By Mike Cherney
SYDNEY–Australia’s biggest airline, Qantas Airways Ltd., said it expects an underlying pretax profit in the fiscal first half of the year, reflecting strong demand for travel as the industry recovers from the Covid-19 pandemic.
Qantas said underlying pretax profit in the fiscal first half would be between 1.2 billion Australian dollars (US$750 million) and A$1.3 billion Australian dollars, following five consecutive halves of heavy losses. It said revenue intake for both domestic business and leisure travel are both higher than pre-Covid levels.
The airline, which had been hit with customer complaints for flight delays and lagging service standards as it ramped up after the pandemic, said it would invest another A$200 million in its operations to protect against sick-leave spikes and supply-chain issues. It also said it would boost annual wage increases at a cost of A$40 million per year.
“It’s been a really challenging time for the national carrier but today’s announcement shows how far we’ve come,” Chief Executive Alan Joyce said. “Since August, we’ve seen a big improvement in our operational performance and an acceleration in our financial performance.”
The airline said domestic capacity is expected at 94% of pre-Covid levels in the fiscal first half and that international capacity is expected at 61%. Those figures are forecast to rise to 100% and 77%, respectively, in the fiscal second half.
Qantas cautioned that challenges remain, including high fuel prices, inflation, and rising interest rates that could hit consumer demand. Fuel prices are now 75% higher than pre-Covid, compared to 60% higher in August.
The airline said that to protect against delays and cancellations, about 20% of its flying capacity would be left in reserve and called upon if needed. It said its domestic on-time performance in October had so far averaged about 75%, its target, which is an improvement from the 69% in September and 67% in August.
Qantas added that a A$400 million share buyback was 26% complete. It also said that its loyalty unit is expecting record earnings for the first half and is on track to reach its FY 2023 target of A$425 million to A$450 million.
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