Qantas Airways (ASX: QAN), Australia’s flagship airline, has reported outstanding first-half financial results for fiscal year 2025, declaring dividends for shareholders for the first time since 2019. This marks a notable moment for the airline, as it aims to reward investors following several challenging years.
On Thursday, the company announced its underlying profit before tax reached A$1.39 billion ($875 million) for the six months ending December 31, 2024, exceeding expectations set by market analysts. This figure reflects an 11% increase from the previous year's profits and is supported by strong demand across all travel segments. Qantas attributed this performance to strategic expansions and operational improvements across its fleet.
Alongside this remarkable profit, Qantas declared both interim and special dividends for shareholders, amounting to 16.5 Australian cents and 9.9 cents per share, respectively. The interim dividend is part of the airline’s move to reinstate distributions post-COVID, which has not occurred since September 2019. "Our financial strength means we are now in a position to pay our shareholders dividends for the first time in almost six years," stated CEO Vanessa Hudson, as reported by Investing.com.
Investors welcomed this news, with Qantas shares climbing over 5% to approximately A$9.40 during trading on the same day. This surge signifies increased confidence among stakeholders, with analysts highlighting the strength lent by the airline's dual-brand strategy, which includes its subsidiary, Jetstar. The domestic air travel market remains competitive but profitable, with Qantas and Jetstar carrying over 28 million passengers during the half-year period.
Revenue across the business saw significant growth, with total group revenue increasing by 9% to A$12.13 billion. This growth is attributed to various segments, including the Qantas Domestic operations, which contributed A$4.95 billion, and Jetstar’s A$1.15 billion — both showcasing consistent upward trends influenced by increasing demand. The Qantas Loyalty program also reported strong performance, growing by 11% with membership numbers climbing to 17 million.
"The performance was driven by the strength of the Group’s dual brand strategy with demand for travel remaining strong across all customer segments," noted analysts from Jefferies, underscoring how the airline managed to recover faster than many competitors. The airline recorded operational efficiencies and fleet enhancements—adding eleven new aircraft—implying promising developments as it moves forward.
Looking toward the future, Qantas projects continued strong travel demand across both domestic and international markets. The airline anticipates domestic unit revenue increases of between 3% to 5% for the second half of FY25, even as it notes challenges due to rising operational costs. This is particularly relevant as prices of air travel are expected to adjust moderately due to market strategies.
Despite these positive financial indicators, Qantas must remain attentive to competitive threats, particularly from Virgin Australia, which has regained market share recently. With Qatar Airways acquiring a 25% stake in Virgin, the competitive dynamics are shifting rapidly, as acknowledged by regulators and industry analysts alike. This acquisition has raised concerns about pricing pressures and customer loyalty as Virgin aims to expand its own service offerings.
The Australian government’s approval of this stake transfer is seen as pivotal for the aviation market, potentially increasing competitiveness and improving service for customers amid rising demand for air travel as post-pandemic recovery continues.
Qantas is also involved with plans for enhancements throughout its operational framework, focusing on customer service improvements and implementing new cabin designs across its fleet, including upgraded seats and larger overhead storage options on its 737 aircraft. These updates are expected to enrich the traveler experience, particularly valuable as leisure and corporate travel rebounds.
While Qantas celebrates its strong fiscal results and positive market reception, Hudson emphasized the importance of continued efforts to rebuild stakeholder trust and service reliability. Looking to the second half of the fiscal year, Qantas remains optimistic, positioning itself strategically to adapt and thrive amid the ever-evolving aviation market.