Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qantas Airways Ltd (QABSY) reported an underlying profit before tax of $1.39 billion for the first half of 2025, reflecting strong financial performance.
• The company announced a fully franked base dividend of $250 million and a special dividend of $150 million, indicating a return of surplus capital to shareholders.
• Qantas Airways Ltd (QABSY) is experiencing strong demand across both premium and low-cost travel sectors, with Jetstar fares under $100 attracting over 10 million customers.
• The fleet renewal program is progressing well, with 16 new aircraft added, enhancing operational efficiency and customer experience.
• Qantas Loyalty program shows promising growth, with active members increasing by 11% year on year, and Classic Plus redeemers earning points at twice the rate of non-redeemers.

Negative Points

• The company faced a $65 million increase in legal provisions related to the ground handling Federal court case, impacting statutory profit.
• Unit costs excluding fuel increased by 3.1%, driven by fleet-related entry into service costs and inefficiencies.
• There were minor delays in the delivery of new aircraft, which could impact the timing of transformation benefits.
• The impact of 'same job, same pay' legislation resulted in $22 million in costs during the first half.
• Qantas Loyalty's underlying EBIT was below last year due to significant investment in the Classic Plus redemption product.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Sign with QABSY.

Q: Can you discuss the delays in aircraft delivery and how it impacts your capital expenditure and transformation benefits? A: Vanessa Hudson, CEO, explained that while there have been minor delays in aircraft delivery, Qantas is actively managing these with Airbus to minimize impact. Rob, CFO, added that the current CapEx guidance includes these delays, and the transformation benefits, particularly fuel savings, remain a priority despite the delays.

Q: What are the drivers behind the expected 3-5% yield increase in the second half for the domestic group? A: Marcus Fenson, CEO of Qantas Domestic, highlighted that the yield increase will be driven by a mix of seat factors and the return of corporate travel. Steph Tully, CEO of Jetstar, added that strong demand for low fares and strategic scheduling around peak travel periods will also contribute.

Q: How does Qantas plan to manage the distribution of surplus capital between dividends and buybacks? A: Rob, CFO, stated that the base dividend of $250 million is sustainable and will be reviewed every six months. The decision to distribute surplus capital as a special dividend or buyback will depend on the most efficient form of distribution, considering available franking credits.

Q: With the strong performance of Jetstar, how does the dual-brand strategy benefit the broader Qantas Group? A: Vanessa Hudson, CEO, emphasized that the dual-brand strategy allows Qantas to dynamically manage capacity and serve different market segments effectively. This strategy, along with the integration of loyalty and freight services, enhances the overall value and performance of the group.

Q: How is Qantas addressing the competitive landscape in international markets, particularly with increased capacity from other carriers? A: Cam Wallace, CEO of Qantas International, stated that Qantas embraces competition and differentiates its product through non-stop services and strategic partnerships. The focus remains on maintaining a strong customer experience and leveraging the unique aspects of Qantas' international offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.