Qantas has posted an interim underlying pre-tax profit of $1.43 billion in its first return to profitability since the coronavirus pandemic started three years ago.

The record first-half result exceeded the predictions of many analysts and was at the top end of the airline’s forecast for an underlying profit between $1.35 billion and $1.45 billion in the first half of fiscal 2023.

The statutory net profit for the six months to June 30 was $1 billion, compared to a $456 million net loss a year ago.

“When we restructured the business at the start of COVID, it was to make sure we could bounce back quickly when travel returned,” CEO Alan Joyce said on Thursday.

“That’s effectively what’s happened, but it’s the strength of the demand that has driven such a strong result.”

The profit turnaround was delivered despite a 65 per cent increase in fuel costs during the half.

Despite the return to the black, Qantas had a warning for travellers. It said that while airfares would “moderate”, prices would not return to pre-pandemic levels.

“Fares expected to moderate during 2H23 as capacity increases but will remain significantly above FY19 levels,” it told shareholders in its outlook.

Mr Joyce said that travel demand remained “very robust, particularly leisure travel”.

The rebound helped Qantas notch up revenue of $9.9 billion, more than three times the figure for the same period a year ago.

“While interest rates and inflation are expected to hit discretionary spending at some point, we have yet to see any signs of that,” Mr Joyce said.

“In fact, research shows that travel is one area that people want to prioritise over the next 12 months.”

The airline said domestic flying levels had averaged 94 per cent of pre-pandemic levels in the past six months. International capacity had doubled to 60 per cent.

Mr Joyce said $1 billion in restructuring benefits was also beginning to flow to the airline’s bottom line.

“That restructure, which we announced almost three years ago, was about making sure we survived the pandemic and bounced back quickly, which is what we’re exactly seeing now,” he said.

“Having said that, costs are up. We’re keeping more spare aircraft in reserve and rostering more crew to give our operations extra buffer.

“The estimated disruption cost, the cost of all of that back-up is over $200 million this financial year, and it will steadily unwind as operations continue to stabilise. As I think our customers would agree, that investment has been well worth it – our reliability has improved, right
across the group.”

Qantas’ profit turnaround comes after three years and $7 billion in statutory losses due to the pandemic.

All segments of its business turned profitable during the half year, led by Qantas Domestic, which had $785 million in earnings before interest and tax, compared to a $613 million loss a year ago.

Qantas International and Freight was the second most profitable segment, generating $464 million in earnings, while Qantas Loyalty garnered a $220 million gain. Jetstar recorded half-year earnings of $177 million.

Qantas expects travel demand to continue helping drive the recovery this year and in 2024. Its domestic capacity will exceed pre-Covid levels in the second half of 2023, while international capacity is forecast to reach 81 per cent of 2019 levels in the second half.

The national carrier will not pay any interim dividend for the half year but announced an on-market share buy-back of up to $500 million.

Across the Tasman, Air New Zealand has also announced a return to profit.

Its first first-half profit in three years was also helped by strong travel demand following the reopening of domestic and international borders, and cargo revenues above pre-COVID levels.

Air NZ reported a statutory profit before tax of NZ$299 million ($270 million) for the six months to December 31, after a loss of NZ$376 million a year earlier.

-with AAP