Qantas has revealed this morning that its underlying profit for the first half of 2020 was $771 million, down $4 million on last year, but this dip in profit came in the face of some big challenges.
These challenges included:
- $51 million in higher foreign exchange costs
- A $68 million impact from unrest in Hong Kong and trade wars hitting international freight; and
- $55 million increase in domestic airport overheads due to terminal sales.
“So, despite more than $170 million in headwinds and cost-ups, our result was almost flat on the prior year and our earnings per share increased,” Qantas CEO Alan Joyce said.
According to Alan Joyce, Group Domestic had strong performance in the first half, though it was down slightly on last year’s record – mainly because of the structural change to airport costs.
While Jetstar grew its ancillary revenue it faced the added challenge of industrial action at one of its busiest times of the year.
Qantas’ international arm increased its overall profit in the half with earnings up almost 3 per cent.
“It continues to benefit from ongoing fleet renewal, from 747-to-787. And from the ultra long haul routes made possible by the Dreamliner,” Alan Joyce said.
“Perth-London continued to outperform, and early signs for our new Brisbane-Chicago service are very positive”.
In terms of Project Sunsire, Alan Joyce said they’d made good progress – including three research flights direct to Sydney from New York and London.
“We’ve chosen Airbus as the preferred aircraft supplier and we’ll be making a final decision at the end of March,” he said.
Looking at Jetstar, its leisure routes to South East Asia performed well, but the stronger US dollar has weighed on budget leisure demand for services to Hawaii.
Meanwhile, Qantas Loyalty had another record half-year, with earnings up 12 per cent.
There were several reasons why, including contributions from new products like our own credit cards and insurances.
Qantas CEO, Alan Joyce
But overhauling the Frequent Flyer program had the biggest impact, a $25 million investment and included 1 million more reward seats. We also cut fees.
Mr Joyce said even with the challenges faced in today’s climate Qantas remained extremely well positioned.
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