Qantas shares lift on lower fuel costs, domestic revenue growth
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More news: Qantas shares climbed on the ASX after the airline cut its fuel cost estimate for the first half of the year and lifted its domestic revenue growth forecast.
Shares were up 1.4% to $8.02 by 1:40pm AEDT, having gained around 50% since January.
RBC Capital Markets analyst Owen Birrell said he expects Qantas' earnings growth to continue to achieve the required return on investment on the airline's incoming fleet investment.
Birrell noted that Qantas confirmed "stable demand", improving domestic revenue per available seat kilometre (RASK), and incoming benefits from lower jet fuel prices through the first half of FY25.
Qantas also held its annual general meeting today and had all of its resolutions passed. The airline was at risk of a second strike on its remuneration report and proxy advisor ISS had recommended shareholders to vote against the re-election of John Mullen as chair due to overboarding given he was also chair of Brambles and Treasury Wine Estates, and is a non-executive director of Brookfield.
What they said: "Overall Qantas continues to reap the economic benefit from its dominant market position, effectively managing and passing through costs, and defend its gross margin," Birrell said.
Qantas trims fuel cost estimate, sees improved domestic revenue
The news: Qantas has trimmed its fuel cost estimate for the first half and expects slightly higher domestic revenue on the back of stronger than expected performance at Jetstar.
The numbers: Its first-half fuel cost is now expected at $2.55 billion, down from its previous estimate of $2.7 billion. The carrier now expects domestic revenue to increase 3% to 5% from a year ago in the first half, compared to its earlier forecast of 2% to 4%.
International revenue is still expected to fall 7% to 10% over the same period.
The context: Australia’s biggest airline attributed the improved domestic revenue due to stronger than anticipated demand at its Jetstar business, while Qantas domestic is seeing improvements in load factors and corporate travel year on year.
It flagged a lower fuel bill for the first half but warned that geopolitical events continued to cause volatility in fuel prices.
The airline said group capacity is expected to improve 10% over FY24, with the bulk of this coming from international operations in the second half of the fiscal year.
Ahead of its annual general meeting later on Friday, Qantas said it has completed 45% of its $400 million share buy-back, with the program expected to be completed by the year-end.
The source: ASX announcement
