Qantas flags record revenue as leisure, international travel lift

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The Australian domestic aviation market is largely a duopoly of Qantas and smaller rival Virgin Australia, both of which have increased fares and boosted domestic earnings by keeping a lid on capacity.

Qantas is expected by analysts on average to report revenue of $18.03 billion for the year ending June 30, up 5.6 per cent. It posted a record revenue last fiscal year as well, when it rose 6.2 per cent to $17.06 billion.

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The company, in its trading update on Thursday, did not disclose its third-quarter underlying profit before tax, its most closely watched measure, or provide the profit outlook for the fiscal year ending June 30.

In February, the airline reported a half-year underlying profit before tax of $780 million, its lowest since 2015 as a rise in international revenue failed to fully offset a margin squeeze from higher fuel prices.

Qantas shares were up 2.5 per cent to $5.50 on Thursday afternoon.

In the third quarter, Qantas cut domestic capacity by 1 per cent and international capacity by 1.9 per cent, which helped the airline recover some fuel costs.

The company said it remained on track to fully offset the impact of significantly higher fuel costs this year, compared with last year.

Revenue per available seat kilometre, a measure that combines fares paid and the percentage of seats filled, grew by 5.5 per cent in the four months from January 1, 2019, it said.

Qantas also said it settled the sale of a terminal at Melbourne Airport and secured future access to it for $355 million, of which it would receive $276 million in cash in the current financial year and the rest accrued in future periods.

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