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Qantas has upgraded its half-year profit forecast by an extra $150 million as consumers’ demand for domestic flights rises.
The news means the Flying Kangaroo is now targeting a remarkable underlying profit of up to $1.45 billion.
The result comes despite the wider group recording an underlying loss before tax of $1.86 billion in its last full-year results and claiming the pandemic cost its airlines $7 billion in total.
In a surprise statement, Qantas said on Wednesday that limits on international capacity were driving consumers to instead holiday in Australia.
“The group’s net debt is now expected to fall to an estimated $2.3 billion and $2.5 billion by 31 December 2022,” said the business in a statement.
“This is around $900 million better than expected in the most recent update, due largely to the acceleration of revenue inflows as customers book flights on Qantas, Jetstar and partner airlines into the second half and beyond, as well as deferral of approximately $200 million of capital expenditure to the second half.
“Around 60 per cent of the $2 billion in COVID-related travel credits held by the Group have now been redeemed by customers.
“Total credit usage is consistent at a rate of circa $70 million a month and new initiatives will be announced shortly to encourage full use of remaining credits over the next year.”
The airline added that low levels of net debt mean it is in a position to “consider future shareholder returns in February 2023”.
The news comes days after it was revealed that Qantas had put much of its poor service troubles behind it and was now the best carrier in the country for cancellations.
The Flying Kangaroo was also the top-performing carrier for avoiding delays in October, overtaking long-time best performer Rex.
Earlier this year national carrier faced a string of problems, including huge delays at Easter, hours-long call wait times, and even a revelation that the cabin crew of a Qantas A330 were made to sleep across seats in economy.
However, Alan Joyce received strong support from Chairman Richard Goyder, who in September claimed the CEO and his executive team had done “exceptionally well” in a strongly worded riposte to the CEO’s critics.
Writing The Australian Financial Review, Goyder hailed his senior staff for steering the airline through a pandemic that “sent other airlines and their creditors packing”.
He said Qantas is now well on its way to fixing its problems, quipping, “If you haven’t heard this, it may be because the data showing the improvement received far less media attention than stories showing how bad things got.
“In the meantime, the corporate obituary writers have been busy. Their analysis has (mostly) been unencumbered by what’s happening at other airlines, or that Qantas’ performance has turned around.”
