QAN posts $1.25 billion profit after turbulent year

Federal Aviation Administration Administrator Teri O’Toole said the agreement showed Qantas management had changed for the better and struck the right balance between the safety of the business and necessary pay increases for cabin crew.

“This is a stark contrast to what Qantas did a few years ago when it openly declared war on cabin crew and put guns to their heads demanding they terminate their enterprise agreement,” O’Toole said.

The latest results, Hudson’s first since becoming chief executive, were a 28 per cent drop from a record $1.73 billion profit in 2023. Qantas has been struggling as customers, shareholders and staff are widely disappointed with its customer service and fares, with the troubled business beginning to enter a difficult period.

Hudson said the company had been working to revitalise the brand after a difficult 2023, a year that saw the departure of Joyce, the failure of an appeal in the High Court over the unlawful sacking of 1700 workers and a Federal Court case by the consumer watchdog.

Hudson, who first took over as Qantas CEO in September and has successfully addressed most of the problems facing the airline, said her focus was on ensuring strong operational performance, deepening the airline’s relationships with employees, unions and airports, and controlling costs.

“For me, the key for next year is consistency. We have to maintain a certain level of profitability, keep a tight control on costs and keep the balance sheet strong because that is fundamental for us to get through the fleet renewal cycle. Sustainability is another key focus and the biggest challenge facing the aviation industry in the next decade,” she said.

Qantas’ results come after the Australian government released its long-awaited aviation white paper this week, which proposes 56 reforms to the regulation of the aviation industry by 2050, including a passenger charter of rights.

Qantas has missed most of its financial targets this year, including for domestic and international flights, after having to spend $230 million on a customer recovery program and penalty provisions following a settlement with the consumer regulator, as well as an upcoming compensation fine after illegally sacking 1,700 ground staff.

The company’s total revenue rose 10.7% to $21.9 billion. Its operating margin fell to 10% from 13.5% in 2023.

Qantas International had originally targeted an 8% EBIT margin, but achieved just 6.4% as global air capacity recovered and cargo yields fell. The domestic unit of the combined Qantas and Jetstar Airways achieved an EBIT margin of 14%, below the 18% target.

Jetstar’s profit hit a record $497 million, but still missed analysts’ expectations of $585 million, while its loyalty division’s profit of $511 million was in line with expectations.

Despite missing its target, Qantas announced a $400 million share buyback and said it could resume a full dividend in the second half of the financial year. Hudson said she remained committed to meeting the airline’s profit margin targets despite the poor performance in 2024.

Its net result was hit by $198 million in legal provisions, including $128 million to settle the airline’s lawsuit with consumer regulators and a $70 million increase to cover its illegal dismissal of ground staff.