Qantas - Strategic Analysis and Outlook Report (2026)

Australia’s flagship carrier, Qantas, has completed a pivotal year of transformation, recording exceptional financial results while accelerating one of the aviation industry’s most ambitious fleet modernization programs.

With A$23.8 billion in revenue for fiscal year 2025 and a statutory profit after tax of A$1.61 billion, Qantas stands at the intersection of strategic expansion as it charts its course toward 2026.

Table of Contents

• Financial Performance: Delivering Shareholder Valu …

• Operational Excellence and Customer Satisfaction

• Fleet Modernization: A$20 Billion Transformation

• Project Sunrise: Redefining Ultra-Long-Haul Aviati …

• Dual Brand Strategy and Market Segmentation

• Network Expansion and Route Development

• Cost Pressures and Operational Challenges

• Sustainability and Environmental Commitments

• Loyalty Program: Industry-Leading Engagement

• Outlook for 2026 and Beyond

• My Final Thoughts

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Financial Performance: Delivering Shareholder Value

The airline’s FY25 financial results demonstrate remarkable momentum across all business segments. Revenue climbed 8.6 percent to approximately A$23.8 billion compared to the previous year, while underlying profit before tax reached A$2.39 billion, representing a 15 percent year-over-year increase.

The statutory profit after tax surged 28 percent to A$1.61 billion, reflecting disciplined cost management and strong travel demand.

FY25 KEY FINANCIAL METRICS (Year Ending June 30, 2025)

Revenue:                          A$23.8 billion (+8.6%)
Underlying Profit Before Tax:     A$2.39 billion (+15%)
Statutory Profit After Tax:       A$1.61 billion (+28%)
Underlying EPS:                   A$1.10
Operating Cash Flow:              A$3.2 billion
Net Debt:                         A$5.0 billion

CEO Vanessa Hudson emphasized that the strong financial performance enabled significant investment in new aircraft and customer initiatives. The Group declared dividends totaling A$800 million for the full year, comprising a fully franked base dividend of 16.5 cents per share and a special dividend of 9.9 cents per share, payable in October 2025.

Operational Excellence and Customer Satisfaction

Qantas achieved its best domestic on-time performance since 2019, with 82 percent of flights departing on time in the second half of FY25. Jetstar improved on-time performance by 3 percentage points, reaching 76 percent, while maintaining a cancellation rate below 2 percent.

These operational gains translated into measurable customer satisfaction improvements, with Qantas’ Net Promoter Score increasing 10 percentage points and Jetstar improving 6 percentage points.

The airline’s commitment to service quality earned recognition at the 2025 Skytrax World Airline Awards as Best Airline in Australia/Pacific.

The carrier invested substantially in customer-focused infrastructure during FY25, opening new lounges in Adelaide and Broome while commencing significant upgrades to facilities in Sydney International, Los Angeles, and Auckland.

Qantas activated fast and free international Wi-Fi on South East Asia and trans-Tasman routes, with additional markets scheduled for connection throughout 2026.

Fleet Modernization: A$20 Billion Transformation

Qantas is executing one of aviation’s most comprehensive fleet renewal programs, with 214 new aircraft on order representing approximately A$20 billion in investment. The airline received 17 new aircraft in FY25 alone, with the rate of delivery accelerating through 2026.

In August 2025, Qantas ordered an additional 20 Airbus A321XLR aircraft, with 16 featuring lie-flat Business class seats. This represents a significant advancement for narrowbody aircraft operations.

The A321XLR entered service in September 2025, making Qantas the first airline in Asia Pacific to operate this advanced aircraft type capable of extended range routes up to 8,700 kilometers.

QANTAS FLEET RENEWAL HIGHLIGHTS

A321XLR Aircraft:     48 on order (20 additional units announced August 2025)
A220-300:            29 on order
A350-1000ULR:        12 on order (Project Sunrise)
787 Dreamliner:      Refurbishment program underway
Legacy Aircraft:     737-800, A330 phase-out ongoing

Total Investment:    Approximately A$20 billion
Fuel Efficiency:     20-30% improvement per seat

QantasLink’s transition to new A220 aircraft demonstrates the financial benefits of modernization. Each A220 delivers up to A$9 million additional annual EBITDA benefit compared to the retired Boeing 717 aircraft. The regional carrier completed its transition to an all-Q400 turboprop fleet, retiring all Q200 and Q300 aircraft during FY25.

