Qantas has an optimistic outlook for its international operation despite reporting weaker profits and a near-term slowdown on its Hong Kong route.
The Qantas Group posted a net profit of A$891 million ($603 million) for its 2019 fiscal year ended June 30, down 6.5% from A$953 million in the previous year. Underlying profit declined 17% from the group’s record profit in FY2018.
Overall, group revenue for the Australian flag carrier increased 4.9% to A$18 billion for the fiscal year. Total costs rose 7% to A$16.5 billion, with fuel expenses increasing by A$614 million year-over-year (YOY). Capacity was down 0.7% and traffic increased 0.5%. Unit revenue grew by 5.3%.
For the international division, underlying profit was down 28% YOY to A$285 million. However, Qantas said international performance was “much improved” in the second half of the year, with competitor capacity shrinking and fares adjusting to higher fuel prices. The outlook is positive for international premium demand.
The group’s international capacity is projected to rise 1.5% in the six months through Dec. 31, while competitor capacity will be down 1%. Qantas domestic capacity is expected to be flat or slightly down, and group capacity is forecast to be up 1%…