By Roushni Nair and Lisa Barrington
(Reuters) -Australia's Qantas Airways announced an additional share buyback on Thursday but no dividend for the fifth year, as the airline reported a 16% annual profit drop due to lower fares, spending on customers and weaker freight revenue.
Australia's flag carrier has been trying to fix its reputation after what was one of its most reputationally damaging years in 2023 due to a series of controversies regarding travel bookings and employee treatment.
Underlying profit before tax for the group, which includes low cost carrier Jetstar, fell 16% to A$2.08 billion ($1.41 billion) in the year ended June 30, matching a Visible Alpha consensus.
Profit after tax declined 28.1% to A$1.25 billion.
"Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travellers and saw the benefits from its new aircraft," said CEO Vanessa Hudson (NYSE:HUD).
Qantas shares were up 0.4% at 02:50 GMT in a broader market down 0.4%.
STABLE DEMAND
Air fares around the world are coming down from post-pandemic highs as airlines restore capacity and travellers seek savings, putting pressure on airline profits as they struggle with costs, and aircraft and labour shortages.
Qantas said travel demand is stable, with domestic revenue expected to increase 2-4% year-on-year in the first half of the current financial year.
While it expects international revenue to fall 7-10% over the same period as capacity is restored, the decline is expected to slow through the year.
Hudson has emphasized spending more on customers and said Qantas and Jetstar have seen significant improvements in operational performance and customer satisfaction.
Qantas did not declare a final dividend for the fifth year.
It announced another on-market share buy-back of up to A$400 million to distribute surplus capital in the first half, following A$869 million of buy-backs in 2024.
Qantas expects fuel costs in the first half to be similar year-on-year, although finance costs and expenses associated entering new planes into service are expected to rise.
Deliveries of Airbus's delayed A321-XLR narrow-body planes are expected from April 2025, Hudson said.
STAFF
Hudson took over late last year from long-standing CEO Alan Joyce, who an external review this month found responsible for measures alienating travellers, employees and shareholders, and cut his exit bonus.
Qantas in recent months has been in discussion with the Flight Attendants Association Australia (FAAA) over requests under 'Same Job Same Pay' legislation passed in December.
Qantas and the FAAA on Thursday announced an in-principle agreement on pay increases for around 2,500 international crew.
Qantas also agreed to three applications by the union to raise pay for up to 800 short-haul staff.
FAAA Federal Secretary Teri O'Toole said it was a positive start to a new relationship with Qantas.
($1 = 1.4723 Australian dollars)