The Middle East war has lifted Qantas Airways’ half-year fuel bill by about A$1 billion (US$709 million) and forced it to reduce capacity.
The Australian flag carrier said jet fuel prices had more than doubled and remained highly volatile since it provided outlook guidance at its half-year results.
Qantas has hedged about 90% of its crude oil exposure in the second half of the 2026 financial year (2H26), but it is exposed to movements in jet refining margins, which have increased from US$20 per barrel in February to a peak of around US$120.
“As a result, the estimated fuel cost for 2H26 is now $3.1 – 3.3 billion,” the airline said in an ASX announcement.
This compared with its previous estimate of $2.2 billion.
Qantas was working closely with the Government and jet fuel suppliers, who continued to provide confidence in fuel supply for the rest of April and well into May.
The airline also said it had taken action to mitigate the impact of the war between the United States and Iran, including international network changes, capacity adjustments and fare increases.
It continued to see strong demand for international travel to Europe as customers sought alternative routes away from the Middle East and had redeployed capacity from the United States and its domestic network to increase flights to Paris and Rome.
“Given the continued volatility in fuel prices and the global economic conditions, the Group has reduced domestic capacity in 4Q26 by around 5 percentage points,” Qantas said.
Affected Qantas and Jetstar customers were being contacted directly and offered alternative flights or a refund.
International unit revenue (RASK) growth for 2H26 was expected to double the previous guidance to 4% to 6%, including half of 4Q26 revenue sold prior to the start of the conflict, while domestic RASK growth was expected to be 5% for 2H26 and 6% in 4Q26.
Capital expenditure in the 2026 financial year (FY26) would be at or below $4.1 billion, the bottom end of the previously guided range.
“The Group maintains a strong financial position in accordance with its Financial Framework and is well progressed with its FY27 funding plans,” the airline said.
At the time of writing Qantas shares (ASX: QAN) were trading 11 cents (1.28%) lower at $8.90, capitalising the company at $13.57 billion.
