Australia’s Qantas raises domestic revenue estimates, shares hit record high By Reuters

Written by: Rishav Chatterjee

(Reuters) – Australia’s flag carrier Qantas Airways on Friday raised its domestic operating profit expectations for the first half of its fiscal year, while also forecasting lower fuel costs due to lower international prices.

The airline now expects revenue per available seat kilometer for its regional business to increase 3% to 5% in the first half of the year ended December 31 compared with a year ago. This is an increase from the 2-4% range provided in August.

Domestic production capacity is expected to increase by 1% during the full fiscal year. This is lower than the 2% increase predicted in August.

“The group continues to perform in line with expectations, with both Qantas and Jetstar seeing stable demand,” Qantas CEO Vanessa Hudson (NYSE:) said in a speech at the airline’s annual meeting.

“Jetstar’s demand has been stronger than expected, while Qantas’ domestic load factors and corporate travel demand continue to improve year on year,” she said.

The company’s shares rose 1.6% to A$8.04, hitting their second all-time high this week.

Under Hudson, the national carrier is trying to rebuild a reputation damaged over the past 18 months by legal, regulatory and customer issues.

The airline’s new chairman, John Mullen (NASDAQ:), said Qantas also remained on track to restore its full dividend from the second half of the current financial year.

“The outlook for Qantas and Jetstar is truly positive due to the progress we have already made in restoring our reputations, backed by strong balance sheets,” Mullen said in his address to shareholders.

The airline now expects first-half jet fuel costs to be around A$2.55 billion ($1.69 billion), which is lower than the A$2.7 billion it had previously estimated.

Qantas’ current fuel cost estimate is based on the current jet fuel price of A$140 per barrel, which is lower than the previous estimate of A$150.

The company said its A$400 million share buyback was now 45% complete at an average price of A$7.23. The airline expects final completion by the end of this year.

Transactions in Qantas’ loyalty program have met expectations since the launch of its new flight rewards scheme, the company said.

The loyalty division continues to expect base earnings before interest and tax to increase by at least 10 per cent in the current financial year, Qantas said.

($1 = 1.5060 Australian Dollars)

(This story has been corrected in paragraphs 3 and 3 to peg the domestic production capacity forecast period as the first half of the year to a full year.)