Qantas half-year net profit jumps 18pc, announces share buyback

Qantas says its underlying interim profit climbed 15pc to a record $976m, despite rising fuel costs, as it rewards shareholders.

A 0antas Airbus 380 over Sydney. Pic: Qantas

Qantas has posted a record, underlying $976 million half-year profit despite rising fuel costs.

Amid concerns of a pilot shortage, Qantas has also announced it will set up a formalised pilot academy that the carrier hopes could become one of the biggest in the southern hemisphere, training up to 500 pilots a year.

The marquee Australian carrier (QAN) reported this morning that its underlying profit before tax — a measure that strips out one-offs — was up 15 per cent for the six months to December 31 2017. Statutory profit before tax was $857m for the period.

Qantas said its said its statutory net profit for the half was $607 million — up 18 per cent — while revenue rose by 6 per cent to nearly $8.7 billion.

Qantas chief executive Alan Joyce said the result “beats our previous first half record, set in 2016”.

“And it comes in the face of some challenges — higher fuel costs, a competitive domestic market and international capacity growth.”

The fuel bill for the 2018 financial year is expected to come in at $3.24 billion, compared to $3.04bn the year prior.

The flagship carrier also announced another $500m will be returned to shareholders, comprised of an on-market buyback of up to $378m and 7 cents per share in unfranked dividend.

Mr Joyce said there was “a lot of momentum behind us”.

“We’re vigilant about maintaining that momentum and we’re confident about the future it allows us to build,” Mr Joyce said.

“Today’s result comes from investing in areas that provide margin growth and a network strategy that makes sure we have the right aircraft on the right route.”

The domestic division — which includes both Qantas and Jetstar’s domestic routes --- reported an underlying earnings before interest and tax of $652m. Of that, Qantas Domestic was responsible for $447m, which is a 20 per cent rise, with the resources sector providing “modest” growth for the first time in years.

Qantas International has posted a lower underlying EBIT of $222m — a 5.5 per cent fall — though overall revenue was up by 7.3 per cent because of more capacity and because it filled more seats.

“Qantas International faced the challenges of rising fuel price and more seats in the market,” Mr Joyce said, but added that the unit “largely held its own”.

For the booming loyalty area that is now run by Olivia Wirth after the resignation of Jayne Hrdlicka, profit was up 1.7 per cent to $184m.

The results again highlight just how much of a turnaround Qantas has made since its $2.8 billion full-year net loss detailed in 2014.

The company has cut its cost base, including by laying off staff, turned to lucrative markets such as China, and gotten away from loss-making routes.

Last week, Mr Joyce indicated that the airline would probably start paying corporate tax again next year.

Last week, a report by S & P Global Ratings said that “investment in new aircraft may coincide with the resumption of company tax payments”, although the carrier insisted its ability to meet its long-term capital expenditure needs was “clear”.