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Qantas full-year profits fall 14% due to fuel costs; A380s will be retired in 2028

Qantas Airways, Australia's largest airline, reported on Thursday a 13.8% decline in its pre-tax profit for the full year, due to the Middle East conflict and a surge in jet fuel prices.

The flag carrier of the country also announced that it is in discussions with major aircraft manufacturers Airbus and Boeing to convert 20 options into firm orders starting from?2030.

Qantas stated that "Project Sunrise and additional 787-9 deliveries have been confirmed for calendar year 2027. The A380 fleet is expected to be retired in calendar year 2020, in order to maximize capital efficiency while maintaining network reach with the new wide-body aircraft fleet."

The carrier reported an underlying profit before tax of A$2,06 billion ($1.48billion) for the year ended June 30 compared to A$2.39billion reported a previous year, which was slightly higher than the Visible Alpha consensus estimation of A$2.00billion.

The Middle East conflict caused jet fuel prices to more than double and remain highly volatile during the second half. Qantas hedged almost 90% of its crude oil exposure in the second half, but it was still vulnerable to changes in jet refinery margins.

The rising costs of fuel are partially offset by higher fares, reduced domestic capacity and the re-deployment of aircraft to better international routes.

The carrier declared a final dividend per share of 19,8 Australian cents, a higher amount than the 16,5 Australian cents declared last year. The company also decided to scrap its A$150 million share buyback announced in February that never started after the Iran War.

(source: Reuters)