Qantas expects its underlying pre-tax profit for the six months to December 2017 to come in between AUSD 900 million (USD 693 million) and AUSD 950 million, aided by stronger unit revenues during the first quarter of the 2018 fiscal year.

The forecast, which was part of a trading update released by the Oneworld carrier, compares favourably with an underlying profit before tax of AUSD 852 million during the same period the year prior.

Qantas also noted that its group revenue for the three months to 30 September increased 5.1% to AUSD 4.19 billion. RASK increased by 3.1% overall, as domestic unit revenue grew 8% on a 2.7% fall in capacity.

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“The domestic market is healthy but remains very competitive,” says Qantas chief executive Alan Joyce. “The high rate of revenue growth we’ve seen so far this year is likely to slow when compared with what was a strong second half last year.”

In response, the airline will reduce domestic capacity by 1% during the second half of the fiscal year as it continues to right size capacity in key markets.

On the international front, the airline also reported a marginal 0.2% lift in international RASK during the first quarter, amid a larger increase in competitor capacity on routes from Australia.

“There’s been a welcome easing of capacity growth in the international market but the indications are that it is likely to pick up pace again in the second half,” says Joyce.

It expects that during the first half, its international capacity will be up around 5%, and 3% in the second half as it continues to target strong-growing Asian markets.

Despite those challenges, Joyce says that the Qantas group “remains on track for another strong underlying first half and a successful full year.”