The Qantas Group has reported its financial results for the fiscal year 2024, showing a 16% dip in annual profit. The drop had been attributed to lower air fares, increased spending on customer initiatives and softer freight revenue.
The Group clearly faced challenges from increased market capacity and moderating fares. Nevertheless, it achieved an Underlying Profit Before Tax of $2.08 billion. This translated to a Statutory Profit After Tax of $1.25 billion for the year ending June 30, 2024.
Profit Dip and Contributing Factors
While overall earnings saw a reduction compared to the previous year, this can be attributed to several factors.
The normalization of market capacity led to fare moderation. Meanwhile increased spending on customer initiatives and a decrease in freight revenue weighed heavily. This was particularly evident in the first half, and it also impacted the bottom line.
However, the Group’s domestic unit revenue showed positive momentum in the second half of the year. It surpassed levels seen in the latter part of 2023.
Qantas Group CEO Vanessa Hudson highlighted the strength of the company’s integrated portfolio as a key factor in these results. The flagship Qantas brand benefited from increased corporate and resources travel, as well as strong demand for international premium seats.
Jetstar, the Group’s low-cost carrier, delivered its highest-ever result, capitalizing on growing demand from price-sensitive leisure travelers and reaping the benefits of its fleet modernization program.
A significant contributor to the Group’s success was the introduction of Classic Plus, which made millions of frequent flyer seats available. This initiative drove member engagement and contributed to strong earnings for Qantas Loyalty.
The company’s focus on operational reliability and customer-centric initiatives also paid off, with improvements in on-time performance and customer satisfaction. Notably, Qantas ended the year as the most punctual major domestic airline in Australia.
Group Domestic Operations
The Group’s domestic operations saw divergent strategies between Qantas and Jetstar. Jetstar expanded its domestic network by an impressive 15% year-on-year. This catered to the burgeoning demand for low-fare travel.
Qantas took a more measured approach with a 1% capacity increase. This conservative growth for Qantas was driven by the continued return of corporate and small business travel, which more than offset a softening in demand for domestic premium leisure travel.
Operational metrics showed marked improvement, with Qantas’ on-time performance reaching near long-term averages in the fourth quarter, with 80% of flights departing on time. Jetstar also made strides in this area, achieving a 74% on-time departure rate.
These enhancements in reliability contributed to a significant boost in customer satisfaction, with Qantas Domestic’s Net Promoter Score increasing by 24 points. Additionally, Qantas reduced its mishandled baggage rate by almost a third year-on-year, surpassing pre-COVID levels.
International Operations
On the international front, the Qantas Group reached a significant milestone by returning to pre-COVID capacity in May 2024. This achievement was facilitated by the reintroduction of more aircraft, including two additional A380s.
However, the revenue gains from this expanded capacity were offset by an anticipated increase in competitor capacity, resulting in an 11% reduction in unit revenue. Despite this challenge, the decline showed signs of slowing in the second half of the fiscal year.
The Group’s ultra-long-haul routes continue to perform well, with services like Perth-London, Perth-Rome, and the recently launched Perth-Paris demonstrating strong demand.
These successes bolster confidence in the planned non-stop flights from Melbourne or Sydney to London and New York, set to commence with the arrival of the A350-1000ULR aircraft in mid-2026.
Jetstar’s international network experienced significant growth, achieving an impressive 11% margin for the year.
The airline strategically deployed its new Airbus A321LR aircraft on short-haul international routes to destinations like Fiji and Bali, allowing for the reallocation of B787s to long-haul routes connecting Australia’s east coast to Japan and South Korea.
Looking Ahead
Looking ahead, the Qantas Group is poised for continued growth and innovation. 20 new aircraft scheduled for delivery in the coming year. Additionally, the return of the remaining two Airbus A380s will take place over the next 18 months.
Overall, the group is executing the largest fleet renewal program in its history. This strategic investment in modern, fuel-efficient aircraft is expected to yield significant operational and financial benefits in the years to come.
The aviation industry continues to navigate post-pandemic recovery and evolving market dynamics. Qantas is still shaking off the flow-on effects of reputational damage, and continues to work towards the return to an even keel.
The Qantas Group’s diversified portfolio, strategic investments, and focus on customer satisfaction may weigh in its favour for its future success in the competitive global airline market.
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