Qantas upgrades first-half profit forecast on improved demand
Australia's Qantas Group expects to post an improved underlying profit before tax of between A$1.35-1.45 billion ($897-963 million) for the first half of financial year (FY) 2023, a A$150 million increase from the range it gave in early October.
"Continued strength in travel demand has resulted in the Qantas Group upgrading its profit expectations for the first half of FY2023," the group says in a statement today. The group previously indicated a profit of A$1.2-1.3 billion.
Consumers continue to put a high priority on travel ahead of other spending categories, the group notes, highlighting that there are signs that limits on international capacity are driving more domestic leisure demand.
The group's net debt is now expected to fall to an estimated A$2.3 billion and A$2.5 billion by 31 December.
The group states: "This is around A$900 million better than expected in the most recent update, due largely to the acceleration of revenue inflows as customers book flights on Qantas, Jetstar and partner airlines into the second half and beyond, as well as deferral of approximately A$200 million of capital expenditure to the second half."
Fuel costs remain significantly elevated compared with FY2019 and are expected to reach approximately A$5 billion for FY2023, which would be a record high for the group despite international capacity at around 30% below pre-Covid levels.
The group says it is adding capacity "as quickly as possible" in the second half of the fiscal year while maintaining operational reliability.
Of the A$400 million share buyback announced in August, 76% is now complete at an average price of A$5.66, the group notes.
Qantas adds: "Low levels of net debt put the board in a position to consider future shareholder returns in February 2023 consistent with the group's financial framework and phasing of capital expenditure for fleet renewal."
The group recently finalised a three-year agreement with Jetstar pilots as part of its improved pay policy and expects to reach in-principle agreements with others in coming weeks. More than 6,500 employees, or 33% of those covered by an enterprise agreement, have now signed up to a post-Covid enterprise bargaining agreement (EBA).
"The group remains on-track to share the benefits of the recovery with around 20,000 non-executive employees through a A$5,000 boost payment and up to 1,000 Qantas shares, subject to key conditions being met," it says.