Qantas has posted a record first half net profit as strong growth in its domestic network helped offset some declines on international routes.
The company reported net profit of $607 million for the six months to December 31 2017, up 17.9 per cent from $515 million in the prior corresponding period.
Revenue rose 5.8 per cent to $8.66 billion, Qantas said in a regulatory filing to the Australian Securities Exchange (ASX) on Thursday.
Qantas chief executive Alan Joyce said it was a challenging first half amid higher fuel costs, a competitive domestic market and international capacity growth.
However, the bottom line was buoyed by Qantas and Jetstar’s domestic flying achieving 20 per cent growth in underlying earnings.
“The results show what our previous record results have shown – we have a strong portfolio of businesses and the right integrated strategy for managing them,” Joyce said in a statement.
Meanwhile, Qantas said its international business suffered a 5.5 per cent decline in underlying earnings.
“Qantas international faced the challenges of rising fuel prices and more seats in the market,” Joyce said.
“But it largely held its own, with a six per cent decline in profit and slight rise in unit revenue.”
Underlying profit before tax (PBT), which excludes one-off items and which the company regards as the best indication of financial performance, came in at $976 million, up 15 per cent from $852 million in the prior corresponding period.
The result was above company guidance of between $900-950 million for first half of 2017/18 and the highest first half underlying PBT in the company’s history.
Looking ahead, Qantas has guided the market to a one per cent reduction in group domestic capacity for the second half.
Meanwhile, the airline group’s international capacity was forecast to grow 2-3 per cent, compared with competitor capacity growth of five per cent.
Fuel costs were expected to be “no more than” $3.24 billion, compared with $3.04 billion in the prior year.
No profit guidance was given for the full year.
“Looking ahead, we are broadly positive about trading conditions and the prospects for consumer demand,” Joyce said.
“After several years of turning this business around, Qantas now has a lot of momentum behind it.”
Qantas announced an interim dividend of seven cents per share, unfranked, and a $378 million share buyback.