Qantas Airways has posted a $2.1bn annual underlying profit – down 16% from last year’s record result – amid a surge in demand for budget Jetstar fares and mounting public anger at its service and ticket policies.
Australia’s biggest airline said bookings and travel demand remained stable across its flying brands, although moderating air fares had eroded profits, especially on international flights.
The Qantas chief executive, Vanessa Hudson, said on Thursday the airline was using its strong balance sheet to renew its fleet.
“These investments come at a time when Australians are continuing to prioritise travel over other spending categories, with intention to travel over the next 12 months remaining high,” Hudson said.
Qantas’s profits fell from last year’s record highs but the financials were still strong on a historical basis.
The airline’s return-on-invested-capital measurement, which tracks how well a company generates profits, was now at 57.9%. Before the pandemic, it was usually less than 20%.
The company accounts show that earnings fell significantly in Qantas’s international business, which generated $556m in 2023-24, down from $906m a year ago when demand was surging, capacity lower and fares higher. The Qantas domestic business generated $1.06bn in earnings, down from $1.27bn the prior year.
However, Jetstar recorded a 23% increase in earnings, from $404m to $497m.
Hudson said Jetstar’s strong performance was due to a surge in demand of holidaymakers seeking cheaper air fares.
“We know that many of our customers are feeling the pressure of cost of living, and that’s the role that Jetstar has in this market, which is actually to bring the lowest fares, both domestically and internationally.”
The results came after the government’s landmark aviation white paper, released on Monday, did not commit to a compensation scheme entitling passengers to cash for delayed and cancelled flights.
Instead, the government left the door open for an interim airline ombudsman to make the decision, which will have the power to include such compensation entitlements as they draft an upcoming charter of rights for air passengers.
On Thursday, Hudson backed the argument of the transport minister, Catherine King, who said she feared such a scheme could lead to airlines baking in the expected cost of compensation payouts into their operations and increase base air fares accordingly.
Asked if Qantas would be lobbying the interim ombudsperson against pushing ahead with a compensation scheme, Hudson said the airline was opposed to a compensation scheme, and that it held itself to a higher standard.
“There are going to be times where there are disruptions … and so communication and managing customers in those moments will always be something that we focus on and drive ourselves to get better,” Hudson said.
“We want to regulate ourselves, I suppose, is what I’m saying in the first instance. We have seen customer satisfaction across the board in complaints and also complaint resolution go up.”
Hudson also defended progress of the mammoth task of repairing Qantas’ reputation after a damaging few years, despite its own brand reputation metric scoring the airline 67/100 in July, up from 51/100 in September 2023. She said Qantas’ peak reputation score, before recent sagas engulfed the airline, had only ever reached 80/100.
“Our ambition is to get back to being the best, and that pride in the national carrier, and so we feel really confident in the momentum that we’ve got behind that. But there is still a lot more to do.”
The volatile financial year included a decision by the former chief executive Alan Joyce to bring forward his exit date as the airline faced mounting public anger at poor service and refund policies.
Qantas also struck a deal with the competition regulator to pay a $100m penalty and pay $20m to customers in compensation, after conceding it misled consumers by selling tickets for thousands of flights it had already cancelled.
Its annual results revealed Qantas spent $8m on legal and other costs on the proceedings with the competition watchdog, which included its controversial legal defence that it doesn’t sell customers tickets to any particular flight, but rather a “bundle of rights”.
The airline also lost its high court bid to overturn a ruling that it illegally outsourced 1,700 ground handler jobs. It increased its provision by $70m in its accounts as it awaits a ruling on the compensation bill.
When those costs are included in its results, shown in the statutory profit figures, Qantas’s profit was down more than 28% over the year to $1.25bn.
Qantas’ chief financial officer, Rob Marcolina, on Thursday acknowledged the provision for the outsourcing payout was not final and could ultimately be larger.
Previously, the Transport Workers’ Union has spoken in terms of remedies exceeding $100m.
