Highlights

  • Qantas reported Underlying Profit before tax of AUD 2.06 billion in FY26, reflecting increased fuel expenditure and geopolitical disruption.
  • Domestic operations and the Loyalty division continued contributing to group profitability.
  • Aircraft deliveries progressed during FY26 as the airline advanced its fleet modernisation programme.
  • Management expects higher unit Revenue in H1FY27 while maintaining substantial Capital Expenditure for fleet replacement.

Qantas Airways (ASX:QAN), Australia's national airline group operating passenger, freight and loyalty businesses, reported lower underlying and statutory Earnings for FY26, ended 30 June 2026. The company's results reflected increased aviation fuel costs associated with the Middle East conflict, partly offset by network adjustments, fare increases and operating efficiencies. Alongside these developments, Qantas continued its fleet renewal programme, Shareholder distributions and Investment in future international routes.

FY26 Profitability Declines Amid Higher Operating Costs

Qantas reported underlying profit before tax of AUD 2,064 million in FY26, representing a decline of AUD 330 million from FY25.

Statutory profit after tax decreased by AUD 316 million to approximately AUD 1.29 billion.

Underlying Earnings Per Share declined to 96 cents from 110 cents in the previous financial year.

The reduction in profitability reflected higher fuel expenditure, increased operating costs and disruption across international aviation markets.

Nevertheless, Qantas generated Operating Cash Flow of approximately AUD 3.9 billion during FY26.

The financial results indicate that existing operations continued generating earnings, although additional fuel expenditure affected overall profitability.

Middle East Conflict Increases Aviation Fuel Expenditure

Qantas Airways (ASX:QAN) experienced a material increase in aviation fuel costs during H2FY26 following disruptions associated with the Middle East conflict.

The company estimated a gross fuel cost impact of approximately AUD 1,010 million.

Fuel hedging arrangements provided approximately AUD 400 million in protection, reducing the net fuel expenditure impact to AUD 610 million.

Operational mitigation measures, including fare increases, network adjustments and expenditure reductions, offset approximately AUD 190 million of the additional cost.

Consequently, the estimated net impact on underlying profit before tax was approximately AUD 420 million.

The company also adjusted international capacity and redeployed aircraft in response to changes in passenger Demand and global airline operations.

Domestic Operations and Loyalty Support Earnings

Qantas Domestic and Jetstar continued contributing to group profitability during FY26.

Group Domestic generated underlying earnings before interest and tax (EBIT) of approximately AUD 1.44 billion.

Qantas Domestic revenue increased 5%, supported by capacity growth and continued demand across its network.

Jetstar Domestic underlying EBIT increased 15%, reflecting contributions from newer aircraft and operational improvements.

Meanwhile, Group International and Freight reported underlying EBIT of approximately AUD 650 million, with increased fuel expenditure affecting margins despite higher revenue.

Qantas Loyalty generated underlying EBIT of approximately AUD 625 million, representing 12% growth compared with FY25.

The division benefited from increased member activity and points transactions, providing earnings Diversification beyond passenger operations.

Fleet Renewal Progresses Across Domestic Operations

Qantas Airways (ASX:QAN) continued replacing older aircraft with newer-generation models during FY26.

The group received 29 aircraft, including 17 new aircraft comprising five Jetstar Airbus A321LRs, one Jetstar Airbus A320neo, five QantasLink Airbus A220s and six Qantas Airbus A321XLRs.

The new aircraft form part of the group's fleet modernisation programme, designed to improve fuel efficiency, increase operating flexibility and support network development.

Qantas expects delivery of up to 31 additional aircraft during FY27, subject to manufacturer schedules.

The airline is also progressing Project Sunrise, which involves introducing Airbus A350-1000ULR aircraft for future ultra-long-haul international services.

Fleet renewal is expected to influence operating costs and fuel consumption over time, although aircraft Acquisition and introduction require substantial capital investment.

Capital Expenditure and Net Debt Remain Important

Qantas reported net debt of approximately AUD 6.2 billion at 30 June 2026, within its FY26 target range of AUD 5.5 billion to AUD 6.9 billion.

Net capital expenditure reached approximately AUD 4.0 billion, reflecting payments for new aircraft, maintenance and infrastructure investment.

For FY27, management expects net capital expenditure between AUD 4.3 billion and AUD 4.6 billion.

The company also expects Depreciation and Amortisation expenses of approximately AUD 2.4 billion during FY27.

These expenditure commitments reflect the financial requirements of ongoing fleet replacement and associated operational improvements.

Shareholder Distributions Continue

Qantas Airways (ASX:QAN) declared a fully franked final Dividend of 19.8 cents per share for FY26, representing an aggregate distribution of AUD 300 million.

The dividend is scheduled for payment on 14 October 2026.

Combined with the interim dividend, total FY26 dividends reached 39.6 cents per share.

The company returned approximately AUD 700 million to shareholders during FY26.

Qantas also paused its previously planned share buyback as part of measures to manage Liquidity and capital expenditure requirements amid increased fuel costs.

Future distributions will depend on financial performance, cash generation and investment priorities.

FY27 Outlook Reflects Fuel Costs and Capacity Management

Qantas expects aviation fuel expenditure of approximately AUD 3.6 billion during H1FY27.

The company has hedged approximately 85% of its Brent Crude oil exposure for the period, providing partial protection against price volatility.

Management expects domestic and international total revenue per available seat kilometre to increase by 8–10% during H1FY27.

Total group capacity is expected to remain broadly unchanged, with domestic capacity declining approximately 3% and international capacity increasing approximately 2%.

The company also expects Qantas Loyalty underlying EBIT to grow by 5–7% during FY27.

However, fuel prices, currency fluctuations, labour costs and aircraft delivery schedules remain important operating risks.

Final Thoughts

Qantas' FY26 results reflect the impact of increased fuel expenditure and international aviation disruptions on profitability.

Despite these challenges, domestic operations, international services and the Loyalty division continued supporting group earnings.

Fleet renewal, capital expenditure management and fuel-cost mitigation will remain central to operating performance during FY27.