Qantas’s underlying profit before tax for the six months to December 2018 fell 19% to A$780 million ($559 million), as higher fuel costs offset increases in revenue..
Revenue rose 5.8% to A$9.2 billion, as RPKs grew by a marginal 0.7% despite a 0.5% decline in ASKs. Expenses were up 9% on the back of a 27% climb in fuel costs, with CASK including fuel rising 9.8% to 7.92 Australian cents.
Net profit fell 16% to A$498 million.
“Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could. That’s easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that’s reflected in the segment results we’re reporting today,” says Qantas group chief executive Alan Joyce.
The carrier’s mainline domestic business was the group’s strongest performer, with its earnings before interest and tax (EBIT) up 1% to A$453 million. Revenue for the segment came in at A$3.23 billion, as load factor grew 0.9 points to 79.6%, despite a 2.1% decline in capacity.
Qantas International’s EBIT fell 60% to A$90 million, as higher fuel, and sales and marketing costs, along with impact on foreign exchange from non-fuel cost offset the 6.7% climb in revenue to A$3.7 billion.
International capacity grew 1.3%, with loads seeing a 1.1 point lift to 85.5%.
EBIT at low-cost unit Jetstar fell 20% to A$253 million, despite revenue growing 5.1% to A$2.05 billion. Load factor remained strong at 86.6%, up 0.9 percentage points increase.
Profitability at Jetstar’s Asian affiliates was impacted by higher fuel costs, as well as increased airport charges and taxes. Jetstar Japan remained profitable, as it added two A320s.
The Oneworld alliance member ended the half-year period with a cash and cash equivalents of A$1.49 billion, a slight decline from the A$1.69 billion it had on 30 June 2018.
In its outlook for the remainder of the fiscal year, the airline is seeing strong forward revenue projections, reduced fuel headwinds, and continuing benefits from the transformation of the company.
This is based on the assumption that group capacity growth is expected to be flat across its domestic and international businesses, attaining transformation benefits of around A$400 million, and the benefit of more favourable alignment of school and public holidays.