SYDNEY — Australia's Qantas Airways raised its first-half fuel cost forecast by 4 percent on Friday and said it expected prices to remain elevated for the rest of the financial year.
Citing disruption to air travel and oil markets since the Iran war began in February, the country's largest airline said it expected a fuel bill of A$3.75 billion ($2.61 billion) for the six months ending Dec. 31, A$150 million higher than the forecast at its annual results in August.
Qantas said it had adjusted fares and capacity in response to higher fuel costs and would continue to do so. The carrier said it was about 85 percent hedged for the full financial year, predominantly in Brent crude oil.
"We're not immune," Chair John Mullen said at the airline's annual shareholder meeting, when asked about its exposure to oil price volatility as a result of the war.
"We've done probably better than a lot of airlines have, but we're not immune. It's very hard to tell you where we'll be in three months or six months or whatever," Mullen added.
Fuel hedging lets airlines fix or cap the price of future fuel purchases through derivatives, giving them more certainty on one of their biggest costs.
Qantas said it now expected its full-year capital spending to be at the lower end of the previously guided range of A$4.3 billion to A$4.6 billion. It added that demand remained resilient as customers continued to prioritize travel.
Qantas shares were down 0.3 percent, broadly in line with Australia's benchmark index on Friday.
