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After navigating years of turmoil and strengthening its balance sheet, Qantas Group (ASX: QAN) is paying its first dividend to shareholders in almost six years as the national carrier reported an underlying profit of $1.39 billion for the first half of FY25.
The underlying pre-tax profit is up 11 per cent compared to a year ago as the group’s domestic and international operations under the Qantas and Jetstar livery carried almost 10 per cent more customers in the six months to the end of December.
With the statutory profit after tax up 6 per cent to $923 million, Qantas has decided to carve off $400 million to distribute to shareholders in the form of a $250 million interim dividend and a $150 million special dividend – for a combined payout of 26.4c per share.
This is the first dividend for long-suffering Qantas shareholders since FY19, representing almost half of the group’s underlying earnings per share of 63c.
Qantas recorded a 9 per cent increase in revenue to $12.13 billion during the half year, aided by a strong performance from premium and corporate travel at Qantas and a record haul of passengers for Jetstar with the company revealing that one in three passengers on its low-cost subsidiary flew for less than $100.
“The group’s performance highlights the benefits of having both a premium and a low fares airline and a strong loyalty program,” says Qantas CEO Vanessa Hudson.
“With a growing fleet of new aircraft, Jetstar went from strength to strength delivering a better experience for customers and an improved financial performance. Importantly, Jetstar was able to help more Australians take a holiday for less.”
Qantas upgraded its fleet with 11 new aircraft and five mid-life aircraft arriving during the half year, with Jetstar’s new Airbus A321LRs and A320neos growing to a fleet of 21 and delivering “a step change in fuel efficiency, network growth and customer satisfaction”.
After a torrid few years that saw Qantas in the reputational doldrums with passengers - ultimately leading to a $100 million court-ordered penalty for misleading thousands of consumers over cancelled flights - the airline reported that customer satisfaction has improved across all segments.
However, Qantas notes that “there is more progress to be made”.
Qantas says its fleet renewal is also under way with five A220s now in operation and “performing well”, although the benefits of the new fleet were outweighed by costs associated with the transitioning to the new aircraft.
“The investment in new aircraft will be complemented by a significant cabin overhaul across existing aircraft to improve the flying experience for customers,” says the company.
Among the new investments in this area, Qantas plans to fit 42 of its Boeing 737 aircraft with new cabins including next generation business and economy seats and larger overhead lockers.
“We’re seeing progress from the investments we are making for our customers and people, but we know there’s more work to do to consistently deliver in the moments that matter,” says Hudson.
“This is a key part of rebuilding trust and continues to be our focus. Australians have always loved to travel and continue to prioritise it over other spending options.
“Looking forward, we continue to see intention to travel from leisure and corporate customers remaining high.”
The company has forecast solid revenue growth over the current half year for Qantas which, along with Jetstar, will benefit from fleet upgrades, including the arrival of the A321XLR in the next few months.
Demand for travel is expected to remain strong in the current half, led by domestic travel which is tipped to rise by 3 to 5 per cent, although international travel is expected to remain flat.
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