Australia's Qantas Expects Hefty Fuel Bill Increase in 2024 1st Half
Sydney — Australian airline Qantas on Monday said it expects its fuel bill for first-half of fiscal year 2024 increase by about $200 million Australian ($128.5 million US) due to higher oil prices and a lower Australian dollar.
Overall travel demand remains strong, with trading conditions in the first quarter of fiscal year 2024 similar to the last quarter of fiscal year 2023.
The carrier said it will invest a further $80 million in customer improvements across fiscal year 2024 in addition to the $150 million previously budgeted, which will be funded from profits.
The additional investment is aimed at addressing a number of customer "pain points" through improvements such as better contact centre resourcing and training, as well as an increase in the number of seats.
According to Qantas, overall travel demand remains strong, with trading conditions in the first quarter of the 2024 fiscal year - which started at the beginning of July - similar to the last quarter of fiscal year 2023.
Qantas and its low-cost arm Jetstar expect to carry more than 4 million passengers over the September/October school holidays period on almost 35,000 domestic and international services.
This compares with around 3.7 million passengers on approximately 28,000 services over the same four week period last year.
Qantas noted that fuel prices have increased by around 30% since May 2023, including a 10% spike since August. It is driven by a combination of higher oil prices, higher refiner margins and a lower Australian dollar.
If sustained, this is expected to see the carrier's first half of fiscal year 2024 fuel bill increase by approximately $200 million to $2.8 billion after hedging. A further $50 million impact is expected due to non-fuel related foreign exchange changes.
Qantas said it will continue to absorb these higher costs, but will monitor fuel prices in the weeks ahead and, if current levels are sustained, will look to adjust its settings.
The company noted that new aircraft deliveries and wet-leasing arrangements will help Qantas and Jetstar boost international capacity by 12 percentage points by the end of the calendar year - an increase of almost 50 additional flights a week.
It includes Qantas resuming its Sydney-Shanghai services and starting two new routes - Brisbane, Australia-Wellington and Brisbane-Honiara, Solomon Islands - as well as a new Jetstar service from Brisbane to Tokyo.
Both international and domestic capacity for first-half of fiscal year 2024 is materially unchanged from estimates given in late August 2023.
The group said it remains in a very strong financial position, including its debt levels and continued strong revenue intakes.The on-market share buyback of up to $500 million announced on 24 August 2023 is now 10 per cent completed.
©2023 dpa GmbH. Distributed by Tribune Content Agency, LLC.