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Highlights
- Qantas' first-half trading for FY25 is on track with stable demand across its portfolio.
- Jetstar's domestic unit revenue is surpassing expectations due to strong travel demand.
- Corporate travel and domestic revenue continue to show improvements year-on-year.
Qantas Airways Limited (ASX:QAN) has provided an update on its FY25 performance, signaling stable growth and improving demand across its segments. The company's first-half trading aligns with previous expectations, particularly in its domestic market, where both Qantas and its budget airline, Jetstar, continue to see steady demand. This consistent performance has led to a modest 0.6% rise in the share price of TSX:QAN, a notable player in the ASX industrial sector.
One of the key highlights from the update is Jetstar’s domestic unit revenue, which is outperforming initial estimates due to stronger-than-expected demand for domestic travel. This positive trend signals resilience in the airline’s operations as domestic load factors improve, and corporate travel demand continues to recover year over year.
Qantas also revised its domestic revenue per available seat kilometre (RASK), expecting it to increase between 3% to 5% for the first half of FY25. However, the group’s international RASK guidance remains unchanged, with an expected decline of 7% to 10% in the same period. This is largely driven by varying global demand patterns and pricing adjustments.
The airline’s Loyalty division continues to perform strongly, thanks to the successful launch of its classic plus flight rewards. The division is projected to boost its underlying EBIT by at least 10% in FY25, further solidifying its contribution to the overall business performance.
Qantas' $400 million share buyback plan, announced with the FY24 results, is currently 45% complete, with shares repurchased at an average price of $7.23. The company plans to finalize the buyback by December 31, 2024.
On the cost front, Qantas highlighted that rising geopolitical tensions are leading to volatility in fuel prices. The airline expects fuel costs for the first half of FY25 to reach approximately $2.55 billion, factoring in hedging and carbon-related expenses. The airline emphasized its continued focus on disciplined hedging strategies to manage fuel price fluctuations.
Additionally, Qantas acknowledged its employees by announcing a $28 million ‘thank you’ payment for 27,000 staff members in recognition of their contributions over the past year.
While the Qantas share price has soared by over 60% in the past year, further growth may be tempered by external factors, including competition from Virgin Australia, which is backed by investment from Qatar Airways.