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Project Sunrise: Redefining Ultra-Long-Haul Aviation

The crown jewel of Qantas’ expansion strategy remains Project Sunrise, which will enable the world’s longest commercial flights connecting Australia’s east coast non-stop to London and New York. The first Airbus A350-1000ULR entered final assembly in Toulouse in October 2025, with delivery scheduled for October 2026.

These specially configured aircraft feature an additional 20,000-liter rear center fuel tank and enhanced systems enabling flight durations up to 22 hours.

The A350-1000ULR fleet will accommodate just 238 passengers in a four-class configuration, compared to typical high-density layouts exceeding 350 seats, prioritizing passenger comfort on ultra-long-haul sectors.

Commercial Project Sunrise services are scheduled to commence in the first half of the calendar year 2027.

Dual Brand Strategy and Market Segmentation

The Group’s dual brand approach continued delivering value across premium and low-fare segments.

Qantas Domestic unit revenue increased 5 percent, driven by a 3.5 percentage point improvement from higher seat factors and increased business travel, plus 1.5 percentage points from yield improvements. The airline’s charter revenue grew 9 percent, supported by five additional Airbus A319 aircraft servicing Western Australia’s resources sector.

Jetstar achieved exceptional results with a 55 percent increase in underlying EBIT, carrying a record 16 million passengers domestically. New aircraft enabled stronger performance with seat factors increasing 2 percentage points. Approximately one in three Jetstar passengers traveled for under A$100, demonstrating the brand’s value proposition amid cost-of-living pressures.

Internationally, Qantas carried 25 percent more customers, launching 11 new routes during the year supported by delivery of seven A321LR and four A320neo aircraft. Strong demand for premium cabins persisted, with seat factors across First, Business, and Premium Economy increasing 2 percentage points during the second half.

Network Expansion and Route Development

For 2026, Qantas has announced strategic route additions strengthening connectivity across key markets. The airline will increase Perth-Rome services by nearly 50 percent, operating seasonally from May through October 2026. New international services include Gold Coast to Auckland launching June 2026, adding 52,000 annual seats to trans-Tasman capacity.

Perth continues its evolution as a strategic hub, with new year-round services to Auckland and Johannesburg complementing existing European connections.

Seasonal routes to Sapporo (December 2025 through March 2026) target Japan’s winter tourism market. Brisbane maintains daily Boeing 787 Dreamliner services to Los Angeles through December 2025 and January 2026.

Cost Pressures and Operational Challenges

Despite strong revenue performance, Qantas faces significant cost headwinds. Same Job Same Pay legislation increased labor costs by approximately A$65 million in FY25, with the gross impact expected to reach approximately A$115 million in FY26. Engineering and supply chain costs rose above inflation rates, while airport and government-mandated infrastructure charges increased substantially.

Fleet transition and new aircraft entry-into-service costs totaled approximately A$130 million in FY25, forecast to increase to approximately A$160 million in FY26 as A321XLR deployment accelerates. These transition costs are expected to decrease as fleet types reach operational scale and crews complete training programs.

Sustainability and Environmental Commitments

Qantas maintains ambitious sustainability targets, including reducing net Scope 1 and 2 greenhouse gas emissions by 25 percent by 2030 from 2019 levels and achieving 10 percent Sustainable Aviation Fuel (SAF) usage by 2030. Through its A$400 million Climate Fund, the Group has committed more than A$100 million to SAF and decarbonization projects.

In April 2025, Qantas announced a A$15 million investment in ClimateTech Partners, an Australian venture capital fund targeting climate improvement projects. The airline expanded SAF uptake from Los Angeles with an agreement to use more than 100 million liters over three years.

In Australia, a partnership with Sydney Airport and corporate customers enabled the country’s largest SAF importation, validating infrastructure readiness.

