Qantas to Retire A380s Early, Sees Revenue Growth Despite Profit Dip
Qantas reports 14% profit decline due to fuel costs, but upbeat revenue outlook and early A380 retirement plans lift shares.
Qantas Airways has announced it will begin retiring its Airbus A380 superjumbos in 2028, four years earlier than originally planned, as part of a broader fleet renewal strategy. The Australian flag carrier is currently in discussions with Airbus and Boeing to convert 20 options into firm orders for A350 and 787 aircraft, with deliveries expected from 2030.
CEO Vanessa Hudson explained the accelerated retirement timeline, noting that the A380 is no longer in production, making maintenance costs and operational disruptions increasingly expensive over time. The new orders would be separate from the airline's "Project Sunrise" initiative, which involves 12 specially configured long-range A350-1000s for non-stop flights between Sydney and London and New York, set to arrive from next year.
The announcement came alongside the airline's annual results, which showed underlying profit before tax of A$2.06 billion for the year ended June 30, a 14% decline from the previous year but slightly ahead of market consensus. Hudson described the year as "defined by two very different operating environments," with strong travel demand colliding with a surge in fuel costs driven by the Middle East conflict, which reduced second-half earnings by A$420 million.
Higher fares, reduced domestic capacity, and redeploying aircraft to more profitable international routes only partially offset the fuel cost headwinds. Looking ahead, Qantas expects jet fuel prices to remain elevated through the first half of the 2027 financial year, projecting net fuel costs of approximately A$3.6 billion compared with A$2.6 billion in the six months ending December 2025.
Despite these challenges, the airline forecast domestic and international total unit revenue growth of 8% to 10% in the first half of the year, exceeding analyst expectations on both measures. Travel demand remains resilient, though Qantas expects domestic capacity to decline 3% in the first half while international capacity rises 2%.
Shares in Qantas rose 3% in early trading to a one-week high, outperforming the broader market. The company declared a final dividend of 19.8 Australian cents per share and scrapped its A$150 million share buyback program announced in February, which had never commenced following the outbreak of the Iran war.