Qantas raises fares as 2nd-half fuel bill seen reaching $2.3B amid Middle East conflict

Australian flag carrier Qantas Airways said Tuesday it is cutting domestic flight capacity, raising fares, and reshaping parts of its network as surging jet fuel prices linked to the Middle East conflict push its estimated second-half fuel bill to between 3.1 billion and 3.3 billion Australian dollars ($2.20 billion-$2.34 billion), up from earlier guidance of about $1.77 billion.

In a market update, the airline said jet fuel prices have more than doubled since its first-half financial year 2026 results and remain highly volatile.

Qantas said it has hedged around 90% of its second-half crude oil exposure but remains largely exposed to jet refining margins, which rose from $20 per barrel in February to a peak of around $120.

To mitigate the impact, the group said it has adjusted international routes, reduced capacity, and increased fares. It added that it is working closely with the government and suppliers, who continue to provide assurances on jet fuel supply for the rest of April and into May.

Qantas said it reduced domestic capacity in the fourth quarter of financial year 2026 by around 5 percentage points, citing ongoing fuel price volatility and broader global economic conditions. Affected Qantas and Jetstar passengers are being contacted directly and offered alternative flights or refunds.

The airline said demand for international travel to Europe remains strong as customers seek alternative routes, prompting it to redeploy capacity from the US and domestic network to add flights to Paris and Rome. Group international unit revenue growth for the second half is now expected at 4% to 6%, double its previous guidance.

Qantas also said its planned $106 million share buyback has not commenced due to uncertainty, though a previously announced $212.5 million payout will proceed on April 15. The carrier said capital expenditure for financial year 2026 is now expected to be at or below $2.90 billion.