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Qantas forecast for seat shortage suggests no end to high fares

SYDNEY - Qantas Airways said air travel demand will outstrip available seats for the foreseeable future, a forecast that suggests passengers will have little respite from soaring fares any time soon.

“There’s still a mismatch between supply and demand that’s likely to persist for some time, especially for international flying,” Qantas chief executive Alan Joyce said on Tuesday.

Bookings point to “strong travel demand” beyond June into the next financial year. Domestic revenues are running at 118 per cent of pre-Covid-19 levels and 123 per cent for international travel, Qantas said.

The soaring appetite for flights, combined with Qantas’ cost-cutting programme, is allowing Mr Joyce to drive up fares and super-charge profits in his final year as CEO.

The airline on Tuesday forecast record pre-tax income of between A$2.43 billion (S$2.18 billion) and A$2.48 billion for the year ending June 30. An existing A$500 million share buyback was increased by as much as A$100 million.

Australia’s flagship carrier said on Tuesday it was expecting a record profit this fiscal year, compared with a A$1.86 billion loss in the previous year, on the back of strong travel demand. It also raised its share buyback by up to A$100 million.

Airlines across the globe have benefited from a rebound in travel demand from Covid-19 lows, although high fuel and staff costs have weighed on their post-pandemic recovery.

Qantas said flying activity increased in the second half and costs associated with operational buffer the group applied to improve reliability were starting to moderate.

Jet fuel prices remain elevated but recent falls are expected to deliver a cost improvement in the second half.

Qantas said it expects its domestic capacity to reach above pre-Covid-19 levels by the end of the second half and international capacity to grow to more than 80 per cent of pre-pandemic levels.

Qantas swung to a record first-half profit this year and has said it expects its international capacity to reach about 100 per cent of pre-Covid-19 levels by March 2024. BLOOMBERG, REUTERS