Qantas has announced another share buyback and raised its final dividend despite higher fuel costs and a weaker Aussie dollar pulling down its full-year profit by 17 per cent to $1.302 billion.
The carrier on Thursday reported record revenue of $17.97 billion for the 12 months to June 30 but underlying pre-tax profit was hit by a $614 million increase in fuel costs from higher oil prices and a further $154 million impact from currency movements.
The airline's statutory profit, which includes all one-off items, fell by 6.5 per cent to $891 million.
Nonetheless, Qantas raised its final dividend by 3.0 cents to 13.0 cents and plans to buy back up to 79.7 million shares.
The latest buyback means Qantas will have decreased the number of shares on issue by about 30 per cent since 2015 and will take its capital return to shareholders in that period past $4 billion.
"This result shows the strength of our individual businesses but also the strength of our portfolio as a whole," chief executive Alan Joyce said.
"Even with headwinds like fuel costs and foreign exchange, we remain one of the best-performing airline groups in the world."
Qantas has fully hedged its expected FY20 fuel cost of $3.95 billion after its international underlying earnings were hardest hit by fuel and forex headwinds, dropping 28 per cent to $285 million.
But the airline is making significant investment in international, refurbishing its fleet of A380s and trialling non-stop flights from London and New York to Sydney before the end of the year.
The research flights will use new Boeing 787-9s and carry no more than 40 employees, scientists and medical experts as Qantas gathers real-time health and wellbeing data to help inform plans to potentially launch commercial flights of more than 20 hours.
The data is essential as Qantas formulates so-called fatigue management systems, which must be approved by the Civil Aviation Safety Authority and essentially limit flight durations.
With its Perth-London route boasting the highest net promoter score of any in its business, Qantas is optimistic the longer direct flights will be popular with consumers.
They also need to make financial sense, however.
"There's plenty of enthusiasm ... but it's not a foregone conclusion," Mr Joyce said.
"This is ultimately a business decision and the economics have to stack up."
Despite rising revenue, domestic underlying earnings fell 3.3 per cent to $740 million.
Its Jetstar budget airline was similarly affected but Qantas's loyalty program hoisted earnings by 8.4 per cent to $374 million, helped by a near 5.0 per cent rise in members.
Mr Joyce said Qantas anticipated flat domestic capacity at least for the first half of the current financial year, with weakness in the price-sensitive leisure market but steady premium leisure demand.
"Overall demand from our corporate customers is flat, with continued strength in the resources sector offsetting weaker demand from other industries, like financial services and telecommunications," Mr Joyce said.
Reporting net free cash flow of $1.244 billion, Qantas also handed each of its 25,000 non-executive employees a $1,250 travel bonus.
QANTAS' FY RESULTS
* Revenue up 4.9pct to $17.97b
* Underlying profit down 16.8pct to $1.302b
* Net profit down 6.5pct to $891m
* Final dividend up 3.0 cents to 13.0 cents, fully franked.