A Qantas logo is visible on the tail of an aeroplane at an airport in Sydney, Australia, September 18, 2025. REUTERS/Hollie Adams

By Roushni Nair

(Reuters) -Australian flag carrier Qantas Airways on Friday cut its first‑half domestic unit revenue outlook and nudged up its fuel bill, citing softer non-resources corporate demand at home and elevated refining margins, pressuring its shares.

Shares fell as much as 4% by 1142 GMT to a five-month low of A$9.77, underperforming the broader market, which slipped marginally by 0.1%.

Qantas now expects first-half 2026 domestic unit revenue to rise about 3%, coming in at the lower end of its earlier forecast range of 3% to 5%.

The country's flag carrier said travel demand from the mining and resources sector remained robust, but broader corporate travel in Australia was recovering at a slower pace than previously expected.

"With Jetstar Asia ceased and Japan FX‑related, we estimate investors will largely look through, while the refining-margin fuel increase to us appears better than feared," analysts at Citi noted.

Group capacity for the first half of 2026 is now expected to be "slightly lower than previously guided," due to delays in the return to service of its A380 fleet, the company flagged.

"We are adjusting domestic capacity in the second half to match the demand profile we are seeing," CEO Vanessa Hudson said in a separate statement.

The carrier is monitoring the ongoing U.S. government shutdown, with no material impact seen so far.

Fuel costs for the half are now forecast at A$2.62 billion ($1.70 billion), up from a prior outlook of A$2.6 billion, reflecting elevated jet refining margins due to ongoing geopolitical volatility.

The revised figure includes around A$25 million in additional non-cash carbon costs tied to higher compliance obligations under the international CORSIA scheme.

Qantas has been rebuilding trust after legal setbacks, including an A$120 million package of penalties and customer payments over "ghost flights," and a record A$90 million court fine for illegally outsourcing ground staff - costly chapters that have weighed on sentiment even as profits recovered.

The group is also digesting the closure of Singapore‑based Jetstar Asia on July 31, part of a capital recycling push due to rising regional competition and costs. Jetstar Japan and Jetstar's Australia services are unaffected.

Earlier, Qantas flagged A380 reactivation delays as a swing factor for near‑term capacity and yield mix.

($1 = 1.5389 Australian dollars)

(Reporting by Roushni Nair in Bengaluru; Editing by Alan Barona and Chris Reese)