Qantas to launch buyback despite fall in first-half profit

Travel as you know it is set to change after Qantas announced plans to revolutionise its boarding system, while revealing the airline’s profits took a hit in the first half.

Qantas and Jetstar will scrap paper boarding passes this year, with Qantas Group moving to a digital system.

The change is part of the company’s plans to boost its environmental credentials through reusing, recycling and composting at least 75 per cent of waste by the end of 2021.

Qantas Group chief executive officer Alan Joyce revealed the news as the company delivered its half-yearly results.

The airline will launch a fresh $305 million buyback despite first-half profit falling 16.3 per cent to $498 million on a big jump in fuel costs.

As part of the new changes, operation manuals will also be made digital, and “alternative packaging” is set to replace single-use plastics.

The company would also recycle staff uniforms and compost or donate more food.

Qantas will launch a fresh $305 million buyback despite first-half profit falling 16.3 per cent to $498 million on a big jump in fuel costs. Picture: Supplied

“In the process of carrying 50 million people each year, we deal with more than 30,000 tonnes of waste. That’s the same weight as about 80 747 jumbos,” Mr Joyce said.

“It is quite literally a waste, and we have a responsibility to our customers, shareholders and the community to reduce it.

“We’ve already removed plastic wrapping on our pyjamas and headsets, as well as plastic straws. Even plastic Frequent Flyer cards are going digital.

“It adds up to millions of items a year because of our scale, and there’s a lot more we can do.”

Mr Joyce conceded it was challenging to eradicate waste entirely in any industry, but added “avoidable waste should no longer be an acceptable by-product of how we do business”.

“This isn’t just the right thing to do, it is good for business and will put us ahead of legislative requirements in the various countries we operate in where there is an end-date on various single-use plastics,” he said.

Mr Joyce anticipated a strong second half profit result. Picture: Daniel Leal-Olivas/AFP

Qantas Group will move to a digital system, ditching paper boarding passes entirely. Picture: Andreas Smetana

The $416 million increase in the airline’s fuel bill hit the bottom line but Qantas Domestic, Jetstar Domestic and Qantas Loyalty all reported record results and overall revenue rose 5.8 per cent to $9.2 billion.

However, Qantas expects fuel cost growth to moderate in the second half, falling from 27 per cent in the six months to December 31 to 21 per cent cent over the full year.

“Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could,” chief executive Alan Joyce said.

“That’s easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that’s reflected in the segment results.”

As well as reduced fuel cost headwinds in the second half, the carrier predicts an improvement from the prior corresponding period with Easter falling within the school holidays this year.

“Competitor capacity growth has slowed internationally and is relatively flat domestically, and oil prices have declined from the peaks we saw late last year,” Mr Joyce said.

“These factors point to a strong second half and we expect to completely recover our increased fuel costs by the end of this financial year.”

Qantas raised its interim dividend from seven to 12 cents and launched a buyback that, once completed, will mean it has handed back $3.6 billion to shareholders since October 2015.

Originally published as Qantas to launch buyback despite fall in first-half profit