Qantas Group’s Chief Executive Officer Vanessa Hudson speaks during their half-year financial results press conference in Sydney, Australia, February 26, 2026. REUTERS
Feb 26 (Reuters) – Australia’s Qantas Airways on Thursday posted record first-half underlying earnings, but its shares plunged 10% after its international division’s profit unexpectedly declined due to rising costs and weaker demand for economy-class travel to the U.S.
The U.S. has reported a fall in arrivals from many countries, including Australia and New Zealand, since President Donald Trump began his second term last year and tightened border control policies.
Qantas and rival Air New Zealand on Thursday both attributed softness in that market to weaker Australian and New Zealand currencies that drove up the costs of U.S. trips for travellers from their home countries rather than immigration enforcement.
“The U.S. market is a really important market for us,” Qantas CEO Vanessa Hudson told reporters. “The Australian dollar does affect purchase decisions when it comes to travel.”
She later told analysts the Australian dollar’s recent rebound above 70 U.S. cents made her optimistic about an improvement in demand on U.S. routes in the second half ending June 30.
Nevertheless, Qantas is reallocating some capacity from U.S. routes to other destinations such as Singapore where demand remains robust, Hudson said.
Her comments came after the airline posted a 5% rise in underlying profit before tax of A$1.46 billion ($1.04 billion) for the six months ended December 31 that was slightly higher than expected.
Despite that, shares were on track for their biggest intraday fall since March 2020, when the COVID-19 pandemic led to international border closures and devastated the airline industry.
While domestic demand, fleet renewal and loyalty programme growth underpinned the record first-half result, underlying earnings before interest and tax in the international division fell 6% primarily due to higher costs, wages and staff training for new planes.
Analysts, including from Citi and RBC Capital Markets, said the international result was short of expectations, tempering enthusiasm for the company’s overall profit growth.
DOMESTIC PROFITS RISE
Qantas said it expected travel demand to remain strong in the second half, with domestic unit revenue forecast to increase by about 3% and international unit revenue by about 1% to 3%.
Its domestic division delivered a 14% rise in underlying EBIT in the first half, supported by strong business and leisure travel demand.
Hudson said the results reflected benefits from the carrier’s investment in upgrading its fleet with more fuel-efficient planes and strong performances from budget arm Jetstar and its expanding loyalty business.
“We’re already seeing the benefits from the next-generation aircraft that are flying,” Hudson said, noting that around 60% of Jetstar’s profitability increase came from new aircraft through growth and network opportunities.
“This gives us confidence in the benefits that will flow once Qantas’ new aircraft reach scale,” she added.
The group closed Singapore-based Jetstar Asia last July and announced earlier this month plans to sell its stake in Jetstar Japan as it moves to focus on core domestic operations.
Qantas is also accelerating its largest-ever fleet renewal programme, receiving nine new aircraft during the first half and expecting 30 more over the next 18 months. Capital spending rose 27% to A$1.8 billion in the first half.
Reporting by Julie Zhu in Hong Kong, Sameer Manekar and Nikita Maria Jino in Bengaluru and Byron Kaye in Sydney; Editing by Jamie Freed
