The Qantas Airways [ASX:QAN] share price took a on Thursday, even as the travel group revealed it had climbed back on top with a record underlying pre-tax profit of $1.42 billion over the past half year.
This is a huge improvement to last year’s results, when the pandemic forced the group into a $1.2 billion loss.
The latest result has hit the group’s top end of guidance, helped along by triple the revenue earned last year.
QAN’s share valuation ticked down 6.80% Thursday afternoon. The airline is still up 8% in its sector, and 13% up on its own metrics in the last 12 months, even after sliding 8% in the past month:
www.TradingView.com
Qantas posts its post-pandemic return to profit
Today, Qantas posted a record half year for underlying pre-tax profit to the tune of $1.42 billion — the top end of its forecasted guidance of $1.35–1.45 billion.
This was a huge achievement, particularly in the face of last year’s results when the company reported $1.2 billion in losses.
Revenue had tripled to $9.9 billion over the past six months, demonstrating the sheer magnitude in which travel demand is returning, even as inflation propels ticket prices to unseemly highs and inflationary pressure continues to bite.
Net debt had decreased to $2.4 billion, and statutory earnings per share saw shareholders receiving 53.9 cents each.
Qantas said domestic travel delivered underlying EBIT of $915 million, with bookings increasing from 86% of pre-COVID capacity in the second half of 2022.
Qantas’s domestic operations delivered $785 million and Jetstar $130 million, with margins of 22% and 11%, respectively.
Qantas CEO Alan Joyce stated:
‘This is a huge turnaround considering the massive losses we were facing just 12 months ago.
‘When we restructured the business at the start of COVID, it was to make sure we could bounce back quickly when travel returned. That’s effectively what’s happened, but it’s the strength of the demand that has driven such a strong result.’
QAN, ticket prices, revenue, and FY23
QAN celebrated its return to profitability today after three years and $7 billion in statutory losses caused by the pandemic.
The group found its balance sheet was supported by a consistence in strong travel demand, returning higher yields, and cost improvements from the group’s $1 billion COVID-19 recovery program.
The group managed a total operating margin of 16% despite hiked up fuel prices, which higher air fares compensated.
However, Citi pointed out that seating revenue may take a fall in the near future, which may compromise the group’s ability to churn the same level of profit, particularly as inflation continues to rise, pushing capital expenditure into tricky territory.
Qantas echoed this sentiment, claiming ticket prices are likely to moderate over the coming year.
That said, Qantas’s share price took a pummelling today, which could also have something to do with the on-market share buyback announced today.
The buyback has been scheduled to begin next month and is to target up to $500 million ordinary shares.
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