Qantas offloads Melbourne Airport terminal for $355m, on track for record annual revenue

Qantas says it’s on course for a record revenue despite a late Easter trimming first-quarter passenger numbers.

A Qantas A380 makes it way to the runway for takeoff at Melbourne’s Tullamarine Airport. The airline today announced the sale of its Melbourne Airport terminal for $355m. Picture: Nicole Garmston

Qantas has blamed the late Easter holidays for a slight fall in passenger numbers in the first three months of the year, compared to the same period last year.

The third quarter trading update showed Qantas and Jetstar carried 13.6 million people in the period from January 1 to March 31, compared to 13.7 million in 2018.

The figures were impacted by the timing of Easter, which fell in the fourth quarter, whereas last year the holiday period began in the third quarter.

Revenue was up 2.3 per cent for the quarter to $4.4 billion, helped by a 0.5 per cent increase in fares.

Group CEO Alan Joyce said the third quarter figures showed the national carrier remained in a fundamentally strong position.

“The group continues to perform well with strength in key parts of our portfolio helping to hedge against headwinds in other areas,” Mr Joyce said.

The highlight was the performance of Qantas International which saw passenger numbers lift 4.6 per cent and revenue per seat increase 1.7 per cent.

Mr Joyce said the outlook for the international division was positive and continued to improve.

“The long-term fleet and network changes we’ve made are delivering revenue growth and total market capacity in the fourth quarter is contracting in response to higher fuel demands,” Mr Joyce said.

Domestically, the picture was not so bright due to soften in parts of the corporate market, particularly financial services, telecommunications and some areas of construction, he said.

“Growth is also slowing in the small business market,” said Mr Joyce.

“We’ll have a better sense of how temporary this is after the federal election which always has a dampening impact on travel demand.”

The resources sector was continuing to grow and leisure demand was very strong over Easter and was holding up well, he added.

“Overall we expect the group to achieve a record level of revenue this financial year and strong cash flow as we continue to deliver for shareholders, customers and our people,” Mr Joyce said.

Qantas also announced the sale of its Melbourne Airport terminal for $355m, of which $276m would be received in cash this financial year.

A new ten-year lease arrangement had been reached and Mr Joyce acknowledged the “commercially rational approach” taken by Melbourne Airport to make the deal possible.

The sale means Qantas no longer owns any terminals at major airports on the eastern seaboard, having previously offloaded its Brisbane and Sydney Airport terminals.

Melbourne Airport chief executive Lyell Strambi said the deal was the result of the airport’s strong relationship and history with Qantas.

“Melbourne Airport will create an enhanced retail offering for passengers travelling through T1 which will reflect the best food and shopping that Melbourne has to offer,” Mr Strambi said.