Qantas says resilient travel demand is keeping FY27 trading in line with its August outlook, despite a sharply higher fuel burden. The airline has maintained its revenue growth guidance while trimming planned capital expenditure to the lower end of its range.
- 1H27 fuel costs expected at approximately $3.75 billion
- Domestic and international 1H27 TRASK growth guidance held at 8% to 10%
- FY27 fuel hedging coverage extended to approximately 85%
- FY27 net capital expenditure expected at the lower end of $4.3 billion to $4.6 billion
- Domestic capacity set to fall while international capacity expands modestly
Fuel Costs Rise Without Breaking FY27 Guidance
Qantas Airways Limited (ASX:QAN) is carrying a projected 1H27 fuel bill of approximately $3.75 billion, but the airline has not changed its broader FY27 outlook. The update says trading remains in line with the guidance issued with its FY26 results in August, even as forward fuel curves point to elevated prices through the year.
The fuel figure is based on forecast consumption of about 16.2 million barrels and assumes market jet fuel prices of approximately A$223 a barrel in 1H27, before hedging, into-plane costs, sustainable aviation fuel and carbon credits. Qantas says it is approximately 85% hedged for FY27, predominantly through Brent crude oil exposure, while retaining significant participation in lower fuel prices.
The scale of the fuel exposure recalls the airline's earlier fuel-cost guidance, which anticipated 2H26 fuel costs of $3.1 billion to $3.3 billion as refining margins became more volatile. In the latest update, Qantas says it will continue adjusting fares and capacity in response to higher fuel costs rather than presenting the cost pressure as a reason to withdraw its existing outlook.
Revenue Growth Held as Capacity Shifts
Group Domestic and Group International total unit revenue, or TRASK, are each expected to grow by 8% to 10% in 1H27 compared with the prior corresponding period. That guidance is unchanged. Qantas will provide its 2H27 TRASK guidance with its 1H27 results in February 2027, when the comparison will also reflect fare and capacity actions taken in the preceding period.
Capacity plans show where the adjustment is falling. Group domestic capacity is scheduled to decline 3% in 1H27 and 4% in 3Q27, while Group International capacity is set to rise 2% in 1H27 and 1% in 3Q27. Qantas International is planned to grow 3% in 1H27, whereas Qantas Domestic is scheduled to contract 3% and Jetstar Domestic 3% over the same period.
Qantas says international demand across both Qantas and Jetstar remains strong, helped by customers redirecting travel away from the Middle East. Domestic leisure demand is also strong, while non-resources corporate and government travel remains stable and is being monitored.
Lower Capital Spending Adds a Cushion
FY27 net capital expenditure is now expected at the lower end of the previously guided $4.3 billion to $4.6 billion range. Qantas Loyalty remains on track for underlying EBIT growth of 5% to 7% in FY27, and the company says all other guidance from its FY26 results remains unchanged.
The immediate tension is therefore not a new earnings downgrade, but whether resilient demand and pricing can continue to offset fuel costs that are expected to remain high. The next hard checkpoint arrives in February, when Qantas is due to disclose 2H27 TRASK guidance and provide a fuller read on how fares, capacity and hedging have translated into financial performance.
Bottom Line?
Qantas has preserved its FY27 framework, but the outcome now rests heavily on whether pricing and international demand can absorb a sustained $3.75 billion 1H27 fuel bill.
Questions in the middle?
- Will higher fares offset the fuel burden without weakening domestic leisure demand?
- How much of the benefit from lower fuel prices, if they emerge, will flow through the 85% FY27 hedge book?
- What will Qantas disclose about 2H27 TRASK and earnings expectations with its February 2027 results?