Qantas Airways (ASX:QAN) reported higher first-half earnings for FY2026 and announced an interim shareholder distribution, as executives emphasized strong travel demand, improving operational performance, and the accelerating impact of the group’s fleet renewal program.
Financial results and shareholder returns
Chief Executive Officer Vanessa Hudson said the half was “defined by execution,” with the group focused on customers, employees, and shareholders while investing in what she described as the largest fleet renewal in Qantas Group history. Chief Financial Officer Rob Marcolina reported underlying profit before tax of AUD 1.46 billion, up 5% versus the first half of FY2025. Statutory profit after tax was AUD 925 million, flat year over year.
The board approved an interim shareholder distribution of up to AUD 450 million, including:
- A fully franked base dividend of AUD 300 million (an increase of AUD 50 million versus 1H25)
- An on-market share buyback of up to AUD 150 million
Hudson said the base dividend is intended to be sustainable through the cycle, while the mix of additional distributions between dividends and buybacks will continue to be assessed. She also noted the company has franking credits available and said management saw value in the share price at the time of the buyback decision.
Fleet renewal and operational performance
Hudson said fleet renewal is accelerating, with AUD 1.8 billion invested in fleet and other projects during the half. The group added 18 aircraft, including nine new aircraft: two A321XLRs for Qantas, four A220s for QantasLink, two A321LRs and one A320neo for Jetstar.
Management highlighted benefits from Jetstar’s A321 fleet reaching scale. Hudson said A321LR investment contributed roughly 60% of Jetstar’s earnings uplift in the half through efficiency and improved utilization, a figure Marcolina reiterated in discussing the “replacement benefit” from lower fuel burn per seat and reduced maintenance costs.
Hudson also pointed to improvements in customer and operational metrics. Qantas’ Net Promoter Score rose five points and Jetstar’s increased four points. Qantas delivered 70% on-time performance, which Hudson called the highest among major domestic airlines, while Jetstar improved to 71%.
Looking ahead 12 months, Hudson said customers can expect items including the first Project Sunrise aircraft delivery, cabin refresh programs (A330 and Jetstar 787s), lounge refreshes in Los Angeles and Sydney, Wi-Fi rollout across Qantas’ international fleet, and “progressive rollout” of changes to Frequent Flyer announced with the results.
Segment performance: Domestic strength, international cost pressure
Group Domestic delivered EBIT of more than AUD 1 billion, up 14%, with an EBIT margin of 18%. Capacity grew 5%, and revenue per available seat kilometer (RASK) was up 3%.
Jetstar Domestic’s earnings rose 38%, with an EBIT margin of 22% (above target). Qantas Domestic posted RASK growth of 2% as capacity grew 4%, supported by business purpose travel and premium leisure demand, though its operating margin was 16% as it absorbed costs related to entry into service of new aircraft.
On demand, executives said business purpose travel strength was concentrated in small and medium enterprises and the resources market in Western Australia. Markus Svensson said business purpose travel revenue increased 6%, with weaker-than-expected growth in non-resource corporate travel offset by SME and resources demand. Jetstar’s Stephanie Tully said low-fares leisure demand remained strong, supported by a robust events calendar and continued high intention to travel.
Group International (excluding Jetstar Asia and Jetstar Japan) saw underlying EBIT down 6%, which management attributed to cost escalation including higher engineering and industry pressures, operational wage increases, and training costs for new aircraft. Capacity increased 3%, reflecting the closure of Jetstar Asia in July. Jetstar International’s Australian international operation delivered earnings growth of 9% and an operating margin of 14%, also above target.
Loyalty growth and major program changes
Qantas Loyalty underlying EBIT rose 12% to AUD 286 million. Hudson said the Frequent Flyer program exceeded 18 million members, with points earned up 10% and points redeemed up 17%. Management said partner engagement remained a key driver, with members earning across two or more categories up 8%.
Hudson described the company’s Frequent Flyer update as the most significant status change in the program’s history, including rolling over unused status credits into the next membership year and enabling members to earn status credits through everyday spending.
In Q&A, Loyalty executive Andrew Glance said higher redemptions were driven primarily by the full-half impact of rolling out Classic Plus on the domestic network. He said the company would wait for an expected Reserve Bank of Australia update in March before commenting on surcharging and interchange outcomes.
Outlook: RASK growth expected, costs to rise with fleet transition
Hudson said the group continued to see strong travel demand and expects group RASK to increase in the second half versus the prior year, with group RASK expected to rise about 3% and group international RASK expected to increase between 1% and 3%. She said entry-into-service and fleet-related transition costs are expected to increase by AUD 20 million versus the second half of FY2025.
Management said the “same job, same pay” impact for full-year FY2026 is expected to be about AUD 95 million, up AUD 15 million versus the second half of FY2025, and is expected to be mitigated over time. Qantas Loyalty is expected to grow underlying EBIT 10% to 12% for the full year, while net freight revenue in the second half is expected to be in line with the prior-year period.
Marcolina reiterated FY2026 capital expenditure guidance of AUD 4.1 billion to AUD 4.3 billion and provided FY2027 guidance of AUD 5.1 billion to AUD 5.4 billion, reflecting accelerated fleet renewal including the first four Project Sunrise aircraft. He said the net capex guidance does not assume proceeds from asset sales and noted that a non-binding MoU to sell the company’s stake in Jetstar Japan would likely not close until the end of the next financial year, with nothing material expected in FY2027.
About Qantas Airways (ASX:QAN)
Qantas Airways Limited provides air transportation services in Australia and internationally. The company operates through Qantas Domestic, Qantas International, Jetstar Group, and Qantas Loyalty segments. It offers passengers and air freight, and air cargo and express freight services; and customer loyalty recognition programs. The company operates a fleet of aircraft under the Qantas and Jetstar brands. Qantas Airways Limited was founded in 1920 and is based in Mascot, Australia.
