Qantas Profit Falls on Cost of Fixing Damaged Reputation
(Bloomberg) -- Qantas Airways Ltd. said full-year profit fell as the airline invested more to repair its battered reputation and air fares declined.
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Underlying profit before tax fell 16% in the year ended June 30 to A$2.08 billion ($1.4 billion), Qantas said Thursday. The result was in line with analyst expectations.
Qantas shares fell after the airline flagged a slump in international passenger revenue in the final six months of 2024 as capacity continues to flood back into the market following the pandemic. Capital expenditure will jump to as much as A$3.9 billion this fiscal year from A$3.15 billion as Qantas foots the bill for its vast fleet overhaul.
On a call with reporters, Chief Executive Officer Vanessa Hudson said international fares are continuing to fall as more aircraft take to the skies, though the pace of the decline will slow in the first half of 2025.
The stock dropped as much as 2.2% before trading down 1.7% at A$6.21 at 10:59 a.m. in Sydney. It’s up 16% this year.
For more detail from the earnings report and analyst reaction, click here
The results underscore the challenges facing Hudson a year into her job. She’s still cleaning up the mess left by her predecessor Alan Joyce, while picking up the multibillion dollar bill for new aircraft.
“Restoring trust and pride in Qantas as the national carrier is our priority,” Hudson said in a statement. “There’s more work to do.”
Hudson said flight bookings were “holding up” amid a cost-of-living crisis, and customers appeared to be prioritizing air travel over other discretionary spending.
That trend underpins what Hudson described as an “optimistic outlook” for the year ending June 2025.
Hudson took over from Joyce when he abruptly stepped down in the wake of a ghost-flight scandal, service cancellations and illegal sackings.
Qantas also announced a stock buyback of as much as A$400 million and said dividends should be restored in the first six months of 2025. That would be the airline’s first such payment since 2019.
(Updates with stock decline in third paragraph.)
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