Qantas shares fall after profit drop
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More news: Shares in Qantas were down 1.2% to $6.24 in early trading after Australia’s biggest airline reported a 28% drop in full-year profit amid lower fares and higher spending on customer initiatives.
RBC Capital Markets analyst Owen Birrell said the results were in line with expectations while the outlook is mixed, with Qantas flagging a lift in domestic revenue even as international revenue softens. The brokerage has a 'sector perform' rating on the stock with a $6.75 price target.
Qantas flags soft outlook after full-year profit falls
The news: Qantas has announced a fresh share buyback after reporting a drop in full-year profit amid lower fares and freight revenue and higher spending on customer initiatives.
The numbers: Statutory profit for the year to 30 June was down 28.3% from a year ago to $1.25 billion, lagging market expectations for $1.42 billion. Underlying profit was also down 15.7% to $2.08 billion. Revenue rose 10.7% to $21.94 billion. The airline will not pay any dividend for the year but announced a fresh share buy-back of up to $400 million.
The context: Australia’s biggest airline attributed the lower earnings to a moderation in fares as the market returned to capacity, and lower freight revenue in the first half. Domestic operations delivered the bulk of the earnings, with Qantas capacity up 1% and low cost carrier Jetstar’s capacity up 15% amid strong demand. International and freight earnings were lower due to downward pressure on fares, while the Loyalty program also improved earnings with record number of points earned and redeemed.
"Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travellers and saw the benefits from its new aircraft," CEO Vanessa Hudson said.
The carrier expects domestic revenue to increase 2-4% in the first half of FY25, while international revenue is expected to fall 7-10% over the same period, with the decline slowing in the second half.
The source: ASX
