Qantas upbeat on revenue, brings forward A380 exit as profit falls

Qantas declared a final dividend of 19.8 Australian cents per share, and decided to scrap its A$150 million share buyback program announced in February, which it never began after the outbreak of the Iran war. "Qantas delivered resilient earnings, maintained balance sheet strength, continued returning capital to shareholders and provided a constructive outlook," Jefferies analysts said in a note. ($1 = 1.3935 Australian dollars) Australia's Qantas Airways gave an upbeat revenue outlook on Thursday and said it would begin retiring its Airbus A380 superjumbos in 2028 after posting a 14% fall in annual underlying profit as fuel prices spiked. The country's flag carrier said it was in talks with Airbus and Boeing about converting 20 options to firm orders for A350s and 787s from 2030 because it would start replacing the superjumbos about four years earlier than previously planned. "The A380s are now no longer in production, and so the cost of those aircraft over time will increase in terms of maintenance, but also the cost of disruptions that will come are also going to increase," Qantas CEO Vanessa Hudson told reporters. The new order would be separate from the carrier's plans for "Project Sunrise" non-stop flights from Sydney to London and New York on a fleet of 12 specially designed long-range A350-1000s that will begin to arrive from next year. Hudson's comments came after the airline reported underlying profit before tax of A$2.06 billion ($1.48 billion) for the year ended June 30, slightly ahead of the Visible Alpha consensus estimate of A$2.00 billion. Hudson said the year was "defined by two very different operating environments" as robust travel demand through much of the year collided with a surge in fuel costs driven by the Middle East conflict that reduced second-half earnings by A$420 million. Higher fares, a reduction in domestic capacity and redeploying aircraft to stronger international routes only partially offset the headwinds from rising fuel costs. Despite easing tensions in the Middle East, Qantas forecast its fuel bill would rise by A$1 billion in the current half relative to a year earlier, even though it has hedging covering 85% of its needs. The revenue outlook was more positive. Total revenue for every seat flown was expected to grow between 8% and 10% in the first half of the year, higher than the Visible Alpha consensus. Hudson told analysts the airline had increased fares after the fuel price rose, but the strong revenue forecast also included baggage and other fees and charter revenue as well as taking into account the percentage of seats filled. Shares in Qantas climbed as much as 5.1%. The airline said travel demand remained resilient, though it forecast domestic capacity would decline 3% in the first half while international capacity would rise 2%. Qantas has seen a rebound in demand for flights between Australia and the U.S. in both directions over the last six months, International and Freight CEO Cam Wallace said, following a tougher first half last year. Stephanie Tully, the CEO of budget arm Jetstar, said the low-cost carrier had confidence in the outlook, pointing to two months of strong forward bookings. "We're seeing very strong intakes. Jetstar had a record week last week, in fact," she said.

Qantas upbeat on revenue, brings forward A380 exit as profit falls

Dividend declared, buyback scrapped

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