Qantas says ongoing strong travel demand means it now expects to make $150 million (US$99.6 million)more than it previously forecast for the current half-year.
The national carrier now expects an underlying pre-tax profit of between $1.35 billion to $1.45 billion for the six months to December 31, up from its October forecast of $1.2 billion and $1.3 billion.
Net debt is expected to fall to between $2.3 billion and $2.5 billion by year-end, which is $900 million better than what Qantas had predicted in its most recent update.
It’s a huge turnaround on the underlying earnings loss of $1.28 billion that Qantas reported for the first half of fiscal 2022.
“Consumers continue to put a high priority on travel ahead of other spending categories,” Qantas said in a statement to the ASX on Wednesday.
“There are signs that limits on international capacity are driving more domestic leisure demand, benefiting Australian tourism.”
A line of Qantas aircraft sits at Kingsford Smith Airport in Sydney, Australia, on Oct. 31, 2021. (James D. Morgan/Getty Images)
Qantas indicated it expects to maintain its ranking as the most on-time domestic carrier into the busy Christmas period when the fourth wave of COVID-19 is expected to hit.
“The $200 million investment in rostering additional staff, continued recruitment and reserve aircraft will help maintain these levels,” it said.
Qantas also said customers had redeemed about 60 per cent of the $2 billion in travel credits issued during the pandemic.
Passengers wait at the Qantas check in at Sydney International Airport in Sydney, Australia, on March 19, 2020. (Mark Metcalfe/Getty Images)
Customers have been redeeming about $70 million in credits per month, and new initiatives will be announced shortly to encourage full use of the remaining credits over the next year, the airline said.
Qantas said it was adding capacity as quickly as possible while maintaining operational reliability and that more “points planes” would be released soon. Those are flights where every seat is bookable with the very lowest level of Qantas points.
The airline also reported its fuel costs are expected to hit a “record high” of $5 billion in the fiscal 2023 year.
At 11 a.m. AEDT, Qantas shares were up 6.1 per cent to $6.225, their highest level since February 2020.
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