Qantas has upgraded its profit expectations for
the first half of FY23.
The group now expects an Underlying Profit
Before Tax of between $1.35 billion and $1.45 billion, an $150
million increase to the profit range given in early October 2022.
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.
Fuel costs remain significantly elevated compared
with FY19 and are expected to reach approximately $5 billion
for FY23, which would be a record high for the Qantas Group despite
international capacity at around 30% below pre-COVID19
levels.
The group’s net debt is now expected to fall to an
estimated $2.3 billion and $2.5 billion by 31 December 2022, around $900 million better than expected in the most recent
update, 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 $200 million of capital expenditure to the second
half.
Around 60% of the $2 billion in
COVID-related travel credits held by the group have now been
redeemed by customers. Total credit usage is consistent at a rate
of circa $70 million a month and new initiatives are expected to be announced
shortly to encourage full use of remaining credits over the next
year.
While capacity is constrained, over a million sale
fares were launched in October and further sale activity is
planned in the weeks ahead.
More than five million reward seats
are available for frequent flyers over the next year and more
Points Planes are scheduled to be released soon.
Of the $400 million share buyback announced in
August 2022, 76% is now complete at an average price of
$5.66. 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 recently finalised a three-year
agreement with Jetstar pilots as part of its improved pay policy
and expects to reach in-principle agreements with others in coming
weeks. More than 6,500 employees, or 33 per cent of those covered
by an enterprise agreement, have now signed up to a post-COVID
EBA.
The group remains on-track to share the benefits of the
recovery with around 20,000 non-executive employees through a
$5,000 boost payment and up to 1,000 Qantas shares (currently
worth approximately $6,000), subject to key conditions being met.
Operational performance has continued to improve,
with Qantas ranking as the most on-time domestic airline in
October. The $200 million investment in rostering additional
staff, continued recruitment and reserve aircraft is expected to
help maintain these levels during the latest wave of COVID19
infections in the community and into the busy Christmas period, as
well as limiting the impact of extreme weather (especially wind)
in November.
