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QAN 
Qantas Airways Limited 
ASX

Qantas Group HY25 Results Investor Presentations

Sentiment:
 HY25 Investor Presentation
 26 February 2025 4:33 PM

Qantas Group reports a strong first half of FY25 with an underlying profit before tax of $1.385 billion, driven by solid performance across its portfolio and continued investments in customers and fleet renewal.

Delay expected
  OEM production process continues to be challenged by supply chain disruption (incl. seat suppliers), with the Group incurring minor aircraft delivery delays. 

Summary
  • Qantas Group's underlying profit before tax for 1H25 reached $1.385 billion.
  • Operating cash flow was $2.1 billion.
  • Net debt stood at $4.1 billion, within the target range of $4.7 to $5.8 billion for FY25.
  • The group completed $431 million in share buy-backs.
  • Underlying earnings per share (EPS) were 63 cents.
  • Statutory profit after tax was $923 million.
  • The airline saw a 4 percentage point uplift in reputation score and significant improvements in Net Promoter Scores (NPS) for both Qantas and Jetstar.
  • Approximately one-third of Jetstar fares were booked for under $100.
  • The company took delivery of 16 aircraft, including 11 new ones.
  • Qantas Loyalty reported 11% growth in active members.
  • The group domestic margin was 17%, while the international margin was 8% and Qantas Loyalty margin was 19%.
Sentiment

Score: 7

Explanation: The document presents a positive outlook with strong financial results and strategic investments. However, it also acknowledges challenges such as rising costs and supply chain disruptions, resulting in a moderately positive sentiment.

Positives
  • Strong underlying performance across the group's portfolio.
  • Significant operating cash flow of $2.1 billion.
  • Net debt is well-managed within the target range.
  • Completed share buy-backs, returning capital to shareholders.
  • Improved reputation and customer satisfaction scores.
  • Fleet investment with the delivery of new, more efficient aircraft.
  • Growth in Qantas Loyalty program membership.
  • Strong domestic performance with a 17% margin.
  • Successful fleet rollover for Qantas Freight.
Negatives
  • RASK contraction of 4% in international markets, although performing ahead of expectations.
  • Engineering-related aircraft consumables and part costs are escalating above inflation.
  • Impact of 'Same Job Same Pay' agreement on cabin crew costs.
  • Tight supply chain for aircraft parts driving up engineering costs.
  • Jetstar Asia is challenged with high market capacity impacting revenue and supplier cost increases.
Risks
  • Economic and geopolitical uncertainties could impact global market conditions and demand.
  • Legal, technological, and regulatory risks could affect future performance.
  • Global supply chain constraints may continue to impact costs and operations.
  • Geopolitical tensions impacting flight paths.
  • USD strength impacting costs.
Future Outlook

Qantas expects Group Domestic RASK to increase 3-5% and Group International RASK to be flat. Qantas Loyalty Underlying EBIT is expected to grow ~10% in FY25. Net Debt is expected to be at or below the middle of the forecast Net Debt Target Range of $4.7 $5.8b for FY25.

Management Comments
  • Maintaining financial strength means we can invest in our overhaul programs, customers.
Industry Context

The airline industry is currently experiencing strong demand, but also faces challenges such as rising costs, supply chain disruptions, and geopolitical tensions. Qantas' results reflect these trends, with strong revenue growth offset by increased expenses. The company's investments in fleet renewal and customer experience are aimed at maintaining a competitive advantage in this environment.

