The new Qantas chief executive, Vanessa Hudson, has handed down a $1.25bn half-year pretax profit in her first financial results leading the airline, and rewarded shareholders with a $400m buyback after a tumultuous period that unseated her predecessor.
The profit result was down 13% from last year’s record, but still well above pre-pandemic figures, and the airline remains flush with cash.
Qantas said fares and capacity had normalised, resulting in reduced revenue from passengers. However, travel demand remains strong underpinned by leisure, as well as rebounding business travel that is approaching pre-Covid levels.
The airline’s budget division, Jetstar, was one of the standouts in Qantas’s financial performance, with earnings from its Australian operations rising 35% to $175m in the six-month period.
The financial results are the first delivered under Hudson, who moved into the top role earlier than planned amid mounting criticism of her predecessor Alan Joyce.
Under Joyce, Qantas was heavily criticised for reducing capacity as post-pandemic travel demand spiked, leading to high ticket prices and huge profits for the airline.
There was also lingering pandemic-era anger over lost luggage and cancelled flights.
The airline is also defending accusations from the competition regulator that it advertised and sold tickets for thousands of flights it had already cancelled in its internal systems.
Qantas disclosed on Thursday that legal proceedings, if not resolved beforehand, are expected to be heard late this year.
Hudson also addressed the hundreds of millions of dollars in fines and compensation payouts the airline could face. In addition to the competition watchdog’s bid for $250m in fines in relation to the cancelled flights, compensation hearings over the illegal outsourcing of 1,700 ground handlers during the pandemic will take place in March.
Hudson insisted the potential large payouts would not distract the airline from continuing to invest in efforts to improve its customers’ experience and regaining public trust.
“With regard to those two cases, they’re working their way through court. There will be an outcome and we accept the fact that these are a part of what the courts are weighing up,” she said. “I’m not concerned that’s going to affect spending.”
Hudson said Qantas wanted to be “trusted to recover better than ever”.
“We are investing in putting more people in the contact centres so we can service and respond to customers as quickly as possible,” she told reporters in Sydney.
She also commended airline employees.
“Having your back is my number one focus, to make sure that you have what you need to deliver the best for our customers,” she said.
The reputation rebuild includes a decision by Qantas to begin proactively refunding customers with Covid credits. It still holds almost $500m in unclaimed credits.
Last year, hundreds of millions of dollars in Covid credits that Qantas held were set to expire, before the airline, in the face of intense scrutiny from customers and politicians, abolished the expiry deadline for all credits and vowed to offer cash refunds to some customers.
The half-year results show profit margins have compressed from last year, but Qantas still has enough spare cash to announce a $400m buy-back, which replaces a dividend.
Buybacks are typically used to return excess capital to investors and bolster a stock price. The airline’s net profit came in at $869m, down 13% from last year’s strong figures, and its capital expenditure is rising.
On Thursday the airline also announced the order of eight additional A321XLR aircraft, which will operate on Qantas’ domestic network. It took delivery of eight new and mid-life aircraft during the first half of the financial year, and a further 14 aircraft are scheduled to arrive before July, as part of a fleet renewal plan.
The board is also being renewed: former Telstra chairman John Mullen will become the new chair in July after Richard Goyder announced he would depart after a wave of criticism of Qantas’s corporate performance.
The Transport Workers Union, which maintains a combative relationship with Qantas and is leading the compensation case over the illegally outsourced ground handlers, said the carrier’s profit was “obscene” and act as “a reminder of the corporate greed that has turned Qantas into a husk of its former self”.
“There may be a billion bucks in the bank, but at what cost?” the TWU’s national secretary, Michael Kaine, said.
“The good name of the national carrier trashed, passengers price-gouged, and workers thrown on the scrap heap. It just goes to show that money is far from the only measure of a successful business.”
