Qantas Airways Limited (ASX: QAN) shares will be on watch this morning after the airline operator released its FY 2024 results.
Let's see what the Flying Kangaroo reported for the year.
- Revenue up 10.7% to $21.9 billion
- Underlying profit before tax down 16% to $2.08 billion
- Statutory profit after tax down 28% to $1.25 billion
- $400 million on-market share buy-back
What happened in FY 2024?
For the 12 months ended 30 June, Qantas reported a 10.7% increase in revenue to $21.9 billion but a 16% decline in underlying profit before tax to $2.08 billion. The company's weaker earnings were due to its Qantas Domestic and Qantas International businesses.
Qantas Domestic reported a 16% decline in underlying EBIT to $1,063 million in FY 2024, whereas Qantas International posted a 39% decline to $556 million. Management blamed this on moderating fares due to the return of market capacity, an increase in spending on customer initiatives, and lower freight revenue.
This offset strong performances from the Jetstar Group and Qantas Loyalty businesses. The company revealed that Jetstar Group delivered a 23% increase in underlying EBIT to $497 million and Qantas Loyalty posted a 13% lift in underlying EBIT to $511 million.
This ultimately led to Qantas recording a 16% decline in underlying net profit before tax to $2.08 billion. The good news is that this was bang in line with consensus estimates for FY 2024.
More good news is that despite its softer earnings, Qantas isn't holding back on shareholder returns. It has announced a $400 million on-market share buy-back this morning. This will take place through the first half of FY 2025.
Management commentary
Qantas' CEO, Vanessa Hudson, appeared to be pleased with the company's performance. She said:
This result shows the underlying strength of the Group's integrated portfolio. Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travellers and saw the benefits from its new aircraft. The introduction of Classic Plus, with millions of frequent flyer seats, helped drive member engagement and strong earnings for Qantas Loyalty.
Our strong financial performance and balance sheet will allow us to continue to invest in our largest ever fleet renewal program, which will benefit our customers and people, as well as delivering shareholder returns. 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.
Outlook
Qantas advised that it is seeing stable travel demand across its portfolio with positive revenue momentum heading into first half of FY 2025.
Group Domestic unit revenue is expected to increase by 2% to 4% in the first half of the financial year compared to the previous year.
However, Group International unit revenue is expected to fall 7% to 10% over the same period as market capacity continues to restore. Positively, management believes Group International unit revenue will turn positive in the fourth quarter compared to the prior corresponding period.
Net freight revenue in first half is expected to be $20 million to $40 million higher compared to the first half of last year.
