Qantas continues to update its HY1 guidance but in a positive way. As demand continues to soar, the Australian carrier expects to close its first six months of FY23 with an underlying profit before tax of between A$1.35 billion and A$1.45 billion, it said on November 23. This compares to A$1.2 to A$1.3 billion in its previous trading update in October. Qantas upbeat about even higher pre-tax profit.
“Consumers continue to put a high priority on travel ahead of other spending categories and there are signs that limits on international capacity are driving more domestic leisure demand, benefiting Australian tourism”, Qantas says in a media statement. Demand was boosted by a sales campaign that was launched in October.
Qantas says it intends to grow its capacity “as quickly as possible in the second half of the year while maintaining operational reliability.” CEO Alan Joyce said earlier that he wants to maintain higher operational buffers to be prepared for any disruptions, be it from new Covid restrictions, weather, or other issues. This is a lesson learned from earlier this year when record-high sick leave and weather issues left Qantas understaffed. It has made a A$200 million investment to keep more aircraft and staff on standby just to guarantee operational reliability, especially over the busy Christmas period.
High fuel costs are impacting Qantas’ earnings and will likely reach a record high in FY23. This is despite the international network still operating at seventy percent op pre-pandemic levels. Yet, the carrier expects to reduce its net debt by another A$900 million to A$2.3 to A$2.5 billion by the end of December, thanks to the better operational environment. It also benefits from a A$200 million Capex deferral to HY2.
Qantas says it recently concluded a three-year agreement with the pilots of subsidiary Jetstar on improved payment and expects to reach in-principle agreements with other employee groups in the coming weeks.
