Qantas profits fall due to costs of restoring damaged reputation
(Bloomberg) — Qantas Airways Ltd. said its annual profit fell as the airline increased investments to repair its battered reputation and airfares fell.
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Profit before tax fell 16 percent to 2.08 billion Australian dollars (1.4 billion US dollars) in the fiscal year ended June 30, Qantas said on Thursday. The result was in line with analysts’ expectations.
Qantas shares fell after the airline announced a collapse in international passenger revenue in the final six months of 2024 as capacity continues to flow back into the market following the pandemic. Capital spending will rise to as much as A$3.9 billion this financial year from A$3.15 billion as Qantas foots the bill for the major overhaul of its fleet.
In a call with reporters, CEO Vanessa Hudson said international airfares will continue to fall as more planes take to the skies, but the pace of decline will slow in the first half of 2025.
The stock fell as much as 2.2% before settling at A$6.21, down 1.7%, at 10:59 a.m. in Sydney. It is up 16% this year.
For more details on the earnings report and analyst reactions, click here.
The results underscore the challenges Hudson faces a year into her tenure, still trying to clean up the mess left by her predecessor, Alan Joyce, while also footing the multibillion-dollar bill for new aircraft.
“Our priority is to restore confidence and pride in Qantas as the national airline,” Hudson said in a statement. “There is more to do.”
Hudson said flight bookings were “holding up” amid the cost of living crisis and that customers appeared to prefer air travel to other non-essential expenses.
This trend underpins what Hudson called an “optimistic outlook” for the year to June 2025.
Hudson succeeded Joyce when he abruptly resigned following a ghost flight scandal, layoffs and wrongful dismissals.
Qantas also announced a share buyback worth up to A$400 million and said it would restore dividend payments in the first six months of 2025. This would be the airline’s first such payment since 2019.
(Updated with stock decline in third paragraph.)
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