Qantas Profit Hit by Turbulence, Drops 28 Percent

A photo taken on Aug. 22, 2023 shows a Airbus A321 Neo operated by the Qantas low-cost airline Jetstar at Kingsford Smith Airport in Sydney, Australia. William West/AFP via Getty Images

Australia’s national carrier recorded a 28 percent descent in profit to $1.25 billion after tax in the 2024 financial year.

Since taking over from Alan Joyce, the former CEO of Qantas, Vanessa Hudson has focused on customer service amid a issues with the competition regulator.

In contrast, Qantas subsidiary Jetstar recorded its best-ever result as demand for low fares rose during the year.

Hudson said the “strong financial performance” would allow Qantas to continue to invest in their largest ever fleet renewal program.

“Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats, while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travellers and saw the benefits from its new aircraft,” she said.

“The introduction of Classic Plus, with millions of frequent flyer seats, helped drive member engagement and strong earnings for Qantas Loyalty.”

Qantas reported an operating margin of 10.4 percent, down from 13.5 percent in 2023. Operating margin is a key measure of revenue profit after costs are subtracted, but before interest and tax.

What Else Did Qantas Reveal?

Qantas delivered 16 planes in the 2024 financial year, including eight new aircraft. These new planes included five Jetstar A321LRs, two QantasLink A220s, and one Qantas 787-9.

During the financial year, Qantas supported the repatriation of more than 600 Australians from Tel Aviv, Israel, and Noumea, New Caledonia.

Qantas also plans to deliver international Wi-Fi on its A330s planes across the South East Asia network in 2025.

Qantas Domestic also invested in new fleet, food and beverage, disruption management and new technology.

However, fuel costs were higher due to more regional flights and other factors. In the second half of the financial year, Qantas noted they experienced high domestic momentum with revenue growth.

Internationally, Qantas said the fares were normalising in line with expectations, given global capacity had been restored (pdf).

Jetstar’s record earnings were driven by solid revenue and profits from both domestic and international networks.

In the second half of 2024, Jetstar started flying from Sydney to Osaka and Brisbane to Seoul and Osaka. The cheaper airline also announced flights from Cairns to Christchurch, Sunshine Coast to Auckland, Sydney to Vanuatu, and Brisbane to Bangkok.

On the digital front, Qantas updated its app during the financial year, including launching a flight status and baggage tracker, and redesigning the home page.

Further, the airline used conversational artificial intelligence (AI) technology and chatbot to improve customer interactions.

The Jetstar app was also improved with faster online check-in, while the airline also launched Apple Pay and Tap and Go on the plane.

Travel Desire Remains

Qantas also found Australian’s travel desires remain stable, according to an investor presentation (pdf).

The data showed that 49 percent of Australians expressed a wish to fly internationally between June and August, up from 47 percent between March and May.

As for domestic travel, 61 percent of Australians expressed a desire to travel interstate between June and August 2024, down from 62 percent in March to May.

Looking ahead, Qantas expects domestic revenue to rise by 2 to 4 percent in the first half of the financial year.

Conversely, international revenue is predicted to slide 7 to 10 percent due to market capacity restoration. That said, Qantas expects this rate of decline will slow in the 2025 financial year.

As of 4:00 p.m., Qantas shares were up 0.71 percent to $6.36. In earlier trade, Qantas shares fell 2 percent. Qantas did not declare a dividend for shareholders.

Climate Investment

In its financial framework for stakeholders, Qantas outlined how it plans to “deliver against climate action plan targets.”

The airline invested over $100 million in the climate fund, including $75 million for a Sustainable Aviation Fuel (SAF) development fund.

The company also purchased 400,000 tonnes of carbon offsets, equivalent to 86,000 cars. Further, the national carrier donated $1.1 million to environmental charities.

Results Snapshot

Qantas reported an underlying profit before tax of $2.08 billion, down 16 percent on the 2023 financial year.

In June 2024, the company’s net debt was $4.1 billion, which Qantas said was in the bottom half of the target range of $3.9 to $4.9 billion.

Qantas completed $869 million worth of share buy-backs, with another $31 million to be delivered in the first half of 2025.

Qantas domestic revenue (pdf) rose 4 percent to $7.2 billion in the 2024 financial year, up from $6.98 billion in the prior year. However, domestic underlying earnings before interest and taxes (EBIT) fell 16 percent to $1.1 billion.

International revenue rose 12 percent from $7.7 billion in 2023 to $8.7 billion in the 2024 financial year. However, underlying EBIT slid 39 percent to $556 million.

The Qantas Loyalty program delivered an 18 percent boost in revenue to $2.6 billion, while underlying EBIT rose 13 percent to $511 million.

Jetstar, on the other hand, reported a 23 percent boost to $497 million (EBIT), while revenue rose 16 percent to $4.9 billion.