Qantas Airways (ASX:QAN): How Are Fuel Costs and Fleet Renewal Shaping FY27?

Aditi Sarkar

27 October 2026 06:56 PM AEDT

Qantas Airways (ASX:QAN): How Are Fuel Costs and Fleet Renewal Shaping FY27?

Image Source: Shutterstock

You are reading a free article with opinions that may differ from the recommendation given by Kalkine in its paid research reports. Become a Kalkine member today to get access to our research reports, in-depth technical and fundamental research. Learn more

Start Your Free Trial Now!

Highlights

Qantas Airways (ASX:QAN) reported FY26 underlying profit before tax of AUD 2.064bn, down AUD 330mn YoY.
Statutory profit after tax declined to AUD 1.289bn, compared with AUD 1.605bn in FY25.
FY26 operating cash flow was AUD 3.893bn, while net capital expenditure totalled AUD 3.968bn.
The company expects 1H FY27 jet fuel costs of approximately AUD 3.6bn and continues fleet renewal.

Qantas Airways Limited (ASX:QAN) operates passenger airline, freight and loyalty businesses, serving domestic and international markets through the Qantas and Jetstar brands. Its FY26 results reflected higher fuel expenses, increased aircraft investment and varying earnings trends across its operations. Qantas Airways Limited (ASX:QAN) shares were priced at AUD 8.65 on 27 October 2026. The latest financial disclosures also set out FY27 fuel assumptions, capacity plans and capital expenditure commitments.

Company Business

Qantas Airways Limited (ASX:QAN) reports activity through Qantas Domestic, Qantas International, Jetstar Group and Qantas Loyalty. Its passenger networks connect Australian cities with international destinations, while freight services transport cargo on passenger aircraft and dedicated freight operations. Qantas Loyalty provides frequent-flyer and related partner services, generating earnings outside direct airline ticket sales.

Airline profitability depends on passenger demand, aircraft utilisation, fares, fuel prices, aviation charges and employee costs. Fleet investments involve aircraft purchases, cabin upgrades and ongoing maintenance. The Group is progressively introducing A220, A321XLR and other aircraft, while its Project Sunrise program is intended to support longer-range international operations. Operations are exposed to Australian and overseas currencies, airport capacity and international geopolitical events.

Recent Development

In August 2026, Qantas Airways Limited (ASX:QAN) published its FY26 results for the year ended 30 June 2026. Management reported that the Middle East conflict affected second-half earnings through higher fuel costs and route disruptions. The company estimated a net effect of approximately AUD 420mn on underlying EBIT in 2H FY26. The Group adjusted fares, domestic capacity and deployment of available aircraft to respond to those conditions.

The fleet program continued during FY26, with 29 aircraft delivered, including 17 new aircraft. Deliveries included QantasLink A220s, Qantas A321XLRs and Jetstar A321LR aircraft. The company also announced a fully franked final base dividend of 19.8 Australian cents per share, taking total FY26 base dividends to 39.6 cents per share. It decided not to proceed with a previously announced additional AUD 150mn on-market share buy-back, citing fuel-price volatility and changed capital availability.

The latest published financial outlook anticipates FY27 net capital expenditure of AUD 4.3bn–4.6bn. Qantas expects its 1H FY27 Group Domestic and Group International total revenue per available seat kilometre to increase by 8%–10% YoY, based on the assumptions outlined with its FY26 results. These are company forecasts rather than realised results.

Financial Performance and Sector Context

Qantas Airways Limited (ASX:QAN) reported FY26 underlying profit before tax of AUD 2.064bn, compared with AUD 2.394bn in FY25, a decrease of AUD 330mn or approximately 13.8% YoY. Statutory profit after tax declined to AUD 1.289bn from AUD 1.605bn, while statutory earnings per share decreased to 85.4 cents from 105.2 cents. The Group reported an operating margin of 9.2%, down 1.9 percentage points YoY.

