Qantas released their full year (July 2023 to June 2024) financial results yesterday. As expected, statutory profit, Qantas’s bottom line measure of after tax profit was down 28% to A$1.3 billion. Meanwhile, total revenue was up 11%, indicting a decline in the net margin from 9% to 6%. We say “as expected” since their half year (July 2023 to December 2023) results released in February were indicative of this trend with statutory profit down 13% while total revenue was up 12%, with the net margin declining from 10% to 8% compared to the first half of FY23.
Additionally, the weakening of international unit revenue and yields has been staring us in the face as market capacity has normalised following the COVID-19 pandemic. Furthermore, as indicated from our analysis elsewhere, overcapacity between Australia and the United States has decimated loads. Much of this hadn’t been reflected yet in first half results published in February.
Simultaneously, regular reporting of official data on the domestic market has seen a softening with slower capacity increases being reported in BITRE passenger data over the last six months, and BITRE showing significant declines in discounted economy fares over the same period.
While profits fell, it was still an overwhelmingly positive set of results for Qantas. Unit revenues and yields are still outperforming pre-pandemic levels, while costs have remained flat despite the challenging inflation and currency environment. From a profitability perspective, margins remained very strong compared to pre-pandemic levels. Let’s take a little deeper dive into the segment performance …