Qantas forecasted that it would make a profit between AU$2.425 billion to AU$2.475 billion in the financial year ending June 30th, 2023. It also forecasted that net debt would be in the range of AU$2.7 billion to AU$2.9 billion far below its debt target of AU$3.7 billion to AU$4.6 billion.
The Group attributed these figures to strong travel demand and completion of its three-year recovery program. The Group reported increase in flying activity in second half with new aircraft arrivals, the return of widebody aircraft from long-term storage and improvement in operational reliability.
The Group has predicted the domestic capacity to remain above pre-pandemic levels at 104% towards the end of second half of 2023 (2H of 2023) led by a significant increase in flying on key routes between Melbourne, Sydney and Brisbane
Alan Joyce, Group CEO, Qantas said: “We’re seeing the broad trends we expected as the industry recovers and trading conditions remain very positive. More parts of the aviation supply chain are returning to normal, which means 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.
The Group has predicted an 80% growth in the international capacity as compared to pre-pandemic levels by 2H of 2023. Qantas has announced a further ramp up in flying from October 2023 onwards that will see Group International capacity reach around 100% of pre-COVID levels by March 2024.
The Group forecasted a strong travel demand continuing into FY24, given the strong balance sheet and the positive outlook, the Board has increased the existing on-market buy-back by up to $100 million. The existing buy-back of up to $500 million was announced in February and is now 78% complete at an average price of $6.49 per share.
“We called out an extra $200 million of overheads in FY23 because of the operational buffer we put in place, which can now start to roll off. Five of the aircraft that were in reserve last Christmas will be back flying by the end of this half. The industry remains capacity constrained and the travel category remains strong, so there’s still a mismatch between supply and demand that’s likely to persist for some time, especially for international flying,” Joyce added.
The Group is on track to achieve its revised capital expenditure target of $2,600 million to $2,700 million for FY23, which includes forward payments for aircraft due for delivery in future years.
Including the additional buy-back, the Group’s net debt is now expected to be between $2,700 million and $2,900 million at 30 June 2023, which is significantly below the bottom of its revised target range of $3,700 million to $4,600 million.
“We’re on track to take delivery of another eight new aircraft before the end of this calendar year and we’re working hard to bring the last of our stored aircraft through heavy maintenance so we can get them back in the air,” concluded Joyce.