Qantas Airways flags higher fuel costs and capacity changes in FY26 update

The Qantas Airways Ltd (ASX: QAN) share price is in focus today after the company provided a market update flagging sharply higher jet fuel costs and a shift in capacity, while maintaining a strong balance sheet.

What did Qantas Airways report?

• Jet fuel costs for 2H26 are now estimated at $3.1–3.3 billion, more than double previous expectations.
• Group International RASK (unit revenue) growth for 2H26 is forecast at 4–6%, double prior guidance.
• Group Domestic RASK growth for 2H26 expected at approximately 5%.
• FY26 capital expenditure to be at or below $4.1 billion, the bottom end of guidance.
• Net debt now expected at or above the midpoint, but within Qantas’ target range by 30 June 2026.
• The $300 million interim dividend (19.8 cents per share) will be paid on 15 April 2026; $150 million buyback remains on hold.

What else do investors need to know?

Qantas has implemented a range of measures to mitigate rising fuel costs and the impact of Middle East conflict, including network changes, reduced domestic capacity in the current quarter, and fare increases. The company remains exposed to fluctuating jet refining margins, despite hedging most of its crude oil needs for the half-year.

Demand for international travel, especially to Europe, remains robust. Qantas is redeploying resources from the US and domestic operations to offer additional flights to Paris and Rome. Affected domestic customers are being offered alternative flights or refunds after a 5 percentage point reduction in 4Q26 capacity.

What’s next for Qantas Airways?

Qantas will keep monitoring external conditions and holds flexibility to adjust its response to volatile fuel prices. The company says it is working closely with government and fuel suppliers to ensure fuel availability, while continuing to manage capacity and pricing in response to evolving demand.

The group will provide a formal update on its FY27 outlook once there is more certainty on geopolitical and economic developments impacting its operations.

Qantas Airways share price snapshot

Over the past 12 months, Qantas shares have risen 6%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 15% over the same period.

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The post Qantas Airways flags higher fuel costs and capacity changes in FY26 update appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.