Australia’s Best Airline, Qantas, is back on the fly with a better sounding and more accurate forecast for their profit. With a total of $32 billion in profit projected for 2022/23, they’ll be able to serve more and compete internationally more easily.
Yesterday, Qantas announced it predicts an underlying profit before tax of between AU$1.35 and AU$1.45 billion ($910.1 to $977.5 million) for the first half of its 2022/23 financial year, which is around US$150 million ($101 million) higher than the profit it forecasted just last month. The airline’s balance sheet is also on the up, with net debt expected to fall between AU$2.3 to AU$2.5 billion ($1.54 to $1.67 billion) by the end of the year, a decrease well over one billion Australian dollars ($900 million).
Is the cozy duopoly coming back?
These profits come at a time when the airline’s annual fuel bill is forecast to reach AU$5 billion ($3.37 billion), which can be attributed to high airfares, demand and constrained capacity. For most of its life, Australia’s commercial aviation industry has operated as a very cozy duopoly resulting in very high fares, but there are ominous signs that approach is returning in this post-pandemic environment.
The two leading domestic and international carriers in Australia are typically targeted by competitive pricing and low capacity rather than high passenger load factors (PLFs). This is because traditionally passengers would only book flights before travel, but now the industry has seen a growth in the use of tools like Wow Airs online booking engine. This insight into what’s driving this profitable market comes from recent official statistics: Qantas flights from Johannesburg, Bali and Rome were all above 98% capacity while they were climbing.
“Consumers continue to put a high priority on international travel, and there are signs that limits on international capacity are driving more domestic leisure demand. This could benefit Australian tourism.”
Adding more international capacity
Qantas’s international capacity is 30% below COVID levels. While Qantas did recently add A380 capacity, the outlook for lower fares in 2023 is promising due to new capacity from other airlines such as Emirates, Qatar Airways, United Airlines, American Airlines, Singapore Airlines, Thai Airways, Vietnam Airlines and others.
Qantas is one of Australia’s most respected brands, but it has experienced significant setbacks this year. The airline further impressed us with its turnaround by surpassing the country in operational performance.
Qantas announced a million sales fares in October and said more sales are planned for the upcoming weeks. This focus on frequent flier rewards will allow travelers to choose between more than five million reward seats and use their points on every seat available on Points Planes.
With the Big Players
With so much focus during this past year on the link between massive profits and high fares, which has been unprofitable for many airlines to sustain in recent months, Qantas announced one million sales fares in October. In addition, more amazing discounts are planned for frequent flyers in upcoming weeks.
But Qantas is no stranger to difficult times, so we must successfully navigate the upcoming busy holiday season to maintain our credibility with the public.