Qantas reported a decline in annual profits despite a modest increase in CEO Vanessa Hudson’s remuneration, reflecting a cautious financial environment amid ongoing strategic changes. The airline announced a full-year underlying profit before tax of AUD 2.064 billion, falling short of the AUD 2.1 billion target required for full executive bonuses by AUD 36 million. Despite the shortfall, the board exercised discretion to award a 25 percent payout on the bonus metric for those eligible.

CEO Vanessa Hudson received a short-term bonus of AUD 672,000, raising her total remuneration by 1.5 percent to AUD 5.4 million for the year. Most other executives, except for Qantas International CEO Cam Wallace, saw slight reductions in their pay. Wallace’s remuneration increased by over AUD 1 million to AUD 3.14 million, despite his division experiencing the largest earnings decline.

Qantas confirmed plans to begin retiring its four-engine A380 aircraft within two years as new, more fuel-efficient planes, including Airbus A350-1000ULRs, A321XLRs, and Boeing 787-9s, are delivered. Hudson explained that the pace of phase-out would depend on the delivery schedule of the new aircraft. The replacement fleet will feature more premium-seat configurations, resulting in a lower economy seat capacity on international routes but greater operational flexibility and targeted premium revenue growth.

Hudson highlighted that the introduction of more premium seats aligns with Qantas’s strategy to enhance yield, projecting an 8 to 10 percent increase in unit revenue for both domestic and international operations in the second half of the calendar year. She clarified that this revenue growth would not come from direct fare increases but rather ancillary charges such as seat selection and baggage fees, as well as higher passenger volumes and expanded charter operations in Western Australia.

In line with this strategy, Jetsart, a Qantas subsidiary, will introduce a fee for overhead locker space starting February 2, 2027. Although the charge, which can be as high as AUD 49, has drawn criticism from some customers, sales have surpassed expectations. Hudson stated that the policy enhances customer choice, supports low fares, improves on-time performance, and eliminates a passenger friction point. Jetsart CEO Steph Tully added that the airline has multiple ancillary initiatives planned to maintain competitive pricing.

Qantas also declared a fully franked final dividend of 19.8 cents per share to be paid on October 14, bringing the total dividend for the year to 39.6 cents, up from 33 cents in the previous period. Despite the profit decline, the market responded positively, with Qantas shares closing 4.5 percent higher at AUD 9.64.

Market analysts noted the company’s performance as resilient given rising fuel costs, which were identified as the primary factor impacting earnings. Josh Gilbert, lead analyst for Asia Pacific at Etoro, emphasized the challenge facing Qantas in converting higher fares into increased profitability without negatively affecting passenger demand.

Moody’s vice-president Sean Williams pointed to the airline’s cancellation of its planned share buyback as a prudent measure to maintain financial discipline. He noted Qantas’s strong liquidity position of AUD 13.3 billion and net debt levels within management’s targets, providing flexibility amid the ongoing multi-year fleet renewal.