Australia's Qantas Airways expands frequent flyer loyalty programme

(Reuters) - Qantas Airways expanded its frequent flyer programme on Monday, offering access to 20 million more reward seats that can be purchased through points, as the Australian carrier plans to spend more on customers in a bid to fix its battered reputation.

The points required to book the airline's new "Classic Plus" reward seats will be more than its existing "Classic" seats and will vary like normal air fares, meaning they will be lower during off-peak periods or when booking early.

The company had one of its most reputationally damaging years in 2023, as it defended a competition regulator lawsuit over selling tickets to already-cancelled flights and as a court found the airline sacked 1,700 ground staff illegally in 2020.

Qantas has since promised to focus more on customer benefits and engagement, and expects to invest A$120 million ($78.74 million) in fiscal 2025 for the new program. It also expects the benefits from the program to outweigh the cost of investment in the first half of fiscal 2026.

The carrier added it expects the Qantas Loyalty division to deliver underlying earnings before interests and taxes between A$500 million and A$525 million in FY24.

"On first pass, the change appears to be a modest negative short term including higher investment, lower margin and lower profit," analysts at Citi wrote.

"In time, the hypothesis is this investment would stimulate volumes and earning activity that would outweigh costs, but mechanically would take time (18 months) to play out/prove up," they added.

Qantas said its new reward seats will be available to be booked from Monday across international flights departing from Australia for travel from July 1, and will be available across its full international and domestic network by the end of this year.

The Australian flag carrier also confirmed it would begin a stock buyback of up to A$448 million, which it announced in February and expects to complete by June 30.

($1 = 1.5239 Australian dollars)

(Reporting by Himanshi Akhand in Bengaluru; Editing by Sherry Jacob-Phillips and Janane Venkatraman)