Qantas Profit Slumps to A$2.06B as Middle East War Hits Fuel Costs
Synopsis
The Australian flag carrier reported a 13.8% decline in full-year underlying pre-tax profit, with jet fuel prices surging amid the Middle East conflict and eroding the benefit of higher fares.
Qantas Airways will begin retiring its Airbus A380 superjumbos in 2028, bringing forward plans to replace the ageing aircraft as rising maintenance costs and operational disruptions weigh on the economics of keeping the out-of-production jets in service.
The Australian flag carrier said it is in discussions with Airbus and Boeing about converting 20 aircraft options into firm orders for A350s and 787s from 2030.
The additional aircraft would replace the A380s earlier than previously planned and are separate from Qantas’ Project Sunrise programme, under which 12 specially configured A350-1000s will begin arriving next year for non-stop Sydney-London and Sydney-New York services.
Qantas CEO Vanessa Hudson said the A380s were becoming increasingly expensive to maintain as production of the aircraft had ended.
The carrier expects the cost of maintenance and disruptions associated with the superjumbos to rise over time.
Fuel Costs Weigh on Annual Profit
Qantas reported underlying profit before tax of A$2.06 billion for the year ended June 30, down 14% from the previous year but slightly above the Visible Alpha consensus estimate of A$2.00 billion.
Hudson said strong travel demand during much of the year was offset by a sharp increase in fuel costs linked to the Middle East conflict. Higher fuel expenses reduced second-half earnings by approximately A$420 million.
The airline responded by increasing fares, reducing domestic capacity and shifting aircraft towards stronger international routes. However, these measures only partly offset the impact of higher fuel prices.
Qantas expects net fuel costs to reach about A$3.6 billion in the first half of fiscal 2027, compared with A$2.6 billion in the six months ended December 2025.
Qantas Maintains Positive Revenue Outlook
Despite the cost pressures, Qantas expects domestic and international total unit revenue to grow between 8% and 10% in the first half of fiscal 2027. Domestic capacity is expected to fall 3% while international capacity is forecast to increase 2%.
The airline declared a final dividend of 19.8 Australian cents per share but scrapped its previously announced A$150 million share buyback which had not commenced.
Qantas shares rose 3% in early trading, reaching their highest level in a week as investors responded positively to the carrier’s revenue outlook and resilient travel demand.
Source: Reuters
Vishal is an experienced Editor at Inspirepreneur Magazine with key interests in artificial intelligence, eCommerce, entrepreneurship, lifestyle and startup sector. Prior to joining Inspirepreneur, he was a Content Writer cum Correspondent at Siliconindia Magazine, where he worked on Company Profiles, Cover Stories, Executive Profiles, Feature Articles and Thought Leadership content.
