Virgin has just upgraded its outlook despite higher fuel costs, yesterday Qantas said it is looking at a rise in first-half revenues because of a rise in forward bookings and higher airfares have helped offset rising fuel costs.
The airline said it is now looking at a 6.3% rise in first-quarter revenue to $4.41 billion.
The value of forward bookings was up 8% on flat capacity compared with the same time last year, and 6.2% higher than the June quarter, with travel demand strong across the business and leisure markets.
Passengers paid 5.4% more on average for seats over the quarter, with the strong revenue performance also offsetting higher commissions paid to travel agents, and the impact of a weaker Australian dollar. That’s more than double the inflation rate of around 2%.
Revenue across Qantas and Jetstar’s domestic operations was up 6.8% while international group revenue rose by 4%, which it said was supported by structural changes to the network, including the addition of direct flights from Perth to London.
Chief executive Alan Joyce said he was confident forward bookings would help Qantas manage higher fuel costs, which are expected to hit $4.09 billion in 2018-19, compared with $3.23 billion for FY18.
“The Group has now hedged 76 percent of its fuel for FY19 and 39 percent for FY20 with the ability to benefit from significant price falls. Based on a Jet Fuel forward market price of A$130 per barrel for the remainder of the financial year 2019, the Group’s full-year fuel cost is now expected to be $4.09 billion6 compared with $3.23 billion for the financial year 2018,” Qantas said.
“Market demand for travel remains fundamentally strong and we’re seeing some wind-back of competitor capacity growth,” he said.
Qantas also announced a multi-million dollar investment in a new First Lounge, as well as an expansion of its existing Business Lounge, at Singapore Changi Airport, which will increase Qantas’ total lounge capacity at the airport by 60%.
Qantas shares fell 4.6% in yesterday’s sell down to end at $5.36, down more than 24% percent from August’s historic peak of $6.92.
