Australia’s flagship carrier Qantas Airways Ltd and its cross-Tasman competitor Air New Zealand have both announced significant profits, fueled by the resurgence in travel demand in the post-pandemic era.
Following the relaxation of pandemic-related restrictions and border closures in both countries last year, air travel has experienced a robust resurgence. This, coupled with shortages of aircraft, parts, and labor, has contributed to escalated airfares, which reached their peak in the December quarter.
European airlines like Deutsche Lufthansa and Air France-KLM have also expressed positive expectations for demand.
Qantas, often referred to as the Flying Kangaroo, reported an underlying annual profit before tax of A$2.47 billion ($1.60 billion) for the fiscal year ending June 30. This marks a notable turnaround from the A$1.86 billion loss reported a year earlier and represents the airline’s first full-year statutory profit since 2019.
Qantas CEO Alan Joyce highlighted the significance of this achievement, stating, “This is a remarkable turnaround, three years in the making, and it has been hard.” He emphasized the journey from the brink of insolvency to becoming an industry leader once again.
The airline also unveiled an order for 24 new wide-body aircraft, which completes its jet fleet renewal program.
Air New Zealand also indicated strong customer demand for the fiscal year 2024. The airline posted a substantial annual profit, benefitting from the rebound in travel. After reinstating its international network, Air New Zealand undertook its largest recruitment drive and resumed full operations.
Qantas exceeded its profit outlook, surpassing the mid-point of A$2.43 billion to A$2.48 billion. This result is nearly A$850 million higher than the record levels of A$1.60 billion achieved in 2018.
In response to the robust performance, Qantas announced a share buyback program of A$500 million. However, the company did not declare a final dividend, continuing the trend of non-payment over the past three years.
Despite living cost pressures, surveys indicate that people are planning to allocate more funds for travel in the next six months and less for home goods, renovations, and even alcohol.
Ian Chitterer, Vice President of Moody’s Investors Service, emphasized the strong credit metrics and factors supporting Qantas’ credit profile, highlighting the company’s favorable financial standing.
This announcement marks the final results release under the leadership of CEO Alan Joyce, who will step aside in November to make way for new CEO Vanessa Hudson, the first woman to lead the century-old airline.
Joyce, who has been CEO for 15 years, acknowledged both the challenges faced by the airline industry during the pandemic and the bright future ahead. He remarked, “The future of Qantas has never looked better and that is one thing I am very proud of.”