Qantas has made a strong return to profitability after five consecutive half-year losses due to COVID-19 and is promising $40 million in wage increases.
Chief executive Alan Joyce says the carrier expects a "very strong" profit before tax of between $1.2 billion and $1.3b for the first half of 2022/23 - far more than the $201m to $867m that analysts were expecting.
"It's a remarkable turnaround that comes after $7b accumulated losses since 2020," Mr Joyce told reporters on Thursday.
"The main drivers of this performance are strong travel demand, both domestically and internationally, the benefits of our recovery plan and our growth in market share compared with 2019."
Revenue for business travel was more than 100 per cent of pre-COVID levels and revenue from leisure travel is up 130 per cent from before the pandemic, he said.
"Inflation and interest rates haven't made a dent in people's need or desire to travel and the research shows it's a category consumers will prioritise ahead of others," Mr Joyce said.
RBC Capital Markets analyst Owen Birrell said in a research note that it was "a very strong result that should be well received by the market".
And it was, with Qantas shares up 11.8 per cent to $5.78 at 1pm AEDT, the highest level since January 2020.
Mr Joyce said Qantas would boost the pay of 20,000 of its employees, including $10,000 in bonuses in cash and shares, and add 10,000 workers' friends and family as beneficiaries of its staff travel program.
"For many of our people, this translates into a single-year pay increase of more than 10 per cent," he said.
"We know our people have done it tough, including long periods of stand-down and a two-year wage freeze."
This was on top of $200m in cash and share bonuses that Qantas announced in June, Mr Joyce said.
He said Qantas' operational performance was nearly what it was before COVID-19, despite September being affected by wet weather.
The rate of mishandled bags since September has been 6.0 per 1000 passengers, on par with what it was before the pandemic. Cancellation rates were 1.7 per cent in October, better than before the pandemic.
But "what's becoming clear is that delivering pre-COVID levels of service takes more than pre-COVID levels of resources", Mr Joyce said.
That was due to supply chain issues, he said, with Qantas needing to wait up to a week for spare parts that used to be delivered in half a day.
Qantas has also had to have more crew on standby in case of sick leave along, with up to 20 spare aircraft on the ground, he said.
The airline has set aside $200 million this financial year for expenses for the additional crew rosters, training and overtime.
Qantas, Jetstar and QantasLink also announced what they call the biggest combined domestic flights sale of the year, with one-way fares starting at $35 on Jetstar and $99 on Qantas.
The "mega sale" spanned 67 destinations across the country and involved one million seats, Qantas Group said.
Mr Joyce conceded that international fares were still high, as jet fuel is running 67 per cent more than it did before the pandemic.
But he said there were "still a lot of air fares out there that are very cheap - they are higher than what they were before COVID, but you'd expect that".
