SINGAPORE, 25 August 2023: The Qantas Group has posted its first full-year statutory profit since FY19 and will share the benefits by rewarding employees, reinvesting for customers and returning capital to shareholders.
For FY23, the group achieved an Underlying Profit Before Tax of AUD2.47 billion and a Statutory After Tax Profit of AUD1.74 billion. This compares with AUD7 billion in accumulated statutory losses over three prior years.
Underpinning the profit, the group’s completed AUD1 billion recovery programme (launched in the first year of those losses) delivered a 132% increase in flying compared with FY22 and strong travel demand, driving significantly higher revenue.
Operational performance improved considerably during the year after a challenging ramp-up. Qantas achieved the best on-time performance of the major domestic airlines for 11 months out of 12, and Jetstar returned to pre-Covid levels.
CEO reports robust travel demand
Qantas Group CEO Alan Joyce said: “These results show a substantial turnaround in our finances and service over the past year.
“Flight delays and cancellations have largely returned to pre-Covid levels, and we’ve shifted from heavy losses to a strong profit and pipeline of investment worth billions of dollars.
“We safely flew almost 70 billion more seat kilometres and doubled the number of people we carried to 46 million compared to the year before. Travel demand is incredibly robust, and we’ve taken delivery of more aircraft and opened up new routes to help meet it.
“The data shows customer satisfaction has improved significantly, and we’re constantly working to deliver great travel experiences.
“It’s because we’re in a strong financial position that we’re able to invest in new aircraft, new destinations and new training facilities – all things that will make us better.
“Our people have done a superb job under very difficult circumstances. Today’s result means more than 21,000 non-executive staff will receive up to AUD6,000 worth of Qantas shares as a thank-you for our recovery, plus another AUD500 staff travel credit. This is in addition to an AUD5,000 cash payment to eligible employees as new enterprise agreements are finalised.”
International performance
The return to service of seven refurbished Airbus A380s during the year, plus delivery of two new Boeing 787s and eight new A321LRs, helped group international (Qantas and Jetstar) increase flying from 54% of pre-Covid levels to 81% over the period.
This activity and strong demand, particularly in premium cabins, helped drive an underlying EBIT of AUD1.1 billion. Passenger loads averaged above 85% for both Qantas and Jetstar.
Shareholder returns
As of 30 June 2023, the group had liquidity sources of around AUD10 billion, including AUD4.4 billion in cash and undrawn facilities and AUD5.6 billion in unencumbered assets.
Net debt fell to AUD2.89 billion – well below the AUD3.7 billion to AUD4.6 billion target range and the FY19 level of AUD4.7 billion. This exceptional balance sheet strength and cashflows from a structurally enhanced business are expected to underpin future aircraft deliveries and shareholder returns.
The board approved a return to shareholders of up to AUD500 million via an on-market share buy-back, which will commence in September 2023. This follows a return of AUD1 billion during FY23 via share buy-backs at an average price of AUD6.19.
Fleet expansion
The group announced a firm order for 24 widebody aircraft, consisting of 12 Boeing 787s and 12 Airbus A350s. With deliveries starting in FY27 and continuing into the next decade, these aircraft will replace the bulk of the current A330 fleet, with purchase right options stretching out until at least FY37 to provide flexibility for future growth and, ultimately, replacement of the A380 fleet.
This order secures delivery slots for sought-after widebody aircraft with pricing that represents an excellent opportunity for the group. It is in addition to the order for 12 specially modified A350s to operate Project Sunrise flights, arriving in FY26.
The group’s fleet plan has significant flexibility, allowing for adjustments depending on market conditions and its financial framework.
Fares
Fares peaked in the second quarter of FY23 after increasing due to strong demand and industry-wide supply chain constraints.
Additional capacity, moderating fuel costs and a stronger Australian dollar applied downward pressure in the second half, with fares falling by around 12%. In inflation-adjusted terms, domestic fares are now 4% higher than pre-Covid levels, and international fares are 10% higher.
Employee bonuses
Around AUD340 million has been set aside in bonuses for more than 21,000 people, including pilots, cabin crew, engineers and head office staff. This was originally flagged in September 2021 in response to the challenges and hardships employees faced in dealing with the Covid crisis and to incentivise the turnaround.
These bonuses include up to 1,000 Qantas shares (valued at around AUD6,000) that will now vest and an AUD5,000 ‘recovery boost’ that eligible employees receive as enterprise agreements are finalised – around AUD11,000 each. All non-executive employees have today been awarded another AUD500 staff travel credit in addition to AUD500 given earlier this calendar year, valued at AUD20 million.
