Qantas Reports Strong Demand, Capacity Growth in FY2025

In a recent report, Qantas Group demonstrated solid trading performance, with both Qantas and Jetstar experiencing stable demand. Jetstar's domestic revenue is exceeding expectations, while Qantas expects a notable EBIT growth despite some challenges ahead.

Date: 25-10-2024

AI Rating: 7

The report provides several key insights into Qantas Group's performance and future expectations:

Demand: Both Qantas and Jetstar are reporting stable demand across their segments. This implies that customer interest remains strong, which can positively influence revenue and, ultimately, stock prices if the trend continues.
Unit Revenue: Jetstar Domestic's unit revenue is outperforming previous expectations due to stronger travel demand. This is a positive signal indicating robust consumer behavior and can lead to increased revenue projections.
RASK Expectations: The report indicates an expected increase of 3-5% in Group Domestic RASK for FY2025. However, Group International RASK is projected to fall by 7-10%. This discrepancy suggests mixed outlooks, with domestic revenues acting as a potential buffer against international losses.
Underlying EBIT Growth: Qantas Loyalty is anticipated to achieve at least 10% Underlying EBIT growth in FY2025. This growth provides a strong positive outlook on profitability from loyalty-related revenue.
Employee Payments: The company has initiated a thank-you payment for employees amounting to A$28 million. While this gesture supports employee morale and productivity, it represents a cost that will impact short-term earnings.
Capacity Growth: Qantas anticipates a total group capacity growth of 10% for both the first quarter and the fiscal year 2025. Increased capacity typically correlates with higher revenue potential if demand remains stable.
Refurbishment Program: The commitment to upgrading aircraft with larger entertainment screens and refurbishing the A330s shows Qantas' focus on enhancing customer experience, which can lead to better customer retention and increased sales.

In summary, while there are some challenges, the overall sentiment leans positively with strong domestic demand, projected growth in loyalty earnings, and ongoing investments in customer experience, which could bolster stock prices in the medium term.

Stocks: QAN.AX