Qantas, Virgin Report Strong Financial Results Despite Higher Jet Fuel Prices, ACCC Report Says
Qantas Airways (ASX:QAN) and Virgin Australia (ASX:VGN) reported strong financial results despite facing significantly higher jet fuel prices, the Australian Competition and Consumer Commission's (ACCC) Domestic Airline Competition in Australia report found.Qantas reported underlying fiscal year earnings before interest and tax (EBIT) of around AU$2.35 billion, down 11% year-over-year. Virgin Australia reported underlying earnings of AU$753 million, up over 13% from the previous year. The performance was supported by passenger demand, higher fares, capacity adjustments, and agreements that locked in fuel costs in advance to soften the short-term impact of higher prices.Jet fuel prices were almost 50% higher in late August than in February. Average airfares were 3.5% higher in May year-over-year, and 4% in June, before moderating in July. Domestic passenger volumes remained stable in the quarter to July, although they were slightly lower than a year earlier.Seat capacity fell by 2.3% in May and June year-over-year, with June recording the lowest capacity level for that month since 2022. Industry-wide on-time performance declined from 82.1% in May to 78.4% in July, falling below the long-term average of 80.5%. Qantas was the only airline with an on-time arrival rate above the long-term industry average at 81.4% in July.Both Qantas and Virgin Australia forecast further capacity reductions and higher revenue from each seat flown.Qantas' shares fell 2% in recent trading on Tuesday.
