Qantas shares experienced a significant decline in afternoon trading on Thursday, triggered by investor reaction to the airline’s mixed first-half results. While the company’s first-half profit before tax of $1.45 billion exceeded expectations, international operations underperformed, contributing to the negative market sentiment. Qantas is Australia’s largest airline, operating domestic and international services. It also offers freight and logistics solutions.
According to Citi analyst Samuel Seow, domestic earnings before interest and tax aligned with forecasts, reaching $676 million. This was bolstered by a 2 per cent increase in domestic revenue per available seat kilometre and a 4 per cent rise in capacity. However, international EBIT fell short at $300 million, compared to a consensus of $344 million. This shortfall stemmed from increased wages and investment expenses, with revenue per available seat kilometre remaining largely consistent but operating margin decreasing by 90 basis points.
Seow noted that capital management was revised upwards to approximately $450 million. The base dividend was increased to $300 million from $250 million, and the company announced a $150 million share buyback. EToro market analyst Josh Gilbert highlighted concerns regarding demand, stating that Qantas has reduced planned domestic capacity growth due to weaker-than-anticipated corporate demand.
Gilbert emphasised the importance of closely monitoring corporate travel, as it has traditionally provided higher margins and served as a reliable indicator of broader economic confidence. Shares in Qantas were last trading down by 8.5 per cent following the results announcement.
