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Qantas reported its first half FY 2024 results, with pre-tax profits down 13.2% year on year at A$ 1.2 billion. Total revenues increased to A$ 11.1 Billion, 12.3% higher than the prior year. Earnings per share were 4% lower at 51.8 cents per share. New CEO Vanessa Hudson provided shareholders with a A$400 million share buyback, also promising more spending on customers as the carrier tries to improve a poor reputation.
Qantas is facing a lawsuit from the competition regulator in Australia for selling tickets to already cancelled flights, on top of court findings that 1,700 ground staff were illegally fired in 2020.
“It’s fair to say in the last six months I’ve been doing a lot more listening than talking,” Hudson said. “There’s a lot of work happening to lift our service levels and the early signs are really positive. Our customer satisfaction scores have bounced back strongly since December, and we have more service and product improvements in the pipeline.”
Underlying travel demand remained strong, led by leisure travel. Jetstream, Qantas discount unit, led the way with strong leisure traffic. But business traffic has not yet returned to pre-pandemic levels, putting pressure on yields.
Hudson said: “The past six months have been particularly challenging as we faced rebuilding trust and restoring confidence in Qantas.” The decline in first-half earnings was due to fares and capacity normalising after the post-pandemic surge. Fares fell more than 10% since peaking in late 2022. Lower fares contributed to a fall in Qantas’ revenue per available seat kilometre, which had nearly an A$600 million impact on the company’s bottom-line.
Qantas said delays in delivery of the Airbus A350s will affect its Project Sunrise, the high-profile plan for the world’s longest-ever non-stop flights between Sydney and London.
The Bottom Line
The fundamentals for Qantas remain strong, and the outlook for the carrier, despite its regulatory difficulties and regaining its reputation,, is positive. The key to 2024 and beyond is the sustainability of the cost reduction efforts and return of business travel.
