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· Posted on
February 21, 2024

Qantas plans to keep your wallets lighter and profit margins heavier till 2030 thanks to huge demand for flying

As part of Qantas’ investor day, they have shared their plans to boost profitability.

What's the key learning?

  • Qantas plans to grow its Earnings Before Interest and Tax (EBIT) margin from 8% to over 12% for international travel, and its domestic EBIT from 14% to 18%.
  • Qantas plans to grow its EBIT by implementing higher prices, but also by introducing longer-haul, more full-efficient flights... All with the goal of increasing their RASK.
  • Revenue per seat kilometre (RASK) is a crucial metric in the aviation industry used to determine profitability.

👉 Background: Right now, pent-up demand is well exceeding supply of aircrafts and staff. In fact, Qantas reckons that demand for international travel will continue to outstrip supply to the end of the decade.

👉 What happened: As part of Qantas’ investor day, they have shared their plans to boost profitability: grow its Earnings Before Interest and Tax (EBIT) margin from 8% to over 12% for international travel, and its domestic EBIT from 14% to 18%.

👉 What else: They plan to do this by implementing higher prices, but also by introducing longer-haul, more full-efficient flights... All with the goal of increasing their RASK.

What's the key learning?

💡Revenue per seat kilometre (RASK) is a crucial metric in the aviation industry used to determine profitability. It's about how much revenue the airline is making for every kilometre that a passenger travels.

💡Qantas' goal is to get passengers to travel less kilometres through direct long-haul flights, but pay more for its convenience.

💡So despite Qantas' potential cost savings from new, more fuel-efficient aircrafts, it seems like high airfares are here to stay...for a while at least.

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