Qantas domestic revenue rebounds

Qantas has improved a key measure of domestic profitability, although its international arm still lags.

A Qantas 787-9 Dreamliner.

Qantas has quickly turned around a key measure of domestic profitability as sharp capacity cuts make their mark, although its international arm continues to lag in operating performance.

In its monthly update, the national carrier (QAN) said its group revenue per available seat kilometre (RASK) — a core profitability and efficiency measure — slipped again in May despite a swing to a higher domestic number.

The return to profitability with Jetstar and Qantas domestic represents a swift recovery from two months of falls, with the airline downgrading capacity guidance on April 18 in a push to boost returns.

The cuts ensured total domestic capacity for May was down 4.2 per cent on the prior corresponding period.

“As a result of these targeted capacity reductions, group domestic RASK recovered from the negative trends of March and April to be positive in the month of May,” the airline said.

Qantas added the positive performance continued through the month of June.

The performance at its international arm served as a sharp contrast as capacity rose and profitability weakened.

Qantas International capacity jumped 8.4 per cent on last year due to the introduction of new routes through the year, while Jetstar International capacity surged 13.2 per cent thanks to the use of larger plans on routes to Thailand and Bali.

The greater number of tickets needed to be sold has forced discounting in a competitive global environment, again making the international arm the laggard on profitability metrics.

For the year to date, group capacity has lifted 4.7 per cent, while group RASK is lower. The rebound in domestic RASK helped it return to the flatline for the current financial year, while international RASK remained lower, as has been the case since March.