Qantas profit dips but Project Sunrise and fleet upgrades stay on track

Australia's biggest airline has suffered a fall in earnings but its Project Sunrise direct flights to London remain on track.

The impact of war in the Middle East and higher jet fuel costs weighed on the airline during the year, shaving hundreds of millions off its annual profit.

Qantas made a bottom net profit of $1.3 billion for 2025/26, down 19.8 per cent from the previous financial year.

Its underlying pre-tax profit also fell, by 13.8 per cent to $2.1 billion, after a 7.1 per cent rise in revenue to $25.5 billion.

Qantas said the net impact of the US-Iran war, which generated higher fuel costs and forced the rerouting of aircraft through Asian airport hubs, on its results was $420 million.

The airline carried almost 56,000 passengers in the year, which was broadly in line with 2024/25.

However, chief executive Vanessa Hudson said the result was strong, despite the war and fuel cost impacts.

"Qantas continued to see growth at the premium end of the market," she said on Thursday.

The group's lower cost carrier, Jetstar, went "from strength to strength", with almost half of its passengers travelling for under $150 at a time of household budget stress, she added.

In mid April, Qantas delayed a planned $150 million share buyback and reduced domestic capacity because of the Middle East conflict.

It warned the price of jet fuel - its biggest expense - had more than doubled since the war broke out at the end of February.

Like many airlines, Qantas hedges most of its exposure to crude oil, but remains exposed to the cost of refining crude oil into jet fuel.

That expense had increased dramatically from $US20 a barrel in February to a peak of around $US120 a barrel.

Consequently, the airline expected to spend $3.1 billion to $3.3 billion in the second half of the year on jet fuel, up from its original estimate of $2.5 billion.

Later on Thursday, the group is expected to give an update on Project Sunrise, its ambitious plan for direct flights to London and New York from Australia's east coast.

The first specialised Airbus A350-1000ULR to be used for the long-haul routes touched down in Melbourne on July 24 following a test flight from the Airbus manufacturing facility in Toulouse, France.

Qantas is scheduled to take delivery of the airplane in April 2027 and begin flights between Sydney and London in October 2027.