Qantas Airways swings to record profit bolstered by post-pandemic travel boom

Australia’s largest carrier also announced a multi-billion dollar order for a further 24 Boeing and Airbus aircraft

Qantas Airways' self check-in machines at Sydney Airport in Australia. The airline reported bumper profits on August 24. Bloomberg
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Qantas Airways – Australia's largest carrier and long-time partner of Dubai's Emirates Airline – swung to a record annual profit, helped by the group's A$1 billion recovery programme launched in 2020 during the pandemic and as strong travel demand pushed revenue higher.

The airline posted an underlying profit before tax of A$2.47 billion ($1.6 billion) for the year ending June 30, compared to a loss of A$1.86 billion a year ago, it said in a statement on Thursday.

The carrier doubled the number of passengers flown during the year to 46 million compared to the year before.

"Travel demand is incredibly robust and we’ve taken delivery of more aircraft and opened up new routes to help meet it," Alan Joyce, Qantas Airways' chief executive, said.

"We’ve shifted from heavy losses to a strong profit and pipeline of investment worth billions of dollars."

Qantas announced it will share the profits by "rewarding employees, reinvesting for customers and returning capital to shareholders".

The carrier has placed firm orders for 12 Boeing 787 Dreamliners and 12 Airbus A350s, marking the final piece of its fleet renewal programme to gradually replace its existing A330s, it said on Thursday.

Under the multibillion dollar order, the four Boeing 787-9 and eight 787-10 jet deliveries will start in fiscal year 2027, while handovers of the 12 Airbus A350-1000s will begin in fiscal year 2028, according to the statement.

The group also negotiated additional purchase right options, split evenly between both plane manufacturers, "to give flexibility for future growth" and eventually replace its 10 Airbus A380s with A350s starting around fiscal year 2032 onwards, Qantas Airways said.

“These are generational decisions for this company. The aircraft will arrive over a decade or more and they’ll be part of the fleet for 20 years. They’ll unlock new routes and better travel experiences for customers, and new jobs and promotions for our people,” said Mr Joyce.

The airline's ability to afford these aircraft comes from "years of restructuring and strengthening our balance sheet, and our confidence about the future," said chief executive-designate Vanessa Hudson, who will succeed Mr Joyce after his 15 years at the helm.

"Our entire fleet plan has a lot of flexibility built into it so we can slow down deliveries or, within reason, bring them forward depending on the broader market," she said.

The phased orders can funded "within our debt range and through earnings, on top of continuing shareholder returns in line with our financial framework," she added.

The latest aircraft order marked Qantas Airways' third major jet purchase in less than two years.

"It’s because we’re in a strong financial position that we’re able to invest in new aircraft, new destinations and new training facilities – all things that will make us better in the future," Mr Joyce said.

The airline's board also approved a return to shareholders of up to A$500 million through share buyback, which will commence next month.

Qantas also announced awarding another A$500 staff travel credit in addition to A$500 given earlier this calendar year, valued at $20 million in total.

It also handed over 1 billion in loyalty bonus points "to say ‘thank you’ to customers," and set aside around A$340 million in bonuses for more than 21,000 employees, including pilots, cabin crew, engineers and head office staff.

Looking ahead, the airline said it has entered the new fiscal year with "a very strong" balance sheet, a A$1 billion in reoccurring cost benefits from its recovery programme and "strong trading conditions as consumers continue to prioritise travel."

Just before announcing the results, the Australian Senate summoned outgoing Qantas chief executive Alan Joyce to appear before an inquiry into the cost-of-living crisis, according to press reports by The Guardian and The Sydney Morning Herald.

Updated: August 25, 2023, 1:11 AM