Qantas shares tumble 6% despite first-half earnings beat

Qantas Airways Ltd (ASX: QAN) shares are losing altitude on Thursday.

At the time of writing, the airline operator’s shares are down almost 6% to $10.04.

Why are Qantas shares falling?

Investors have been selling the Flying Kangaroo’s shares this morning after it released its half-year results.

According to the release, Qantas delivered a 6.3% increase in revenue to $12.9 billion for the six months.

This was driven by a 5% increase in Qantas Domestic revenue to $4.2 billion, a 5% lift in Qantas International (including Freight) revenue to $4.9 billion, an 8% increase in Jetstar Group revenue to $3.1 billion, and a 19% jump in Qantas Loyalty revenue to $1.4 billion.

On the bottom line, the company recorded a 5.1% increase in underlying profit before tax to $1,456 million. This was around 2% ahead of consensus estimates.

This has allowed the Qantas board to declare a fully franked interim base dividend of 19.8 cents per share. This is a return of $300 million and represents a 20% increase on the prior corresponding period.

But the returns won’t stop there. The company intends to undertake an on-market share buyback of up to $150 million.

Management commentary

Qantas Group’s CEO, Vanessa Hudson, was pleased with the half. She said:

By consistently delivering strong earnings growth we’re able to continue investing in the largest fleet renewal in our history. We’re already seeing the benefits from the next generation aircraft that are flying, which along with strong demand, our dual brand strategy and expanding Loyalty business, helped us deliver another strong result. These new aircraft are not only improving the experience for our customers and opening up new opportunities for our people, they’re also helping drive our financial performance.

Around 60 per cent of Jetstar’s increase in profitability in the half was driven by its new aircraft, through a combination of growth, new network opportunities and the redeployment of existing aircraft onto other routes. This gives us confidence in the benefits that will flow once Qantas’ new aircraft reach scale. We’ve already started to see an acceleration in deliveries for Qantas, with six new aircraft arriving in the half and a further 30 arriving over the next 18 months.

Outlook

Qantas expects strong travel demand across the portfolio in the second half. However, it warns that the evolving economic environment in the US will continue to be monitored.

Group Domestic unit revenue is expected to increase by approximately 3% in the second half compared to the previous year. While Group International unit revenue is expected to increase by 1-3 per cent. This is inclusive of higher capacity mix from Qantas International.

The post Qantas shares tumble 6% despite first-half earnings beat appeared first on The Motley Fool Australia.

More reading

• Qantas earnings: Profit up, higher dividends, and bigger fleet for FY26
• Up 97% in 2 years, can Qantas shares keep the momentum going when the airline reports results on Thursday?
• Why I would buy Qantas and these ASX 200 shares with $5,000
• 5 top ASX 200 shares I would buy with $5,000
• 3 blue-chip ASX 200 shares I would buy and hold

Motley Fool contributor James Mickleboro 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.