Qantas rewards staff and customers ahead of investors after landing $1.7b profit

Qantas rewards staff and customers ahead of investors after landing $1.7b profit

Photo credit: Troy Mortier via Unsplash

Qantas Group (ASX: QAN) has posted a bottom-line profit of $1.74 billion for FY23, the airline’s first full-year profit since the pandemic hit, announcing plans to share the rewards with staff and customers ahead of dividends for shareholders.

The result, which chips away at the company’s $7 billion in accumulated losses over the past three financial years, has been described by CEO Alan Joyce as a ‘remarkable turnaround, three years in the making’.

“And it’s been hard,” Joyce says. “From being 11 weeks shy of insolvency, to a challenging return to flying across the industry, to finally getting back to leading domestic operational performance. It’s an absolute credit to the resilience and hard work of our people, the patience and understanding of our customers, and the support of our shareholders.”

Qantas recorded an underlying profit before tax of $2.47 billion, up from a $1.85 billion loss in FY22, as revenue more than doubled to $19.8 billion.

The buoyant result has led Qantas to announce that it has set aside $340 million to reward its 21,000 employees with bonuses, including the awarding of up to 1,000 Qantas shares each, worth up to $6,000, and staff travel credits of $500 each. This is on top of a $5,000 cash payment to eligible employees as new enterprise agreements are finalised.

“Our people have done a superb job under very difficult circumstances,” Joyce says.

Qantas Frequent Flyer customers will also share in more than a billion bonus points to thank them for their support.

The group says it has added an extra one million Frequent Flyers to boost the program to 15.2 million members, while the Qantas Business Rewards program has grown 19 per cent and now counts one-in-five of Australia's small-to-medium enterprises as members. 

While the company has declared its $1 billion COVID recovery plan completed, Qantas concedes there is still some work to be done to get its customer satisfaction levels back to pre-pandemic levels.

“Flight delays and cancellations have largely returned to pre-COVID levels and we’ve shifted from heavy losses to a strong profit and pipeline of investment worth billions of dollars,” Joyce says. 

 “We safely flew almost 70 billion more seat kilometres and doubled the number of people we carried to 46 million compared to the year before. Travel demand is incredibly robust and we’ve taken delivery of more aircraft and opened up new routes to help meet it.

“The data shows customer satisfaction has improved significantly and we’re constantly working to deliver great travel experiences.”

Joyce says Qantas has been the ‘most on-time major domestic airline for 11 out of 12 months’.

“That’s the biggest lead we’ve ever had over our main competitor, which Jetstar has also overtaken,” he says. 

Qantas has placed an order for 24 widebody aircraft, comprising 12 Boeing 787s and 12 Airbus A350s, with the aircraft set for delivery in FY27. The jets will be introduced to the Qantas fleet over the ensuing decade to replace the bulk of the current A330 fleet.

While Qantas is not yet paying dividends, the company says it is rewarding shareholders through a $500 million on-market share buyback.

Operationally, Qantas domestic services, including QantasLink and Jetstar, increased flying to 103 per cent of pre-COVID levels by the end of the second half of FY23. Strong demand from leisure and business travel helped the company deliver underlying EBIT of $1.5 billion for this division.

International flights have risen from 54 per cent of pre-COVID levels to 81 per cent over the period, driving underlying EBIT to $1.1 billion, boosted by demand for premium cabins.

While airfares peaked in the second quarter of FY23, Qantas says prices eased in the second half by about 12 per cent. In inflation-adjusted terms, Qantas says domestic fares are now 4 per cent higher than pre-COVID levels and international fares are 10 per cent higher.

In his last full-year profit announcement ahead of retiring as Qantas CEO in November, Joyce says he is leaving the airline on ‘very solid ground’.

“Our financial position is the strongest it’s ever been,” Joyce says.

“We’ve taken $1 billion in costs out and there’s been a structural change to our earnings to deliver a new level of profitability.  

“Our balance sheet is the strongest it’s been in decades. Put simply, we can afford to invest and grow – especially in new aircraft – while still delivering returns to shareholders. And I know that from November, Vanessa will be a very safe pair of hands to lead all of this forward.”

Qantas announced in May that chief financial officer Vanessa Hudson will be promoted to CEO following Joyce’s retirement.

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