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Qantas upbeat as Q3 revenue rises 2.3%

Qantas is on track to deliver record revenue for the financial year after it reported a 2.3% rise in revenue to A$4.4 billion ($3.07 billion) for the quarter ended 31 March.

“The group continues to perform well, with strength in key parts of our portfolio helping to hedge against headwinds in other areas,” commented chief executive Alan Joyce in a limited trading update issued by the carrier on 9 May.

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Strong performance from Qantas's mainline international network over the third quarter helped to deliver overall revenue growth of 2.3%

Qantas

The growth in revenue came despite the peak Easter holiday period falling later, pushing it into the fourth quarter.

Group unit revenue rose 4% for the three month period, despite a 1% fall in RPKs. That was offset by a 1.6% fall in capacity, resulting in revenue seat factor increasing 0.5 points to 83.7%.

The Oneworld carrier highlights a 6.2% growth in international unit revenue, with the mainline carrier delivering a “robust” performance, offsetting weakness in Jetstar’s international operations.

Joyce says that the outlook on its international network continues to be positive, particularly as competitors have slowed their capacity growth.

“The long-term fleet and network changes we’ve made are delivering revenue growth, and total market capacity in the fourth quarter is contracting in response to higher fuel prices,” he adds.

Domestic unit revenue rose 1.1%, as growth in the resources market offset weakness in the wider corporate market.

That weakness is expected to carry through to May and June, amid slowing growth in the small business market, and softer demand from the financial services, construction and telecommunications sectors.

“Overall, we expect the group to achieve a record level of revenue this financial year and strong cash flow as we continue to deliver for shareholders, customers and our people,” adds Joyce.

The airline also reached an agreement to sell the lease on its domestic terminal at Melbourne airport back to the airport in an A$355 million deal that includes a 10 year access arrangement for the facility.

While welcoming the agreement, Joyce repeated Qantas’s view that airport retains too much power when negotiating airline pricing arrangements.

“Unfortunately, the current system doesn’t have an independent arbitrator for airports that aren’t commercially rational, which creates a stalemate around these critical pieces of infrastructure. That’s why we’re continuing to argue for regulatory change.”

Australia’s Productivity Commission has been reviewing airport pricing regulation, and a draft report issued in February largely dismissed the concerns of Qantas and other carriers and recommended no changes.

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