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New Qantas chief reveals solid half-year profit and increased capital expenditure

EditorOliver Gray
Published 22/02/2024, 10:56 am
Updated 22/02/2024, 10:56 am
© Reuters.

Investing.com - In her debut financial report since taking over from Alan Joyce, Qantas' new chief executive, Vanessa Hudson, announced a first-half pre-tax profit of $1.245 billion. This figure, while 12.8% lower than the previous year's exceptional $1.428 billion, was accompanied by a $400 million stock buyback and an increase in spending. Despite the slight dip in profit, Hudson confirmed that demand remains robust amidst a challenging economic climate.

The airline's net profit fell by 13.2% to $869 million. However, in response to customer feedback, Hudson has committed to improving service through increased spending. Qantas' capital expenditure for the next fiscal year is set to rise to between $3.7 billion and $3.9 billion. This increase will allow for the acquisition of eight additional A321XLRs for domestic flights. The current year's capital expenditure is budgeted at between $3 billion and $3.2 billion.

In the absence of a dividend, Qantas declared a further $400 million buyback, following the near completion of a $500 million buyback in the first half. The group's operating margin was 12.1%, a decrease from the previous fiscal year's 15.6%.

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The airline's performance was supported by the continued restoration of international flying capacity, with total group available seat kilometres reaching 90% of pre-COVID levels for the first half of 2023-24. This represents a 25% increase compared to the same period last year. Qantas' loyalty program also continued its positive trend, achieving $501 million underlying EBIT for the calendar year 2023. However, freight performance fell short of expectations.

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Qantas also plans to introduce Wi-Fi on international flights starting from the end of 2024. As part of its long-term goals, the airline aims to increase EBIT margins for the international business to 10-12% and lift domestic EBIT margins from 13% in 2019 to 18% in 2024.

Despite these ambitious targets not being explicitly mentioned in Thursday's investor presentation, several other global carriers have reported that cost inflation, increased capacity and competition amid a gloomier economy have impacted their margins.

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