Qantas Updates Its FY26 Outlook, Cuts Capacity On Domestic Flights

Qantas, amid continuing uncertainty due to the conflict in Iran, has provided an update to stakeholders, including its investors, on its FY26 capacity and unit revenue developments over the last months of the fiscal period.

On April 14, 2026, Qantas provided an update to its FY26 guidance due to the continuing hostilities in Iran and the wider Middle East region, saying that while it has hedged around 90% of its H2 FY26 exposure in crude oil, jet fuel refining margins have increased exponentially since the breakout of the war.

According to the Australian airline, the margins went from $20 per barrel in February to a peak of around $120, resulting in estimated fuel costs of between AU$3.1 billion ($2.2 billion) and AU$3.3 billion ($2.3 billion).

The estimate assumes it would consume around 16.1 million barrels of jet fuel during the six-month period, including sustainable aviation fuel (SAF), and a market jet fuel price of between AU$185 ($131.8) and AU$200 ($142.5) per barrel, which excludes “hedging, into-plane costs, SAF premium and carbon credit costs.”

In comparison, in H1 FY26, Qantas spent AU$2.6 billion ($1.8 billion) on fuel costs, up 3% year-on-year (YoY) due to “higher flying activity and [an] increase in carbon cost offsetting slightly lower fuel prices.” The Australian airline group consumed around 16.1 million barrels of fuel, compared to 15.6 million in H1 FY25.

“The Group is working closely with the Government and jet fuel suppliers who continue to provide confidence in fuel supply for the remainder of April and well into May. We are closely monitoring the situation given the ongoing uncertainty in global fuel supply chains.”

Qantas said that it will reduce “domestic capacity in 4Q26 by around 5 percentage points,” and as a result, group-wide domestic available seat kilometers (ASKs) will be down by 1% YoY during the last quarter of the fiscal year.

International ASKs will be up 3% in Q4 FY26, despite the fact that Jetstar-operated international capacity will be down 7% YoY, which will be offset by Qantas’ international ASKs growing by 9%.

“While the Group does not operate [flights] to the Middle East, Qantas has provided additional support to customers booked to travel on partner airlines, including more flexibility to move flights or receive a refund.”

Qantas highlighted that demand for travel to Europe remains strong, which is why it has redeployed United States-bound and domestic capacity to fly more flights to Paris Charles de Gaulle Airport (CDG) and Rome Fiumicino Airport (FCO).

According to Cirium’s Diio Mi, Qantas’ Europe-bound departing ASKs will be up 14.5% YoY in Q4 FY26, which is the period from April to June. To the US, ASKs are up 15.4%, despite reductions on specific routes to the mainland US compared to the same three-month period in 2025.

However, forward-looking capacity could still change.

As a result of the capacity changes, Qantas expects that its unit revenue on international flights will improve by 4% to 6% in H2 FY26, double its previous guidance, which includes 50% of revenue for Q4 FY26 “that was sold prior to the conflict commencing.”

The group’s domestic unit revenue will improve by around 5% in H2 FY26 and 6% in Q4 FY26.

“The revised RASK outlook assumes current demand levels are sustained across Domestic and International.”

While the group will pay out the AU$300 million ($213.7 million) dividend, it said that it has “not commenced” its planned AU$150 million ($106.9 million) buyback.

“In light of the ongoing volatility, the Group will provide an update on the FY27 outlook at a later date.”

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