Qantas is to repay A$650 million in debt ahead of schedule and invest up to A$100 million in a share buy-back.
The share buy-back represents up to approximately 4% of Qantas shares and is expected to begin next month.
The measures will be funded by the recently-completed sale of Qantas’s stake in road freight company StarTrack and a settlement from Boeing in relation to the airline’s 787 Superjumbo order.
These two transactions will deliver combined net proceeds of A$750 million next year.
Qantas chairman Leigh Clifford said: “The board believes the current Qantas share price does not reflect fair value of the group, particularly considering the underlying strength of its domestic, loyalty and Jetstar businesses and the proposed partnership with Emirates.
“Our continued progress towards the turnaround strategy for Qantas International, plus cash inflows from recent transactions, gives the board confidence to approve these capital management measures.
“The share buy-back and accelerated debt reduction reflect the board’s goal of returning value to shareholders and maintaining a strong balance sheet, as well as retaining the flexibility to pursue current growth initiatives.”