Qantas will launch a fresh $305 million buyback despite first-half profit falling 16.3 per cent to $498 million on a big jump in fuel costs.
The $416 million increase in the airline’s fuel bill hit the bottom line but overall revenue rose 5.8 per cent to $9.2 billion and Qantas Domestic, Jetstar Domestic and Qantas Loyalty all reported record results.
Qantas raised its interim dividend from seven to 12 cents and launched a buyback that, once completed, will mean it will have handed back $3.6 billion to shareholders since October 2015.
Qantas expects fuel cost growth to moderate in the second half, falling from 27 per cent in the six months to December 31 to 21 per cent over the full year.
‘Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could,’ chief executive Alan Joyce said.
‘That’s easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that’s reflected in the segment results.’
Underlying earnings from international operations slipped from a restated $224 million in the prior corresponding period to $90 million.
But Qantas, which this month confirmed it cancelled an order for eight A380s, said it was benefiting from the introduction of the Dreamliner into its long-haul fleet.
Mr Joyce said the Melbourne-Perth-London route meant that London was now a profitable destination for the airline for the first time since 2010.
Underlying earnings from domestic operations rose 0.9 per cent to a record $453 million, with a 5.7 per cent in revenue more than offsetting the increased fuel costs.
As well as reduced fuel cost headwinds in the second half, the carrier predicts an improvement from the prior corresponding period with Easter falling within the school holidays this year.
‘Competitor capacity growth has slowed internationally and is relatively flat domestically, and oil prices have declined from the peaks we saw late last year,’ Mr Joyce said.
‘These factors point to a strong second half and we expect to completely recover our increased fuel costs by the end of this financial year.’
QANTAS’ CLAWS BACK COSTS
* Net profit down 16.3pct to $498m
* Revenue up 5.8pct to $9.206b
* Interim dividend up five cents to 12 cents, fully franked