Qantas' strong results defy Flight Centre's oil price fears

Qantas' strong results defy Flight Centre's oil price fears

Earlier this week travel agency Flight Centre's investors panicked for a range of reasons, with shares plummeting more than 10 per cent in a day.

Flight Centre managing director Graham Turner warned that lower profits from Flight Centre's Australian business, coupled with rising oil prices hitting airfares, could negatively affect financial performance.

But Qantas' outlook statements posted in its first quarter results this morning do not appear too fazed by these macroeconomic challenges. 

Not only did Qantas achieve record levels of revenue for the first quarter of FY19, up 6.3 per cent compared to the same time last year, but the company seems incredibly optimistic about the future.

Even though the cost of oil has risen dramatically from $3.23 billion in FY18 to an expected $4.09 billion this financial year, the airline does not seem overly worried. In fact, Qantas has even announced a significant investment in a new Singapore lounge.

Qantas CEO Alan Joyce says the market is "positive" right now, but shares in the company nonetheless were down by more than 4 per cent $5.39 at 13:30 AEDT.

"Our record passenger revenue performance for the first quarter meant that we were able to substantially recover higher fuel prices," says Joyce.

"Market demand for travel remains fundamentally strong and we're seeing some wind-back of competitor capacity growth."

"When you look across our portfolio, we have a number of factors that help us manage cyclical headwinds impacting the sector. We have a leading position in the domestic market, structural advantages in our international businesses and diversified earnings from Loyalty."

"Based on the value of forward bookings and broader market conditions, we're confident in our ability to manage higher fuel costs and keep investing, while still delivering strong net free cash flow and long-term shareholder value."

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