Qantas’ former chief economist, Tony Webber, warns airline faces profit crash if Iran war continues
The airline’s former chief economist warned its profits could plunge if the Middle East war translates into a big economic downturn and soaring ticket prices.
An extended Middle East war could slash Qantas’ flying profits in half over the six months to June 30 as jet fuel costs soar and passenger demand softens, according to the airline’s former chief economist Tony Webber.
Qantas shares dropped 2.2 per cent to $8.52 on Thursday and are down 12 per cent since the Middle East conflict led to the cancellation of tens of thousand of flights across popular transit hubs in Dubai, Doha, and Abu Dhabi.
Mr Webber told clients that in a worst case scenario the war could lower the airline’s flying profits by $649 million over the half-year to June 30, as demand falters in line with an economic downturn and the airline’s revenue earned per kilometre flown falls.
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By continuing you agree to our Terms and Privacy Policy.“A weaker currency and higher fuel prices will also place upward pressure on costs,” he said. “(Demand for flights may also fall) as a result of weaker equity markets and higher cost of living.”
On Tuesday, news reports suggested the airline has already moved to cut 12 per cent of its Jetstar services across the Tasman to New Zealand as higher ticket costs put off travellers.
Mr Webber, a former Qantas’ chief economist between 2007 and 2011, calculated that Qantas International’s earnings before interest and tax (EBIT) over the six months to June 30, could fall by $257 million from $408 million to $151 million if the war were to extend through the second quarter of 2026.
The economist added that Qantas Domestic could see EBIT fall up to $259 million from a pre-war forecast of $553 million to $294 million, and its budget brand Jetstar could see EBIT fall by $133 million from a pre-war forecast of $232 million to $99 million.
Since the Middle East conflict began, the International Air Travel Association estimates more than 60,000 flights to and from the region have been cancelled to affect 6 million passengers.
Other ASX-listed travel businesses have also been dumped by investors over the last month.
Flight Centre shares are down 12.5 per cent over the past month to $11.15 on Thursday, and rival airline Virgin Australia is off 19 per cent to $2.56, significantly below its June 2025 initial public offer price of $2.90 per share.
Analysts’ views
Other professional airline analysts are still optimistic Qantas will ride out the storm by lowering the number of flights offered and pushing through higher ticket prices to passengers.
On March 25, Citi analyst Samuel Seow stuck to a buy rating on the airline and $8.70 share price valuation.
“Of note, the (Airbus) A330s appear to be the prime candidate for downgauging given age and width,” said Mr Seow. “While there is also a shift towards newer and less flying of narrowbody planes.”
Citi expects Qantas to post a net profit of $1.76 billion over the 12 months to June 30, slightly up on the $1.74 billion it posted in the prior financial year.
It added that data showed both Qantas and Jetstar had trimmed down current flight schedules for the June quarter to 2 per cent growth versus the prior corresponding quarter in FY 2025.
“Interestingly, despite mid-single-digit percentage price rises in International, we’re yet to see any meaningful reduction in long haul capacity,” said Mr Seow.
“While we note Gulf carrier capacity has come out, it does suggest to us some long-haul travel resilience. Particularly given around 90 per cent of international vols are meant to be leisure/more discretionary.”
UBS Australia analyst Andre Fromyhr last had a $11.60 per share price target on Qantas, and $4.25 per share target on Virgin Australia. Qantas did not immediately respond to a request for comment on Mr Webber’s research.
According to Dow Jones, 11 out of 15 analysts covering Qantas had a buy rating on it as at March 26.
Over the six months to December 30 the Flying Kangaroo posted an adjusted net profit up $71 million to $1.46 billion as demand for domestic flights and Jetstar remained strong.
The airline has also invested in ultra-long-haul Airbus 350’s it expects will fly direct from Sydney to London and New York from 2027 under its Project Sunrise banner.
