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Qantas Sees Weak Leisure, Business Markets as Profit Falls

Qantas Sees Sluggish Leisure, Business Markets as Profit Falls

(Bloomberg) -- Qantas Airways Ltd. said the leisure travel market is weak and demand from corporate customers is flat as the airline reported lower full-year profit.

  • “Looking ahead, the overall market remains mixed,” Chief Executive Officer Alan Joyce said in a statement Thursday. Full-year underlying profit before tax fell 17% to A$1.3 billion ($882 million) as higher fuel costs bit.

Key Insights

  • The outlook suggests Qantas is facing challenges on several fronts: higher fuel costs, and a mixed bag of demand in the airline’s key domestic market.
  • While Qantas said the outlook is brighter for premium international travel demand, that division doesn’t contribute as much profit as the carrier’s Australian business.
  • Despite the mixed forecast, Joyce said the company is feeling confident about this financial year. He said earlier this month there’s plenty of opportunities for revenue growth at home, even if capacity isn’t increasing.
  • Qantas felt the impact from Hong Kong protests, with demand for flights to the city falling as much as 10%. The airline plans to compensate by operating smaller aircraft on those flights for the next few months.

Market Reaction

  • Qantas shares were down 0.7% as of 10:27 a.m. in Sydney, erasing an earlier gain of as much as 2.1%. The stock is down 0.7% for the year.

Read More

  • To see what the market expected from Qantas earnings, click here.
  • Click here for Qantas regulatory filings.
  • To read Bloomberg stories on Qantas, click here.

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Jeff Sutherland

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