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  • Qantas revenue rise offsets higher costs in Q1

Qantas revenue rise offsets higher costs in Q1

Qantas reported a 6.3% rise in revenue to A$4.41 billion ($3.12 billion) for the quarter ended 30 September, with the record result helping to offset higher fuel and other operating costs.

Group RASK for the quarter increased 5.4%, with its domestic operations - including those of budget unit Jetstar - delivering a 6.8% rise in unit revenue on stronger demand across business and leisure markets. International unit revenue rose 4%, which it attributed to structural changes to its network and the refocusing on its Singapore hub.

ASKs decreased over the quarter by 0.3%, with capacity cuts taking place across its domestic and international networks.

“Our record passenger revenue performance for the first quarter meant that we were able to substantially recover higher fuel prices,” commented chief executive Alan Joyce in a trading update.

“Market demand for travel remains fundamentally strong and we’re seeing some wind-back of competitor capacity growth.”

While it did not provide any cost data, it noted that apart from higher fuel costs, the carrier increased commissions paid to travel agents and also had to contend with a weaker Australian dollar.

Despite that, Qantas states that demand continues to strengthen, with the value forward bookings at the end of the quarter increased 8% compared to the same time the year prior. That should allow it to “substantially recover increased fuel costs” over the remainder of the fiscal year ending 30 June 2019.

Qantas has hedged 76% of its fuel requirements for the fiscal year, and now expects total fuel costs to come in at A$4.09 billion – up from A$3.23 billion last year.

Capacity across the group is expected to remain flat for the half-year ending 31 December, with domestic ASKs forecast to marginally decrease while international capacity will remain static.

It adds that it is on track to deliver around $400 million in transformation benefits over the full fiscal year, with most of that expected to be realised in the second half.

The carrier did not provide any profit guidance for the first half nor the full year. It is scheduled to report its first half results in February 2019.

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