Qantas profit falls 20pc as Middle East conflict drives up fuel costs

Australian airline Qantas reported a 20% drop in annual net profits due to soaring fuel costs resulting from the Middle East conflict, according to a report on August 27. Despite the increased expenses, the airline expects resilient travel demand to lift revenue in the upcoming months, as people continue to prioritize travel. Jet fuel prices are projected to remain high throughout the July-December period, and Qantas plans to mitigate the impact through various strategies, including fuel price hedging.

For the fiscal year ending June 30, net profits dropped 19.7% to A$1.29 billion, while revenue increased by 7.1% to A$25.5 billion.

The airline attributed the decline in business and consumer confidence, primarily due to the conflict, as the primary factor behind the reduced demand for travel. Qantas Group CEO Vanessa Hudson stated that the company swiftly adjusted fares, capacity, and aircraft deployment to provide customers with more options to fly to Europe amidst the surge in fuel prices.

The company managed to report a "strong" result despite the disruptions caused by the Middle East conflict and high fuel costs, enabling Qantas to invest in renewing its fleet. Over the past financial year, Qantas added 17 new aircraft, with up to 31 more expected to join the fleet in the coming year. These investments will facilitate the company's plans to retire its double-decker A380 fleet starting in 2028.