The Qantas Group has delivered its highest-ever first half Underlying Profit Before Tax of $976 million for the six months ending 31 December 2017.
The result surpasses the previous record of $921 million achieved in the first half of FY16 and comes despite recent increases in fuel costs and continued international capacity growth. Both Underlying and Statutory profit before tax were significantly higher (15 per cent and 20 per cent respectively) than the first half of FY17.
All targets of the Group’s financial framework were met, enabling Qantas to keep rewarding shareholders, investing for customers and positioning for the future.
Group CEO Alan Joyce said the record result showed Qantas’ ability to keep delivering.
“After several years of consistent performance, we now have a lot of momentum behind us. We’re vigilant about maintaining that momentum and we’re confident about the future it allows us to build.
“Today’s result comes from investing in areas that provide margin growth and a network strategy that makes sure we have the right aircraft on the right route.
“Our lounges, Frequent Flyer program and initiatives like free Wi-Fi all drive customer satisfaction, and so does the network strength across Qantas and Jetstar.
“We’re seeing continued capacity discipline in the domestic market, coupled with a product advantage that’s delivering a significant profit share to the Group.
“This is a transition year for Qantas International and it’s setting up a bright future. We have the Dreamliner joining the fleet and important network changes on flights to Europe and across the Tasman, which will unlock significant benefits from FY19.
“For international to largely hold its own ahead of those benefits flowing through, and in the face of rising fuel costs and market capacity, shows its resilience.
“Qantas Loyalty performed very well with the Frequent Flyer program at its core, but it’s also opening up fresh revenue growth by expanding directly into areas like financial services and health insurance.
“We operate in very competitive markets right across the Group, and we’re focused on continuous improvement.
“This result includes $181 million in benefits from ongoing transformation as part of an average annual target of $400 million. Ultimately, that discipline is key to our ability to keep delivering for our customers, shareholders and people,” said Mr Joyce.
Qantas and Jetstar’s domestic flying operations combined posted their highest ever first half Underlying EBIT of $652 million.
The result was driven by ongoing capacity discipline and growing margins of both airlines, achieved through product and network superiority.
Qantas Domestic posted Underlying EBIT of $447 million, up 20 per cent. Unit revenue was up 8.6 per cent and load factor increased by 1.4 points to 78.7 per cent. The resources sector posted modest revenue growth for the first time since 2014. Jetstar’s domestic operations achieved a 7 per cent increase in unit revenue.
Qantas and Jetstar’s international operations performed well in the face of higher fuel costs and increased competitor capacity.
Underlying EBIT for Qantas International was lower, down 5.5 per cent to $222 million, however unit revenue increased slightly by 0.3 per cent. A capacity increase together with load factor increasing by 3.1 percentage points to 84.4 per cent lifted overall revenue by 7.3 per cent.
Jetstar’s international operations generated strong earnings, helped by the operating costs of the 787-8 but impacted by around $10 million from the Bali ash cloud disruption. Jetstar’s portfolio of airlines in Asia was profitable, driven by Japan and Singapore operations as well as a significant improvement in Jetstar Pacific’s performance as excess market capacity in Vietnam moderated.