Fleet renewal represents a cornerstone of emissions reduction strategy. New aircraft deliver 20 to 30 percent fuel efficiency improvements per seat compared to retiring models. The A321XLR and A350-1000ULR incorporate advanced aerodynamics, lightweight materials, and efficient engine technology substantially reducing carbon intensity.

Loyalty Program: Industry-Leading Engagement

Qantas Loyalty achieved 9 percent underlying EBIT growth to A$556 million, demonstrating the program’s resilience and growth trajectory. Frequent Flyers earned 10 percent more Qantas Points and redeemed 8 percent more compared to FY24. Members booked a record number of Flight Reward Seats during the year.

The introduction of Classic Plus on domestic flights in December accelerated bookings to above one million seats for the year. Approximately one in three Classic Plus bookings covered peak school holiday periods, while one in four members making Classic Plus bookings redeemed points on flights for the first time in five years.

Coalition partnership growth continued, with David Jones joining as the latest major Australian retailer. Woolworths Group extended its partnership beyond 2030. Cash inflows from partners increased 10 percent. Hotels, Holidays, and Tour bookings achieved double-digit growth in total transaction value to A$1.5 billion, including more than 50 percent growth in TripADeal bookings.

Outlook for 2026 and Beyond

For the first half of FY26, Qantas expects Group Domestic unit revenue to increase 3 to 5 percent compared to the prior year, with Group International unit revenue projected to grow 2 to 3 percent. Qantas Loyalty is forecast to grow underlying EBIT by 10 to 12 percent in FY26.

First-half fuel costs are expected at A$2.6 billion based on approximately 16.2 million barrels consumption at an assumed market jet fuel price of approximately A$134 per barrel. The Group targets transformation initiatives worth approximately A$400 million in FY26 to offset inflation impacts, weighted 35 percent in the first half and 65 percent in the second half.

Net debt is expected to remain at or below the middle of the target range of A$4.6 billion to A$5.7 billion despite accelerated capital expenditure. The Board remains committed to performance targets established at the 2023 Investor Day, including airline margin targets and loyalty EBIT objectives.

FY26 FIRST-HALF EXPECTATIONS

Group Domestic Unit Revenue:      +3% to +5%
Group International Unit Revenue:  +2% to +3%
Qantas Loyalty EBIT Growth:       +10% to +12%
Fuel Cost (1H26):                 ~A$2.6 billion
Transformation Target (FY26):     ~A$400 million
Net Debt Position:                At/below middle of target range

My Final Thoughts

Qantas enters 2026 with several strategic priorities requiring execution excellence. Fleet modernization must proceed on schedule to realize efficiency benefits and capacity targets. Project Sunrise represents both an operational challenge and competitive differentiator that could reshape ultra-long-haul travel patterns globally.

Cost management remains paramount as labor, engineering, and infrastructure expenses outpace inflation. The targeted A$400 million transformation program will test management’s ability to extract efficiency gains while maintaining service quality. Balancing investment requirements with shareholder returns through the dividend program requires disciplined capital allocation.

Competition across domestic and international markets continues intensifying. Low-cost carriers expand capacity while legacy competitors restore pre-pandemic networks. Qantas must defend market share through service differentiation, network coverage, and loyalty program strength while managing yield pressures.

The carrier’s position as Australia’s flag carrier provides strategic advantages, including brand recognition, corporate relationships, and government route access. The dual-brand strategy with Jetstar enables market segmentation that competitors struggle to replicate. The industry-leading loyalty program creates switching costs and revenue diversification beyond airline operations.

As aviation rebounds from pandemic disruptions and navigates evolving regulatory environments, fuel volatility, and sustainability mandates, Qantas demonstrates operational resilience and strategic clarity.

The ambitious fleet renewal positions the airline for the next decade of growth, while Project Sunrise could establish new benchmarks in global connectivity.

For aviation professionals analyzing the carrier’s trajectory, execution of these initiatives through 2026 will prove decisive in determining whether Qantas achieves its aspiration of being recognized not just as Australia’s airline, but as a world-leading aviation group.