Qantas highlights increased engagement as loyalty program returns stronger earnings

Airline releases full-year financial results, noting mixed conditions and lower underlying earnings thanks to high fuel and foreign exchange costs

Qantas has reported a return to double-digital earnings across its frequent flyer program and seen a 24 per cent increase in flight redemptions since announcing a $25 million overhaul of the loyalty offering this year.

The ASX-listed airline reported its full-year financial results today, noting record revenue of $17.9 billion for the year to 30 June 2019, up 4.9 per cent year-on-year. Underlying pre-tax profit, however was down 17 per cent to $1.3 billion, a figure Qantas attributed to a $614 million increase in fuel costs, along with $154 million negative foreign exchange impact, over the year.

A bright spark was the Qantas Loyalty offering, which returned to double-digit earnings growth in the second half, leading to a record underlying EBIT of $374 million off revenue of $1.6 billion. This came off the back of new insurance and financial services streams, as well as improvements made to the Frequent Flyer program.

Total points redeemed during the year grew 12 per cent, while membership increased 5 per cent to 12.9 million. In addition, the Qantas Business Rewards program reached 250,000 members. Qantas also confirmed growth of credit cards earning Qantas points continued to outperform the market, while health insurance customers grew by 46 per cent over the period.

Qantas noted a 24 per cent lift in classic flight redemptions since announcing plans to invest $25 million into renovating its loyalty program from June. Among the changes are 1 million extra rewards seats, a new lifetime qualification and tier points club for non-flying spenders.

Across the respective Qantas divisions, the group confirmed its domestic business delivered an underlying EBIT of $1.03 billion, down 4 per cent year-on-year, while unit revenue from Qantas and Jetstar’s domestic operations grew by a combined 4 per cent. EBIT on international, meanwhile, was down 28 per cent to $285 million.

Qantas Group CEO, Alan Joyce, described FY19 performance as positive given market conditions.

“This result shows the strength of our individual businesses but also the strength of our portfolio as a whole,” he said. “Even with headwinds like fuel costs and foreign exchange, we remain one of the best-performing airline groups in the world. Our performance is the result of having the right strategy and the ability to deliver it.”

Looking ahead, Joyce said overall market conditions remained mixed, with weakness in the lower-end leisure market, and flat overall demand across corporate customers.

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