Updated August 27, 2026 — 10:48am,first published August 27, 2026 — 8:53amQantas profits have taken a hit as rising fuel costs outpaced the benefit of sustained demand for international travel.The airline posted a 13.8 per cent fall in underlying pre-tax profit of $330 million in the year ended June 2026. Underlying pre-tax profit is $2.06 billion, down from $2.39 billion in 2025. The company said its fuel bill jumped by more than $600 million as it was hit hard by the ramifications of the Middle East conflict. Qantas shares are steady in early trade.The airline confirmed it plans to begin retiring the much-loved, but high-maintenance, A380 fleet from 2028.APChief executive Vanessa Hudson said: “The final four months of the year saw business and consumer confidence fall as the conflict and economic headwinds created uncertainty.”Qantas said this forced some large corporates and government customers to cut travel budgets. “In response to the surge in fuel prices, we quickly adjusted fares and capacity, and redeployed aircraft to give customers more options to fly to Europe,” Hudson said.“These actions, along with other mitigations, limited the net impact on earnings to $420 million, despite a $610 million increase in our fuel bill.”Spiralling fuel costs driven by the US-Israel conflict with Iran have put pressure on the aviation industry. Six weeks after the conflict began, Qantas flagged a $600 million to $800 million increase to its fuel bill. Fuel is typically one of the largest expenses for airlines.Qantas, and rival Virgin, have been forced to trim domestic routes to account for a slowdown in demand, as the cost-of-living increase cut into travel budgets.“The group will continue to take mitigating action and remains highly hedged in Brent crude oil”, Hudson said.The airline confirmed it plans to begin retiring the much-loved, but high-maintenance, A380 fleet from 2028 which will be “successively retired in the years beyond that”, according to Hudson.In addition to the 12 Project Sunrise aircraft on order, Qantas now has firm orders for 12 more A350s and 12 Boeing 787s Dreamliners, with the first of those arriving in the 2028 financial year.Auckland-based Alton Aviation Consultancy director Clark Johns said high fuel prices make the “next-generation aircraft and associated fuel savings more substantial”.“They’ve already locked in those orders before the current fuel crisis, so if anything, it makes [them] more valuable with the ability to burn less fuel in this higher-price environment.”Carriers build their fleet plans with flexibility, said Johns.“If demand does go into a contractionary cycle, from a business perspective, airlines across the globe generally want to make sure they have the flexibility to retire aircraft earlier ... to contract the fleet and match supply with demand.”Qantas is also in talks with Airbus and Boeing to potentially buy 20 more planes by 2030.The new business seats for its A321XLR.Qantas said premium-cabin revenue is growing at twice the rate of economy revenue across Qantas’ international network. Consequently, newer planes will have a higher proportion of premium seats than the aircraft they replace.So far, seven extra-long-range, narrow-body Airbus A321XLR aircraft have entered service.The airline unveiled the suites to be featured on its A321XLRs, which will cater to transcontinental passengers flying from the East Coast to Perth, connecting on to non-stop flights to Europe. The new business suites will be arranged in a one-one configuration in an “angled herringbone layout”, and come with lie-flat beds and sliding privacy doors.“Customers are telling us how much these aircraft are improving the flying experience, and they’re a big part of what’s driving our financial performance too,” said Hudson.Loyalty boostEven as the cost of living rises, Qantas’ loyalty program has continued to function as a profit centre for the airline.Qantas Loyalty delivered 12 per cent underlying pre-tax earnings growth of $625 million, the company said. Beginning December 8, Qantas will allow frequent flyer members to earn status credits, which allow frequent flyers access to lounges and more perks, by shopping rather than just flying.The company is expected to provide details on status credit goals closer to the date.With looming RBA changes to become effective on October 1, Qantas loyalty and customer CEO Andrew Glance revealed that half of frequent fliers using Qantas cards will see less than 10 per cent impact from the RBA change.“An amazing outcome given what we were staring into at the very start” [of the proposed changes].He said that Uber had emerged as the fastest-growing partner with more than a million members earning points on rides.Qantas Loyalty is forecast to generate underlying pre-tax earnings of 5 to 7 percent in the 2027 fiscal year, with a 2030 target of $800 million to $1 billion in underlying earnings before interest and tax.The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.Chris Zappone is a senior reporter covering aviation and business. He is former digital foreign editor.Connect via X, Facebook or email.From our partners