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Qantas domestic business improves

Business

Qantas’s vast domestic operations are benefiting from the airline’s move to cut capacity following early signs of passenger demand weakness.

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In the airline’s May traffic update, Qantas said its domestic revenue per available seat kilometre (RASK) – an industry measure of efficiency – returned to growth in May following falls in March and April.

The strength has continued through June, Qantas said today.

“Group domestic RASK growth was restored ahead of expectations, representing a successful outcome to QAN’s swift and rational decision to cut capacity at the early signs of demand weakness,” Macquarie Securities analyst Sam Dobson said in a research note.

Still, group international RASK was lower in May from a year earlier, in line with Dobson’s expectations.

Qantas domestic available seat kilometres fell by 5.1 per cent in May from a year ago, with revenue seat factor up 3.6 points.

In April, Qantas announced it would axe plans to add flights, citing lower than expected demand from consumers wary about economy.

The Sydney-based airline had been planning to increase local seat capacity in April, May and June.

Qantas shares were up 12.5 cents, or 4.5 per cent, at $2.89 in a strong Australian market at 1032 AEST.

In May, Qantas saw a 4.2 per cent rise in passengers numbers to 4.01 million as its domestic business returned to growth and international rose.

Domestically, Qantas reported a 1.6 per cent increase in passenger numbers in May, but Jetstar booked a 0.4 per cent fall.

Qantas’ international unit booked a 6.7 per cent rise in passengers, while the international arm of its budget carrier, Jetstar, delivered a 24.5 per cent jump.

-AAP

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