Qantas has posted a record profit for the 2018 half-year despite higher fuel costs and increasing competition on the domestic market.
The underlying profit before tax of $976 million for the six months to December was the airline’s highest and a 14.6% increase on the same period last year. Statutory profit after tax was $607 million, up 17.8%.
The national airline says it has emerged from the Qantas Transformation Program in a position of strength. In 2014, Qantas posted a massive $2.8 billion statutory loss.
In early trade, Qantas shares were 9.3% higher at $5.76.
CEO Alan Joyce says the results come despite higher fuel costs, a competitive domestic market and international capacity growth.
“After several years of consistent performance, we now have a lot of momentum behind us,” he says.
“We’re vigilant about maintaining that momentum and we’re confident about the future it allows us to build.”
Qantas Domestic posted underlying EBIT (earnings before interest and tax) of $447 million, up 20%. Jetstar earnings were up 15.6% to $318 million. International underlying EBIT fell 5.5% to 222 million. Qantas loyalty rose 1.7% to $184 million.
The airline expects transformation benefits in 2018 to be greater than $400 million.
Qantas declared a seven cents a share unfranked dividend, plus an on-market buyback of up to $378 million.
Today’s key numbers:
- Underlying Profit Before Tax: $976 million (up 15%)
- Statutory Profit Before Tax: $857 million (up 20%)
- Statutory Earnings Per Share: 34 cents
- Return On Invested Capital: 20.9%
- Record level of operating cash flow; net free cash flow of $772 million (up 2.7 times)
The result beat Qantas’ previous first half record set in 2016.
“Looking ahead, we’re broadly positive about trading conditions and the prospects for consumer demand,” says Joyce.
“After several years of turning this business around, Qantas now has a lot of momentum behind it.
“Consistent financial performance gives us the headroom to plan for the future. We’re vigilant about maintaining that performance. And we’re excited about what’s ahead.”
Qantas also announced the formation of a $20 million Qantas Group Pilot Academy next year, what it describes as the largest pilot recruitment and training initiative in the airline’s history.
Since 2016, Qantas has hired almost 600 new pilots in Australia, with another 350 to be recruited by the end of this calendar year.
The academy will initially focus on training up to 100 new pilots a year for direct entry to Qantas.
It will also explore the potential to become a major training centre to meet strong demand for pilots in the region.