SYDNEY - Qantas Airways swung to a record first-half profit as appetite for travel grew faster than it could sell seats, but warned that sky-high fares would moderate as the Australian flagship airline and its competitors added more flights, sending its shares down 6 per cent.
The so-called “flying kangaroo” said it was buying back A$500 million (S$458 million) of shares as it declared a turnaround from the shock of initial Covid-19 lockdowns when it had cash to survive for just 11 weeks if it had not parked planes and stood down most of its staff without pay.
The update reflects the precipice that airlines around the world are facing: Raging demand from a population shaking off years of pandemic restriction has jacked up fares and profits, just as increasing mortgage payments, grocery prices and fuel bills start to curb spending power.
It gives a taste of the market that United States private equity firm Bain Capital must navigate if it proceeds with an initial public offering of domestic rival Virgin Australia this year.
Regional rival Air New Zealand also reported on Thursday a swing to profit in the first half ended Dec 31, along with a muted outlook.
Qantas chief executive Alan Joyce said cost-of-living pressures would hit discretionary spending “at some point” but so far, the airline expected robust demand into mid-2024 at least.
Revenue per available seat kilometre, which captures a combination of airfares and the percentage of seats filled, was 46 per cent higher than in the first half of 2019 before the pandemic hit, the airline said in an analyst presentation.
“So far, we have seen no relenting of the strong demand”, Mr Joyce told reporters.
“Fares will keep trending down as more airlines can unlock capacity, which relies on things like supply chain for aircraft, labour availability and training pipelines,” he added.
Qantas said it was facing delays of up to six months in new aircraft deliveries from Airbus, alongside other airlines around the world. It said it would bolster its fleet by acquiring some older Airbus planes and exercising options for Airbus A220 purchases to help meet travel demand growth.
The airline gave no specific full-year profit guidance. Its underlying profit before tax of A$1.43 billion for the six months to end-December, from a A$1.28 billion loss a year earlier, was within its own forecast range of A$1.35 billion to A$1.45 billion. REUTERS
