Highlights

• Qantas Airways (ASX:QAN) reported Qantas Loyalty underlying EBIT of A$625 million in FY26.

• Loyalty Earnings increased 12%, while active membership grew 6%.

• Points earned and redeemed each increased 9% during the year.

• Revised bank agreements and payment reforms will influence future points issuance.

Qantas Airways Limited (ASX:QAN) is emerging as the prize at the centre of an intensifying rewards contest between Australia's major banks, as Commonwealth Bank, Westpac and ANZ all recalibrate their Credit card offers around Qantas Points. Qantas Loyalty, the division that administers the Frequent Flyer program and its bank partnerships, generated $2.9 billion in Revenue and $625 million in underlying earnings in the year to June 2026, up 12 per cent on the prior year. As banks fight over which of them offers the best path to those points, Qantas stands to benefit regardless of who wins.

Loyalty's Growing Weight in the Group

Qantas Loyalty's underlying EBIT of $625 million in FY26 carried an Operating Margin of 21.7 per cent, well above the airline's core flying business, and active membership grew 6 per cent to 18.9 million. That growth came in a year where group Underlying Profit before tax fell to $2,064 million, down $330 million, largely attributed to a roughly $420 million impact from the Middle East conflict on fuel and network costs. Loyalty's resilience has made it an increasingly important earnings buffer, and Qantas has set a target of $800 million to $1,000 million in underlying EBIT from the division by FY30, a goal that depends heavily on the Volume of points banks continue to issue through co-branded cards.

Banks Reshaping the Points Pipeline

The commercial stakes were underlined by Commonwealth Bank's decision to close its CommBank Awards program on 29 September 2026, replacing it with a new Yello points system from 1 October under which Qantas transfers require a $149 annual fee at a 3-to-1 conversion rate, a steeper cost than the $90 fee it replaces. Westpac's Altitude Qantas Black and Platinum cards, and ANZ's Frequent Flyer Black and Platinum cards, continue to offer more direct Qantas Points earning, giving Qantas exposure to competing bank strategies that each shape how quickly, and how expensively, customers accumulate points. Separately, Qantas itself unveiled a program overhaul allowing members to earn Status Credits through everyday spending from 8 December 2026, alongside tighter status-retention thresholds from late 2027, reshaping the value proposition banks are competing to attach their cards to.

Regulatory Pressure on the Whole Ecosystem

Reserve Bank of Australia payments reforms taking effect from 1 October 2026, which cut the interchange fee cap on personal credit cards from 0.8 per cent to 0.3 per cent and ban merchant surcharging, are expected to squeeze the Economics every bank uses to fund Qantas Points. Banks have signalled they may respond with lower earn rates or higher card fees, which could dampen points issuance across all three of Qantas's major banking partners simultaneously. How Qantas Loyalty absorbs any resulting slowdown in bank-issued points, against continuing membership growth from its own program changes, will be a key variable for the division's trajectory toward its FY30 earnings target. Qantas has not disclosed a specific forecast for how the interchange changes will affect Loyalty's points issuance volumes or transfer revenue, leaving the near-term financial impact on the division genuinely uncertain rather than something that can be reliably estimated from public disclosures alone.

Key Insights

Investors should watch Qantas Loyalty's points issuance and member growth data in upcoming results for signs of how the banks' competing rewards strategies, and the RBA's interchange changes, are flowing through to the division that has become one of the group's most valuable and closely watched businesses.