Qantas has upgrading its profit expectations on the back of continued strength in travel demand.
The group now expects an underlying pre-tax profit of between A$1.35 billion and A$1.45 billion for the first half of its 2022-23 financial year ending on December 31.
This represents a A$150 million increase to the profit range given in early October.
The Australian carrier said: “Consumers continue to put a high priority on travel ahead of other spending categories and there are signs that limits on international capacity are driving more domestic leisure demand, benefiting Australian tourism.”
But Qantas warned that fuel costs remain “significantly elevated” and are expected to reach about A$5 billion for the full 12 months – a record high despite international capacity at around 30% below pre-Covid levels.
A A$200 million commitment to rostering additional staff, continued recruitment and reserve aircraft will help maintain operational performance levels during the latest wave of Covid infections in Australia and into the busy Christmas period, as well as limiting the impact of extreme weather – especially wind – in November.
The group’s net debt is now expected to fall to an estimated A$2.3 billion and A$2.5 billion by December 31 – around A$900 million better than expected.
The reduction was “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.
Around 60% of A$2 billion in Covid-related travel credits held by the group have now been redeemed by customers, Qantas revealed.
The group added: “While capacity is constrained, over a million sale fares were launched in October and further sale activity is planned in the weeks ahead.
“The group is adding capacity as quickly as possible in the second half of the year while maintaining operational reliability.
“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 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 – currently worth approximately A$6,000 – subject to key conditions being met.”