Qantas expects fuel costs to drop by as much as $290 million this financial year, but chief executive Alan Joyce insists any increase in profit will be down to good management rather than good luck from lower oil prices.
Declining fuel costs already helped Qantas turn a record $2.8 billion 2013-14 loss into a $557 million profit for 2014-15, and Mr Joyce told Friday's annual general meeting the picture will be even more positive this year.
The airline expects to spend between $3.61 billion and $3.85 billion on fuel in 2015-16, down from $3.9 billion in 2014-15.
Mr Joyce was unequivocal when Senator Nick Xenophon, a Qantas shareholder, queried whether management could take credit for Qantas' return to profit given the airline benefited from falling fuel costs and the abolition of the carbon tax.
"The one thing that has made us profitable is the transformation project," Mr Joyce said.
"With fuel, with depreciation and with the carbon tax, you can add them up and come to a big number. But not every airline around the world got the benefit of fuel. It was good management, not good luck."
Mr Joyce hailed Qantas' decision to use fuel options rather than cheaper swaps or caps and collars, which helped its hedging program outperform that of rival airlines, and said a three-year transformation project was on track for completion by June 30, 2017.
"Without the $1.1 billion in benefits it has generated so far, we would not have announced a profit in August this year," he said.
"We are committed to delivering the full $2 billion of benefits targeted ... with $450 million targeted in this current financial year."
That transformation project has so far resulted in about 4,000 job cuts, while more than 10,000 employees - about a third of its workforce - have accepted the offer of a five per cent bonus to compensate for an 18-month pay freeze.
A lower dollar is making Australia more affordable for overseas visitors, leading to increase in inbound passengers and a positive outlook for the first-half results announced in February.
"While the impact of a cheaper currency varies across each segment, the Aussie dollar around current levels is a distinct benefit for the group as a whole," Mr Joyce said.
"The outlook is positive and we expect a significant improvement in first half performance."
Shareholders voted in favour of Qantas' plan to return $505 million of cash through a 23 cent per share payment and approved Mr Joyce's $11.9 million pay packet.
