Qantas leaps to record H1 profit but fare moderation spooks investors

Australian flagship airline Qantas swung to a record first-half profit as appetite for travel grew faster than it could sell seats, but warned sky-high fares would moderate as it and competitors added more flights, sending its shares down 6%. The so-called "flying kangaroo" also said it was buying back A$500m ($340.85m) of shares as it declared a turnaround from the shock of initial COVID-19 lockdowns when it had cash to survive for just 11 weeks if it had not parked planes and stood down most of its staff without pay. The update reflects the precipice that airlines around the world are facing: raging demand from a population shaking off years of pandemic restriction has jacked up fares and profits, just as increasing mortgage payments, grocery prices and fuel bills start to curb spending power. It also gives a taste of the market that U.S. private equity firm Bain Capital must navigate if it proceeds with an initial public offering of domestic rival Virgin Australia this year. Regional rival Air New Zealand also reported a swing to profit in the first half ended Dec. 31 on Thursday, along with a muted outlook. Qantas CE Alan Joyce said cost of living pressures would hit discretionary spending "at some point" but so far the airline expected robust demand into mid-2024 at least. Revenue per available seat kilometre (RASK), which captures a combination of airfares and the percentage of seats filled, was 46% higher than in the first half of 2019 before the pandemic hit, the airline said in an analyst presentation.<br/>