Qantas Airways (ASX:QAN) has dropped to under $10/share right out the gates on Thursday morning after coming in under Australian market expectations – though Reuters did try to suggest it was a “beat” mid-morning – with its February earnings, where it posted $1.46 billion in 1H underlying profits.
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The Aussie airline’s international division was the weight; it banked a 6% fall in pre-tax earnings, to $463M (but, Jetstar Asia and Japan were excluded); “rising costs” for engineering, wages, and training to blame.
Conversely, Qantas saw a 5% rise in revenue for its domestic branch, and budget airline Jetstar saw a 38% jump in underlying operating profits.
The company is also navigating the “largest fleet renewal” in its history, which it said (at least slightly) impacted things for the report period.
“As we enter an exciting new era for the Qantas Group, our focus continues to be on delivering for our customers, employees and shareholders,” company chief Vanessa Hudson told shareholders after reporting.
“By consistently delivering strong growth, we’re able to continue investing in the largest fleet renewal in our history,” she continued.
“We’re already seeing the benefits from the next-generation aircraft that are flying, which, along with strong demand, our dual brand strategy and expanding loyalty business, helped us deliver another strong result.
“These new aircraft are not only improving the experience for our customers and opening up new opportunities; they’re also helping drive our financial performance.
“Around 60% of Jetstar’s increase in the half was driven by its new aircraft, through a combination of growth, new network opportunities, and then the redeployment of existing aircraft onto other routes.
“This gives us confidence… the benefits that will flow once Qantas’ new aircraft reach scale. We’ve already started to see an acceleration in deliveries, with six new aircraft in the half and a further 30 over the next 18 months.
“Some of these new aircraft will replace older aircraft, while some will support growth by opening up new routes, like the ultra-long range A350s.”
Alongside Feb earnings, Qantas also unveiled a major change to its frequent flyer program today, declaring them the “most significant changes to earning and retaining status since the program’s inception.”
(Funny timing for me, considering I just used some frequent flyer bonuses to get over to our HotCopper Perth HQ, where I’m working through to the weekend.)
Some of the standout updates include a permanent way to earn status credits on the ground, the chance for tiered members to roll over credits through years, and more lifetime milestones that subscribers can achieve.
“Our members have an incredible appetite for earning points, but we know they also place immense value on their status. Our most frequent flyers tell us that status retention is the single most important milestone as a member, with thousands achieving or retaining their tier every day,” Ms Hudson said.
The airline is also shuttering its “Points Club,” which “recognised members who mainly earn their Qantas Points on the ground through everyday spending.”
At time of writing, Qantas is now sitting at its lowest share price level in more than two months, with a -6.06% dump to midday in Sydney, leaving QAN shares at $10.05/ea. Sellers outstripped buyers by four-to-one.
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