Qantas takes $55m profit hit
The carrier on Thursday said first-quarter revenue rose 1.8 per cent to a record $4.56 billion as a 4.4 per cent jump in international revenue and strong growth at Qantas Loyalty more than offset a drop in demand for domestic leisure.
But a drop in demand following pro-democracy protests in Hong Kong will hit first-half profit by $25 million, with Qantas aiming to minimise any second-half impact with capacity reduction.
Meanwhile, deteriorating global trade conditions have reduced freight demand and will cut full-year profit by between $25 million and $30 million. With currency movements set to add $25 million to non-fuel costs in the first half, Qantas said it would increase focus on cost reduction initiatives in the second half.
"Given the slower revenue environment, we have a strong focus on cost reduction to make sure we keep delivering on our transformation targets," chief executive Alan Joyce said.
"Part of this is about taking opportunities to reduce complexity and constantly improving how efficiently we manage our business."
Qantas - which in August reported a 17 per cent drop in FY19 underlying profit to $1.302 billion on higher fuel costs and a weaker Aussie dollar - said first-quarter domestic revenue fell 0.9 per cent on the prior corresponding period. That came despite strengthening resources industry traffic and was largely due to a 2.6 per cent fall at Jetstar.
Nonetheless, its international business performed strongly.
"The group continues to perform well, with strength in key parts of our portfolio helping to offset softness in other areas," Mr Joyce said.
"Qantas International has seen significant upside from competitor capacity contracting more than anticipated, which is expected to continue for at least the remainder of the first half."
Mr Joyce will speak to investors at Qantas's annual general meeting in Adelaide on Friday.