Qantas profit falls 20% as Middle East war drives $610m fuel hit

Qantas (ASX: QAN) posted a 19.8% drop in annual net profit as the Middle East conflict added $610 million to its fuel bill, pushing earnings to $1.3 billion for the year to June 30. Underlying pretax profit fell 13.8% to $2.06 billion, while revenue rose 7.1% to $25.5 billion.

Chief executive Vanessa Hudson said the final four months of the financial year were “particularly challenging, with weaker business and consumer confidence affecting travel demand.” The airline estimated the conflict had a net $420 million impact on earnings after fare increases, capacity changes and aircraft redeployment.

Fuel was the biggest pressure point. Qantas said its fuel bill rose $610 million, with the conflict involving Israel, the US and Iran driving a sharp increase in jet fuel prices. The airline responded by adjusting fares and capacity while maintaining substantial fuel hedging, though hedging does not fully shield it from movements in the cost of converting crude oil into jet fuel.

Premium demand remained a bright spot. Premium cabin revenue is growing at twice the rate of economy revenue across the international network, supporting the airline’s strategy of investing in newer aircraft with a greater proportion of premium seating. Hudson highlighted continued strength from the lower-cost carrier Jetstar as households remained under pressure.

Qantas is positioning its fleet for a longer-term shift toward more fuel-efficient aircraft. It plans to begin retiring its A380 fleet from 2028, with the aircraft phased out progressively.