Why the Iran War Just Cost Qantas $610 Million

Qantas made $2.06 billion in profit for the year to June 2026, its lowest in four years. The reason is straightforward: the US war on Iran pushed jet fuel prices up, and that wiped $610 million off the airline's earnings. The results were released on 27 August 2026 and confirm a 13.8% drop in profit, as Reuters reported a day earlier (Reuters). The full-year figure was $330 million below the prior year and just $600 million above what Qantas made in the first six months alone, showing how sharply things worsened after the fighting started in February.

The timing matters. Two days before the US struck Iran in February, Qantas had delivered a record $1.46 billion profit for the six months to December 2025 (The Guardian). Then the second half of the year took the full hit. Overall, the Middle East conflict cost Qantas $420 million. That figure includes higher fuel costs, partly offset by $190 million in extra earnings from passengers who switched to Qantas after other airlines cancelled their routes.

Qantas tried to protect itself. By early March, it had locked in prices for 81% of its fuel for the rest of the financial year through a practice called hedging — basically agreeing in advance on what you will pay, so sudden price jumps hurt less (Reuters). But that protection was not enough to cover the full scale of the price spike.

The international side of the business took the biggest hit. Qantas international earned $650 million in underlying earnings for FY26, down from the prior year, even though revenue grew 8% mostly because the airline flew more routes. Jetstar International did better, growing capacity 11% and lifting revenue 14%. Qantas also said it would retire its Airbus A380 planes and bring in newer, more fuel-efficient aircraft.

The domestic business held firm. Qantas and Jetstar's Australian operations together earned $1.44 billion. Qantas domestic revenue rose 5% from March to June 2026 as holidaymakers and Western Australian mining companies kept booking flights, making up for cutbacks from government and big corporate clients. Jetstar domestic grew revenue 11% while adding only 4% more seats. Half of Jetstar domestic passengers paid under $150 per flight, compared with a similar share paying under $100 back in 2022, showing how fares have risen without scaring off customers.

The loyalty programme was a bright spot. Earnings from frequent flyer points grew 12% to $625 million, with active members up 6%. Uber was the fastest-growing source of Qantas points, showing the programme increasingly makes money from partnerships outside of flying. Management said the points business would earn at least 5% more next year and reach its $800 million target by 2030.

Investors took the news calmly. Qantas shares rose 2.49% in early trading on 27 August 2026, adding about $300 million in value and lifting the company's worth to $14.3 billion. They appear to have looked past the profit drop and focused instead on the strong domestic business, growing loyalty division, and careful management of flight capacity.

Jetstar Asia's closure is still costing the group. The operation contributed an $80 million loss in the first half of FY26 (Qantas Investor), and Qantas had previously said the wind-down would cost about $160 million in cash, mostly in FY26 (ASX). The exit, announced in June 2025, removes a business that kept losing money, but the costs of shutting it down land in this year's accounts.

Chief executive Vanessa Hudson is also finding new ways to charge for things. Qantas said last month that from next year, basic tickets will include only one small bag that fits under the seat, such as a backpack or handbag. Anything bigger means an extra charge. This follows the approach of budget airlines and suggests management expects pressure on profits to continue into FY27.

The broader context here is that wars and political conflicts can hit companies far from the fighting. Qantas started the Iran conflict period with record profits, fuel price protection, and a domestic business worth over $1.4 billion. None of that fully shielded it from a $610 million fuel-cost surge. The A380 retirement, the carry-on bag charge, and the loyalty earnings target all point the same way: management is preparing for a world where fuel stays expensive, rather than treating the Iran-driven spike as temporary. Whether that assumption holds depends on the Middle East conflict and whether oil prices settle back down, things Qantas can plan for but cannot control.