Aviation

Qantas sets major environmental goals as profits hit by rising fuel price

Ali Coulton

Ali Coulton

Qantas has delivered a strong first half profit despite a $416 million (27 per cent) increase in its fuel bill.

Underlying Profit Before Tax was $780 million and Statutory Profit Before Tax was $735 million compared with the record first-half result in FY18 – a $179 million drop at the underlying level.

Reducing the gap between the increased fuel bill and fall in earnings shows that the Group succeeded in substantially recovering much of the higher fuel cost through a 5.7 per cent increase in unit revenue, which was helped by disciplined capacity management.

This strong revenue performance also helped the Group deal with a rise in non-fuel costs, including the impact of a weaker Australian Dollar and higher commission costs, to post record profits in its domestic flying business and Qantas Loyalty.

“We’re really pleased with how the business responded to the challenges and opportunities we saw in the half,” Qantas CEO Alan Joyce said.

“Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could. That’s easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that’s reflected in the segment results we’re reporting today.”

Alongside its half-yearly results, the airline announced an ambitious environmental program, aiming to become the world’s first airline to reuse, recycle and compost at least three-quarters of its waste to landfill by the end of 2021.

In the process of carrying 50 million people each year, Qantas, Jetstar and QantasLink generate more than 30,000 tonnes of waste – the equivalent weight of about eighty 747 aircraft.

Under the new program, more than 100 million single-use plastic items per annum will be removed from lounges and cabins by the end of 2020.

Examples of reduction measures include switching to alternative packaging, donating or composting food and increasing digitisation of paper-based products ranging from manuals to boarding passes.

“Looking ahead, we’re seeing strong forward bookings. Competitor capacity growth has slowed internationally and is relatively flat domestically. And oil prices have declined from the peaks we saw late last year,” Joyce said.

“These factors point to a strong second half and we expect to completely recover our increased fuel costs by the end of this financial year.

“We are mindful of potential signs of weakness in the broader economy and we’re always adjusting capacity to meet demand in individual markets – but overall revenue and yield indicators remain positive.

“Above all, the resilience we’ve built into the business gives us plenty of confidence about our performance going forward.”

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