The Qantas Group has revised its FY26 outlook, citing significant disruption stemming from the conflict in the Middle East, particularly through sharply higher and volatile fuel costs.
Fuel outlook has deteriorated materially since the Group’s 1H26 update. Jet fuel prices have more than doubled, driven largely by a surge in refining margins, which climbed from around US$20 per barrel in February to approximately US$120 at their peak. While Qantas has hedged about 90% of its crude oil exposure for 2H26, it remains largely exposed to these refining margins. Consequently, total fuel costs for 2H26 are now expected to reach between AUS$3.1 billion and AUS$3.3 billion. Despite supply chain concerns, the Group reports ongoing coordination with government and suppliers, with sufficient fuel availability expected through April and into May.
On operations and customer response, Qantas has implemented network adjustments, reduced capacity, and increased fares to offset cost pressures. Although it does not operate directly to the Middle East, it has supported affected passengers travelling via partner airlines with flexible rebooking or refunds. Demand for European travel remains strong, prompting a redeployment of capacity from US and domestic routes to boost services to Paris and Rome.
Domestically, capacity will be reduced by around five percentage points in 4Q26, with impacted customers offered alternatives or refunds. Revenue performance remains relatively robust: International unit revenue (RASK) growth for 2H26 is now forecast at four to six per cent—double earlier guidance—while Domestic RASK is expected to rise five per cent for 2H26 and six per cent in 4Q26.
From a financial perspective, Qantas maintains a solid balance sheet. FY26 capital expenditure is now expected at or below AUS$4.1 billion. A previously announced AUS$300 million interim dividend will proceed, but a planned AUS$150 million share buyback has been paused. Net debt is projected to sit within its target range by June 2026. (US$1.00 = AU$1.40 at time of publication).