Comparison to Industry Standards
  • Qantas' performance can be compared to other major airlines such as Singapore Airlines, Emirates, and Delta Air Lines.
  • Singapore Airlines reported a record first-half profit, benefiting from strong passenger demand and high yields.
  • Emirates has also seen a significant rebound in profitability as international travel recovers.
  • Delta Air Lines has focused on operational reliability and customer service to drive revenue growth.
  • Qantas' focus on premium cabins and loyalty programs aligns with strategies employed by these airlines to attract high-value customers.
  • The company's fleet renewal program is similar to initiatives undertaken by other airlines to improve fuel efficiency and reduce emissions.
Stakeholder Impact
  • Shareholders benefit from strong profitability and share buy-backs.
  • Employees benefit from investments in training and development.
  • Customers benefit from improved service, new aircraft, and enhanced loyalty programs.
  • Suppliers may face pressure to manage costs and ensure timely delivery of goods and services.
  • Creditors are reassured by the company's strong balance sheet and liquidity position.
Next Steps
  • Continue fleet renewal program with new aircraft deliveries.
  • Expand Qantas International Wi-Fi activation.
  • Open new Adelaide Business Lounge and Chairmans Lounge.
  • Focus on transformation initiatives to offset CPI increases.
  • Manage the impact of USD strength through hedging and network flexibility.
Key Dates
  • 31 December 2024: End of the half year period for which results are reported.
  • 27 February 2025: Date of the investor presentation.
  • March 2025: Qantas International Wi-Fi activation in South East Asia phasing from this date.
  • Mid 2025: Qantas International Wi-Fi activation in Tasman from this date.
  • May 2025: New Adelaide Business Lounge and Chairmans Lounge open from this date.
  • 2026: Qantas 737 cabin refresh commencing.
  • 2026: Jetstar 787 cabin refresh program with first aircraft into service from this date.
Keywords
QAN 
Qantas Airways Limited 
ASX
Sector: Transportation
 
Filings with Classifications
Worse than expected
10 June 2025 7:15 PM
Strategic Restructure Announcement
  • Jetstar Asia was expected to post a $35 million underlying EBIT loss for the financial year prior to the closure decision, indicating poor financial performance.
  • The performance of Jetstar Asia deteriorated further in the second half, with an expected underlying EBIT loss of $25 million.
  • The closure will result in approximately $175 million in one-off redundancy, restructuring, and non-cash costs, impacting the Group's financials.
  • Group International capacity for 2H25 is expected to grow by 9 percent, which is 3 percent lower than previously guided, partly due to industrial action.
Delay expected
10 June 2025 7:15 PM
Strategic Restructure Announcement
  • Group International capacity for the second half of FY25 is expected to grow by 9 percent, which is 3 percent lower than previously guided due to the impact of industrial action on Qantas Finnair wet lease.
Delay expected
26 February 2025 4:33 PM
HY25 Investor Presentation
  • OEM production process continues to be challenged by supply chain disruption (incl. seat suppliers), with the Group incurring minor aircraft delivery delays.
Delay expected
26 February 2025 4:29 PM
Half Year Results
  • The arrival of Qantas's first A321XLR is now expected in June.
Better than expected
26 February 2025 4:29 PM
Half Year Results
  • The results were better than expected due to strong travel demand and effective cost management.
Delay expected
11 September 2024 7:57 PM
Annual Report
  • Delays in the exit of the 717 fleet and entry into service of the A220 fleet impacted Qantas Domestic's performance.
Capital raise
11 September 2024 7:57 PM
Annual Report
  • The company announced a $400 million on-market share buy-back to distribute surplus capital.
Worse than expected
11 September 2024 7:57 PM
Annual Report
  • While Qantas reported a statutory profit after tax, the underlying profit before tax decreased significantly compared to the previous year, indicating that the company's performance was worse than expected despite the overall positive financial results.
Worse than expected
7 August 2024 6:38 PM
Update on Executive Remuneration
  • The document details significant reductions in executive compensation and penalties due to reputational damage and customer service failures, indicating worse than expected outcomes for the company.
Delay expected
5 May 2024 6:03 PM
Media Release
  • Qantas did not promptly notify existing ticketholders that their flights had been cancelled.
Worse than expected
5 May 2024 6:03 PM
Media Release
  • Qantas admitted to misleading conduct over a longer period than initially alleged, resulting in a larger number of affected customers and a potentially significant financial penalty.
Worse than expected
5 May 2024 6:00 PM
Settlement Announcement
  • The document indicates worse than expected results due to the $100 million civil penalty and $20 million remediation program, stemming from issues with flight cancellation processes.

Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.