Qantas Airways Limited

Qantas reported underlying profit before tax of $1.46 billion for the half, up 5% and up $71 million versus first half FY25. Underlying EPS was $0.68, up 7%, statutory profit after tax was $925 million, flat year over year, and the operating margin was 12.3%. Operating cash flow was $1.8 billion, net debt ended at $5.6 billion, and net capital expenditure was $1.8 billion. For the full year, management reiterated FY26 capital expenditure of $4.1 billion to $4.3 billion and guided FY27 capex to $5.1 billion to $5.4 billion. For the second half, Group RASK is expected to rise about 3% year over year, Group International RASK is expected to rise 1% to 3%, transitionary EIS and fleet-related costs are expected to increase by $20 million versus 2H25, and net freight revenue is expected to be in line with 2H25. Qantas Loyalty is expected to grow underlying EBIT 10% to 12% for FY26.

Vanessa Hudson framed the half as one defined by execution, saying the group is delivering for customers, employees and shareholders while funding the largest fleet renewal in its history. She stressed that the integrated portfolio and fleet modernization are creating benefits now and will continue to do so, with particular emphasis on strong travel demand, the dual-brand strategy and the value of loyalty. Her tone was confident and upbeat, especially on Project Sunrise, premium demand, and the ability to flex capacity where demand is strongest.

Robert Marcolina emphasized the financial strength of the period: $1.46 billion of underlying PBT, $925 million of statutory NPAT, $1.8 billion of operating cash flow and $5.6 billion of net debt, which sits at the bottom of the FY26 target range of $5.6 billion to $7 billion. He noted total unit revenue and total unit cost both rose just over 2%, transformation remains on track to deliver $400 million in FY26, and depreciation and amortization increased $89 million because of the fleet renewal pace. He also highlighted capital allocation discipline, saying the company is comfortable returning cash via a higher base dividend and a buyback while staying focused on low leverage and investment-grade strength.

Analysts focused on domestic corporate demand, the rationale for the buyback versus dividends, international margin pressure and capacity management, Project Sunrise economics, long-term margin targets, loyalty redemptions, and Western Sydney Airport. Management said domestic business purpose travel remains strong in SME and resources markets, while softer non-resource corporate growth has been offset elsewhere. On international, they pointed to higher labor, engineering and EIS costs, plus more agile capacity adjustments, including shifting some A380 capacity from North America to Singapore. On Sunrise, management said the demand and premium yield assumptions remain consistent with the business case and that the aircraft would be redeployed if needed, though they view the aircraft as a 'no-regret' purchase.