Operating cash flow declined to AUD 3.893bn in FY26 from AUD 4.253bn in FY25. Net capital expenditure increased to AUD 3.968bn from AUD 3.813bn, leaving net free cash flow at negative AUD 75mn compared with positive AUD 440mn in the previous year. Net debt stood at approximately AUD 6.2bn at 30 June 2026, within the Group’s stated target range of AUD 5.5bn–6.9bn.

The Group reported FY26 net passenger revenue growth of 7% and cited higher freight revenue and additional Qantas Loyalty earnings. Higher jet fuel costs, industry charges and expenses associated with fleet transition weighed on profitability. The FY27 outlook included approximately AUD 3.6bn in first-half fuel costs, 85% Brent oil hedging for the remaining 1H FY27 exposure measured in August, and expected full-year depreciation and amortisation of about AUD 2.4bn.

Risks to Consider

Qantas Airways Limited (ASX:QAN) faces exposure to fuel-price volatility, currency movements, airport and aviation charges, international disruptions and fluctuations in passenger demand. Aircraft delivery timing, maintenance requirements and capital expenditure can affect fleet availability and cash generation. The company has also disclosed cyber-incident costs, legal provisions and restructuring charges in its statutory results. Higher net debt and financing commitments are relevant to the Group’s capital management framework.

What to Watch Next

Monitoring points for Qantas Airways Limited (ASX:QAN) include the next trading and half-year disclosures, demand across domestic and international routes, realisation of FY27 unit-revenue assumptions, and updated jet fuel costs. Investors can also monitor deliveries of new aircraft, Project Sunrise development, Jetstar network changes and progress towards the Group’s debt and capital expenditure targets. Actual outcomes will depend on operating conditions and management execution.

Key Insights

Qantas Airways Limited (ASX:QAN) recorded lower FY26 underlying and statutory earnings as increased fuel expenses affected operations despite growth in passenger and ancillary revenue. Operating cash flow remained substantial, although fleet-related investment exceeded it. FY27 disclosures will indicate how fare settings, hedging, aircraft deployments and capital spending influence earnings, cash generation and debt.

Download Free Report – Explore 3 Stock Ideas & Industry Insights

Unlock 3 stock ideas and key industry insights in our free report. This information is general in nature and does not consider your personal objectives, financial situation, or needs. It is not financial advice.

All investments involve risk—consider independent advice before making any investment decisions.

View 3 Research Reports

Disclaimer:

This article (“Article”) has been prepared by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and its related bodies corporate who are authorised to provide general financial product advice. Kalkine.com.au and its associated pages are published by Kalkine.

Any information/advice provided in this article is general in nature and does not take into account your objectives, financial situation or needs. You should therefore consider whether the information is appropriate for your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Memorandum or other offer document (“Offer Document”) for the securities or other financial products referred to in Kalkine articles. You should obtain a copy of the Offer Document and consider it before making any decision about whether to acquire the security or financial product.

Kalkine strongly recommends that you seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) before acting on any advice/information in this Article or on the Kalkine website. Not all investments are appropriate for all people.

The information in this Article and on Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of the information contained in its articles (including this Article), newsletters and websites. All information represents our views at the date of publication and may change without notice.

The information in this Article does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products.

Kalkine does not issue, sell or deal in any financial products.

This Article may contain information on past performance of particular investments. Please note past performance is neither an indicator nor a guarantee of future performance.

To the extent permitted by law, and excluding any dishonesty or gross negligence by Kalkine, Kalkine disclaims and excludes all liability for any direct, indirect, implied, punitive, special, incidental or other consequential loss or damage arising from the use of or reliance on this Article, the Kalkine website and any information published on the Kalkine website without any warranties or representations by Kalkine to you. To the extent the law prohibits or limits this exclusion, Kalkine limits its liability to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

Employees and/or associates of Kalkine and its related entities may hold interests in the securities or other financial products covered in this Article or on the Kalkine website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.

Some of the images/music that may be used in the Article are copyright to their respective owner(s). Kalkine does not claim ownership of any of the pictures displayed/music used in the Article unless stated otherwise. The images/music that may be used in the Article are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.