(Reuters) - Australia’s Qantas Airways Ltd on Thursday reported record revenue for a first quarter, as higher airfares and its strategy of keeping a lid on capacity helped offset a climb in oil prices.
The results put the country’s flagship carrier on track to deliver relatively strong annual earnings despite headwinds from oil prices that have buffeted Asian rivals which are continuing to add more flights.
Revenue increased 6.3 percent to A$4.4 billion ($3.1 billion) and the value of forward bookings grew 8 percent from the same period a year earlier.
“Our record passenger revenue performance for the first quarter meant that we were able to substantially recover higher fuel prices,” Qantas CEO Alan Joyce said in a statement.
“Market demand for travel remains fundamentally strong and we’re seeing some wind-back of competitor capacity growth.”
Qantas, while hedged on 76 percent of its fuel for the year ending June 30, lifted its expected fuel bill on higher oil prices and a weaker Australian dollar. It predicts a 27 percent rise to A$4.09 billion, compared with an earlier estimate of a 21 percent increase.
The airline, which controls nearly two-thirds of the country’s domestic capacity, trimmed its first-half capacity forecasts. It now expects domestic capacity to be flat to down 1 percent and international capacity to be flat.
By contrast, airlines globally grew capacity by 5.5 percent in the month of August, including a 7.3 percent rise in the Asia Pacific region, according to the International Air Transport Association.
Virgin Australia Holdings Ltd has also benefited from reining in capacity. On Monday it forecast it would report a first-half underlying profit before tax of at least A$100 million after revenue rose 9.7 percent in the first quarter.
Qantas did not provide an earnings estimate for the first half. The airline said the majority of a forecast A$400 million in benefits from a transformation programme designed to cut costs and boost revenue would materialise in the second half.
A consensus estimate from nine analysts put its annual underlying pretax profit at A$1.42 billion, an 11 percent decline from the year earlier, according to Refinitiv data.
Qantas shares, which had rallied on Virgin Australia’s results this week, were trading 4.5 percent lower on Thursday, while the broader Australian market was down 2.1 percent.
($1 = 1.4142 Australian dollars)
Reporting by Jamie Freed in Singapore; Additional reporting by Nikhil Kurian Nainan and Aditya Soni in Bengaluru; Editing by Edwina Gibbs