Qantas shares slump despite $2.5b profit forecast, increased share buyback

Qantas has revealed it expects to post a record underlying profit of up to $2.48b this financial year and increased its on-market buyback by up to $100m, as the cost of fuel, and supply chain challenges the industry has grappled with continue to moderate. The group’s quarterly market update on Tuesday said it estimates an underlying profit before tax of between $2.43b and $2.48b this financial year. The forecast is close to $1b higher than its prior record result in 2018. It comes following an increase in flying activity and the return of the airline’s fleet of wide body jets which have been stored in the desert since the onset of the COVID-19 pandemic. Qantas CE Alan Joyce said the aviation supply chain has begun to stabilise after COVID-19 and doubled down on last week’s comments about an expected lowering of airfares. “We’re able to put some of the spare aircraft and crew we kept in reserve back in the schedule. That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers,” Joyce said. But Joyce warned there remains a sustained “mismatch” between supply and demand, particularly in international flying. This indicates airfares are likely to remain above pre-pandemic levels even if they continue to come down from their 15-year peak in December. The update said the group’s domestic capacity will exceed pre-COVID-19 levels by the end of this financial year and international capacity will reach 80% of pre-COVID levels in this period. Qantas said its local recovery was bolstered by an increase in flying between Sydney, Melbourne and Brisbane, dubbed the “Golden Triangle”, while its international capacity has been hampered by operational delays and industry staff shortages. Revenue intakes sit at 118%t of pre-COVID-19 levels across its domestic outfits and 123% for international.<br/>
Sydney Morning Herald
https://www.smh.com.au/business/companies/qantas-eyes-bumper-2-5b-profit-ups-share-buyback-20230523-p5dagy.html
5/23/23