Fuel costs dent QF profit

SYDNEY, 23 August 2019: Profit slipped 17% for the Qantas Group during the fiscal year ending 30 June mainly impacted by an AUD614 million increase in fuel costs.

Despite the decline, the airline still reported an AUD1.30 billion in “Underlying Profit Before Tax” for the Financial Year 2019.

The Group’s total fuel cost was AUD$3.85 billion, an increase of AUD614 million in FY18. Ongoing efficiency measures, including fleet modernisation and a new flight planning system, drove a 2.2 per cent improvement in fuel efficiency.

Other financial negatives included an AUD154 million in foreign exchange impacts on non-fuel net expenditure.

Qantas Group CEO Alan Joyce said the FY19 performance was particularly positive given mixed market conditions.

“This result shows the strength of our businesses but also the strength of our portfolio as a whole. Even with headwinds like fuel costs and foreign exchange, we remain one of the best-performing airline groups in the world.”

“Qantas International has improved its competitive position by evolving its fleet, network and partnerships. We’ve carved out some unique advantages like the Perth-London route, and there is a lot of value still to be unlocked through our alliances.”

Looking ahead, Joyce said the overall market remains mixed. Domestically, it faces weakness in the price-sensitive leisure market, but premium leisure demand is steady.

He claimed internationally, the outlook remained positive for premium international travel demand, helped by a reduction in broader market capacity.

Qantas International delivered an Underlying EBIT of AUD285 million, down by 28%. There was a significant improvement in the second-half performance, as competitor capacity and overall fare levels adjusted to higher fuel prices.

Unit Revenue grew by 6% compared with FY18, and seat factor grew by two percentage points to 86%.

Network and fleet changes continue, with particularly strong performances on the Perth-London route and Singapore hub services. Competitive pressure on the Pacific remained intense, but Qantas’ performance is expected to improve following implementation of the American Airlines joint business and the start of new routes, including Brisbane-Chicago in FY20.

The Qantas Board has announced a fully franked dividend totalling AUD204 million dollars or 13 cents per share to be paid on 23 September.

The airline will take delivery of six additional 787-9s from October, taking the total fleet to 14 aircraft.

In Asia, it is increasing lounge capacity in Qantas’ Singapore hub by 60%, including an expansion to the existing Business Lounge and opening of a new First lounge.

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