Qantas has upgraded its profit expectations for the first half of this financial year to more than $1.35 billion as rampant consumer demand continues to buoy the sector’s COVID-19 recovery despite fuel costs and capacity restraints.
Qantas has boosted its October underlying profit before tax guidance by $150 million to between $1.35 billion and $1.24 billion in a statement to the ASX. The Group’s net debt is now expected to fall to an estimated $2.3 billion and $2.5 billion by 31 December 2022. This is around $900 million better than expected in the most recent update.
Qantas chief Alan Joyce at the group’s AGM this month. Credit:Louie Douvis.
“Consumers continue to put a high priority on travel ahead of other spending categories and there are signs that limits on international capacity are driving more domestic leisure demand, benefiting Australian tourism,” the statement said.
The carrier expects fuel costs to reach $5 billion by the end of FY23, a record for the country’s biggest carrier despite international capacity remaining about 30 per cent down on pre-pandemic levels.
About $800 million in customer travel credits issued over the pandemic have still not been redeemed, but total credit usage has reached about $70 million per month. The carrier has committed to announcing new initiatives so all of the remaining credits can be used by the end of this financial year.
Just under 80 per cent of the group’s $400 million share buy back announced in August has been completed at an average price of $5.66 per share. The group flagged the board is poised to consider future shareholder returns in February based on its low level of debt.
Qantas’s October return to profit announcement beat analyst expectations, which saw Qantas returning to profit by the end of June 2023. Its shares surged by as much as 12 per cent following the announcement.
More to come.
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