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Qantas confident as cost of living pressures fail to dampen travel demand

Cost of living pressures have not dampened the travel industry, according to Qantas (ASX: QAN), as the airline reassures investors that its earnings remain unaffected by rising household bills and higher interest rates. Qantas has reported that its domestic capacity has returned to pre-pandemic levels, with 11 new international routes added since mid-May to meet the growing demand for travel. The company anticipates carrying over 4 million passengers during the upcoming school holiday period.

In a statement, Qantas stated, “Qantas and Jetstar are gearing up for a busy school holiday period, as travellers make the most of additional capacity and new routes.” Popular domestic leisure destinations include the Gold Coast and Cairns, while heavily booked international routes include Sydney-Auckland-New York and Perth-Rome.

The airline previously announced in May that strong travel demand and increased flying activity would result in a record profit of between $2.425 billion and $2.475 billion. Qantas has resumed routes like Sydney to New York following the delivery of new aircraft, and more wide-body jets are returning from long-term storage. The company has received six new aircraft since January, including Jetstar’s eighth Airbus A321 neo-long-range aircraft, with the ninth scheduled to arrive next month. By the end of the next calendar year, Qantas plans to have 18 aircraft capable of flying any domestic route.

Qantas is also preparing for future fleet upgrades. It will begin receiving its own A321 Neo XLR fleet at the end of 2024 to replace its Boeing 737s, while the introduction of several narrow-body A220s is set to commence this year, replacing Boeing 717s. The replacement of its A330 aircraft is also on the agenda, but due to manufacturer delays, the program is not expected to be completed until the end of 2030.

Despite cost of living pressures and higher interest rates, Qantas remains optimistic about the travel industry and its future profitability. The company’s robust domestic capacity and the addition of new routes reflect the strong demand for travel and the resilience of the aviation sector.