Qantas annual profit slides 14% as Iran conflict lifts fuel costs

Qantas moves A380 retirement to 2028, four years earlier

Qantas said Thursday that the U.S.-Iran conflict contributed A$610 million (about US$437 million) to its fuel bill for the 12 months through June, before mitigation. The airline lowered the conflict’s net impact to A$420 million through cost actions elsewhere, but still expects fuel costs of A$3.6 billion in just the first half of its current fiscal year, signaling continued pressure on margins.

Underlying pretax profit fell 14% to A$2.06 billion, beating the Visible Alpha analyst consensus of A$2.00 billion. On a statutory basis, net profit dropped 20% to A$1.29 billion, while revenue rose 7.1% to A$25.52 billion on strong demand for both domestic and international travel.

Total fuel costs climbed more than 14% year over year to A$5.72 billion, according to Qantas. Jet-fuel prices doubled in the weeks after the United States and Israel attacked Iran, and carriers globally raised fares to keep up. Oil prices have since receded from those peaks but remain volatile, while jet-fuel refining margins have stayed elevated.

To reduce long-term fuel exposure, the airline is accelerating fleet renewal. Qantas said it would begin retiring its aging A380 aircraft in the 2028 calendar year, four years earlier than previously planned. Smaller, more fuel-efficient planes should improve fleet flexibility and profitability, the company said.

Fiscal 2026 capital expenditure rose 3.0% to A$3.97 billion, and depreciation and amortization, including for older planes, increased 12% to A$2.25 billion. Qantas projects depreciation and amortization of A$2.40 billion in the current fiscal year. The carrier took delivery of 17 aircraft in fiscal 2026, expects up to 31 in fiscal 2027, and is in talks with Airbus and Boeing to convert 20 purchase options into firm orders from 2030.

The conflict disrupted Qantas’s Middle East routes and dampened demand for travel to the region and to the United States. To offset the impact, the airline redeployed 16,000 seats to European services in the June quarter. International capacity across the year rose 7%, and international revenue increased 8.3% to A$9.925 billion.

Qantas projected that international capacity on Qantas-branded aircraft would rise 5% in the three months through September compared with the prior year, and by 3%, 4%, and 1%, respectively, over subsequent quarters. Average revenue per international seat kilometer, a key profitability metric, is estimated to rise 8% to 10% in the current half versus a year earlier, with the same range flagged for domestic operations.

The board raised the dividend payout to 19.8 Australian cents per share from 16.5 cents a year earlier. Qantas had declared a special dividend of 9.9 Australian cents at the end of its 2025 fiscal year but did not announce one alongside the current result. The company also said it would not complete the A$150 million buyback it announced in February.