Qantas to buy back $400m shares as full-year profit falls

National carrier Qantas has announced another share buyback and raised its final dividend despite higher fuel costs pulling down its full-year profit by 17 per cent.

Qantas has announced another share buyback and raised its final dividend despite higher fuel costs and a weaker Aussie dollar pulling down its full-year profit by 17 per cent to $1.302 billion.

The carrier today reported record revenue of $17.97 billion for the 12 months to June 30 but underlying pre-tax profit was hit by a $614 million increase in fuel costs from higher oil prices and a further $154 million impact from currency movements.

The airline’s statutory profit, which includes all one-off items, fell by 6.5 per cent to $891

million.

Qantas CFO Tino La Spina with CEO Alan Joyce as the airline delivers its full year results in Sydney. Picture: AAP

Nonetheless, Qantas raised its final dividend by 3.0 cents to 13.0 cents and plans to buy back up to 79.7 million shares, worth about $400 million.

The latest buyback means Qantas will have decreased the number of shares on issue by about 30 per cents since 2015 and will take its capital return to shareholders since October of that year past $4 billion.

“This result shows the strength of our individual businesses but also the strength of our portfolio as a whole,” chief executive Alan Joyce said. “Even with headwinds like fuel costs and foreign exchange, we remain one of the best performing airline groups in the world.”

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Qantas plans to buy back up to 79.7 million shares, worth about $400 million.

Reporting net free cash flow of $1.244 billion, Qantas also handed each of its 25,000 non-executive employees a $1,250 travel bonus.

Despite rising revenue, domestic underlying earnings fell 3.3 per cent to $740 million and international underlying earnings fell 28 per cent to $285 million on rising fuel costs exacerbated by the relatively stronger US dollar. Its Jetstar airline was similarly affected but its loyalty program hoisted earnings by 8.4 per cent to $374 million, helped by a near 5.0 per cent rise in members.

Mr Joyce said Qantas anticipated flat domestic capacity at least for the first half of the current financial year, with weakness in the price-sensitive leisure market but steady premium leisure demand.

“Overall demand from our corporate customers is flat, with continued strength in the resources sector offsetting weaker demand from other industries, like financial services and telecommunications,” Mr Joyce said.

Originally published as Qantas to buy back $400m shares as full-year profit falls