Qantas profit falls 14% as fuel costs and Middle East conflict weigh on results

Qantas Group's underlying pre-tax profit fell 14% to A$2.1 billion for the year ending 30 June, the Australian carrier reported, even as revenue rose 7% to A$25.5 billion.

Group chief executive Vanessa Hudson described the year as containing two very different operating environments. Strong travel demand early in the fiscal year gave way to a sharp decline in business and consumer confidence during its final four months, as the Middle East conflict and broader economic uncertainty prompted large corporations and government bodies to tighten travel spending.

Fuel costs rose about 22% in the second half of the fiscal year, according to Hudson. The airline said it adjusted fares and applied other mitigations, but still absorbed a A$420 million impact tied to the conflict.

Passenger traffic across the group, which includes mainline Qantas and budget arm Jetstar, grew 3% for the full year, with total unit revenue up 3.6%. But the second half told a different story, particularly in domestic markets. Between January and March, Qantas and Jetstar had both expanded capacity by 5%, with traffic gains of 1% and 5% respectively.

By the following quarter, much of that momentum reversed. Qantas cut domestic capacity in the wake of the conflict and shifted some of it toward international routes instead.

Despite the volatility, the company said it remains confident that travel intentions will hold up for the remainder of the year, even as fuel prices are expected to stay elevated in the near term.