Despite stiffer competition and higher fuel prices, Qantas made a bottom-line net profit of $607 million in the first half of the current financial year.
- Qantas delivers an 18 per cent lift in net first half profit to $607m
- Sales revenue up by 6 per cent, driven by domestic services while international continues to struggle
- Shareholders get an $500m back through a buyback and a interim dividend of 7 cents per share
This result is 18 per cent higher than its previous first-half net profit of $515 million.
But in a statement to the ASX, Qantas declared it a “record first-half profit”, when viewed from an “underlying before tax” perspective — in which case it was a gain of 15 per cent to $976 million.
In addition, the flying kangaroo reported that its revenue lifted 5.8 per cent to $8.66 billion.
“Today’s result comes from investing in areas that provide margin growth and a network strategy that makes sure we have the right aircraft on the right route,” chief executive Alan Joyce said.
Investors responded positively to Qantas’ results, driving its share price 9.2 per cent higher to $5.76 (at 11:00am AEDT).
No tax, but higher shareholder returns
The airline disclosed an income tax expense of $250 million, but will not pay tax due to the “utilisation of of carry-forward tax losses and other temporary differences”, according to its interim financial report, released this morning.
Qantas also said “up to $500 million of capital” will be returned to its shareholders.
It plans to achieve this through a $378 million share buyback, and paying Qantas investors an unfranked dividend of 7 cents per share.
The company expects this round of buybacks will reduce its total number of shares by 24 per cent since October 2015.
As for its outlook, Qantas is expecting capacity on its domestic flights to fall by 1 per cent in the second half of the current financial year.
In contrast, its prediction for international capacity is a 2-3 per cent uplift — which is lower than the 5 per cent rise it expects from its competitors on overseas routes.
Investors were pleasantly surprised by the result and in early trade Qantas shares were up more than 6 per cent to $5.61, its highest price since late last year.