Qantas Airways (ASX:QAN) Limited (ASX: QAN) has announced its financial performance for the fiscal year ending June 30, 2024, revealing a mix of challenges and strategic moves.
For FY 2024, Qantas achieved a 10.7% increase in revenue, reaching $21.9 billion. Despite this revenue growth, the airline saw a 16% decrease in underlying profit before tax, which totaled $2.08 billion. The statutory profit after tax also fell by 28%, coming in at $1.25 billion.
Segment Performance
The decline in profits was primarily driven by weaker results from Qantas Domestic and Qantas International. Qantas Domestic experienced a 16% drop in underlying EBIT, totaling $1,063 million. Similarly, Qantas International's underlying EBIT fell by 39% to $556 million. Key factors contributing to these declines included moderating fares due to increased market capacity, heightened spending on customer initiatives, and reduced freight revenue.
On a positive note, both Jetstar Group and Qantas Loyalty delivered strong performances. Jetstar Group saw a 23% increase in underlying EBIT, reaching $497 million. Qantas Loyalty posted a 13% rise in underlying EBIT, totaling $511 million.
Shareholder Returns
Despite the challenges in earnings, Qantas has announced a $400 million on-market share buy-back program, set to take place in the first half of FY 2025. This move reflects the company's commitment to returning value to its shareholders.
Management Commentary
Qantas CEO Vanessa Hudson expressed satisfaction with the company's performance, highlighting the strength of the integrated portfolio. Hudson noted that Qantas benefitted from increased corporate and resources travel, as well as strong demand for international premium seats. Jetstar's success was attributed to its growth in catering to price-sensitive leisure travelers and new aircraft. Additionally, Qantas Loyalty saw improved engagement through the introduction of Classic Plus.
Hudson emphasized the company’s ability to invest in its largest-ever fleet renewal program, which is expected to enhance customer experience and support future growth. She also pointed out the high intention to travel among Australians, which supports a positive outlook for the industry.
Outlook for FY 2025
Looking ahead, Qantas anticipates stable travel demand across its operations with positive revenue momentum into the first half of FY 2025. Group Domestic unit revenue is projected to increase by 2% to 4% compared to the previous year. However, Group International unit revenue is expected to decline by 7% to 10% in the same period due to the restoration of market capacity. On a positive note, Qantas expects Group International unit revenue to improve in the fourth quarter compared to the prior year. Additionally, net freight revenue for the first half of FY 2025 is anticipated to be $20 million to $40 million higher compared to the same period last year.
Qantas faced some headwinds in FY 2024, the airline remains committed to strategic investments and shareholder returns, positioning itself for future growth.