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Highlights
- Qantas raised its domestic revenue forecast due to higher-than-expected travel demand, sending its stock to record highs.
- Qantas is set to reinstate fully franked dividends in the second half of the financial year, after a hiatus since 2019.
- Under new leadership, Qantas is focused on rebuilding its reputation, learning from the mistakes made during Alan Joyce’s tenure as CEO.
Qantas Airways (ASX:QAN), the national airline of Australia, has raised its domestic revenue expectations for the first half of the financial year, fueled by stronger-than-anticipated travel demand. The airline, which has experienced significant turbulence over the past 18 months due to legal, regulatory, and customer challenges, is now navigating a path of recovery under the guidance of its new CEO, Vanessa Hudson, and Chair, John Mullen.
On Friday, Qantas announced that it expects its domestic revenue per available seat kilometer (RASK) to increase by 3% to 5% for the first half ending December 31. This is an upward revision from the earlier forecast of 2% to 4%, driven by the surge in demand for both leisure and corporate travel. In contrast, its international revenue is forecast to fall by 7% to 10% as competition intensifies and airfares decline from their post-pandemic peaks.
The airline's improved outlook, coupled with a reduction in first-half jet fuel costs from an earlier estimate of AU$2.7 billion to about AU$2.55 billion ($1.69 billion), sent its shares soaring. Qantas stock climbed as much as 1.6% on Friday to AU$8.04, marking a record high for the second time in a week.
At Qantas’ annual general meeting, CEO Vanessa Hudson expressed confidence in the airline’s performance, noting that its budget carrier, Jetstar, has seen stronger-than-expected demand. Meanwhile, Qantas Domestic continues to report year-on-year improvements in corporate travel. Hudson also reiterated that the airline was on track to resume dividend payments from the second half of the financial year, having not paid any since 2019 due to the impacts of the pandemic. Chair John Mullen confirmed that Qantas had now accumulated enough franking credits, allowing for fully franked dividends to be paid to shareholders.
Mullen acknowledged past mistakes under previous leadership, particularly during the tenure of former CEO Alan Joyce, who left the company following external reviews critical of his management. Mullen assured shareholders that the airline is committed to learning from these mistakes and moving forward.
Additionally, Qantas announced it would not oppose Qatar Airways’ proposal to acquire a 25% stake in Virgin Australia, its key domestic competitor. The Qatari investment still requires approval from the Australian government, which had previously been lobbied by Qantas against Qatar’s unsuccessful bid to increase flights to Australia.
With a share buyback plan 45% complete at an average price of AU$7.23, Qantas expects to finalize the AU$400 million initiative by the end of the year. Mullen noted that with a strong balance sheet and improving reputation, the outlook for Qantas and its budget arm, Jetstar, is promising.
