Shares in Qantas Airways fell to a three-month low after investors reacted to weaker-than-expected international earnings. Despite this decline, the airline reported higher profit for the first half of the year.
Shares Fall After Earnings Update
Qantas reported an underlying pre-tax profit of about A$1.5 billion from the June-December period. This marks around a 5% increase from the same period in 2024 and slightly exceeds analyst forecasts.
Shares jumped at first following the results but declined later in the session. By the close, they were down more than 9%, as investors focused on slower growth in parts of the business.
Analysts revealed the results were mixed. Softer corporate demand led the airline to slow its planned growth in domestic capacity. Corporate travel is typically viewed as an indicator of broader economic conditions because it generates higher profit margins. So, changes in this area draw close attention from investors.
Additionally, international travel trends varied. While demand for flights from the U.S. to Australia remained stronger, demand for economy travel from Australia to the U.S. weakened. Management attributed the change to currency swings and uncertainty weighing on travel demand.
Aircraft Investment and Payouts
Qantas and its low-cost subsidiary Jetstar continued advancing fleet renewal efforts, taking delivery of nine aircraft during the half-year period. Another 30 aircraft are expected over the next 30 months, including Airbus A350 jets destined for long-haul routes under the airline’s “Project Sunrise” initiative linking Australia with New York and London.
Jetstar said its newer aircraft have improved efficiency to reduce fuel and maintenance costs. The aircraft have enabled new services and routes, including flights to Denpasar, Indonesia.
Overall, the company announced higher shareholder returns, including a dividend totalling A$300 million. They further plan to buy back upwards of A$150 million in shares. Even as executives warned that airport and aircraft-related costs are rising faster than inflation.
Will fleet expansion strengthen the airline’s financial performance in the long term? Tell us your take in the comments!
