Qantas Aims For 70% Domestic Recovery In December

With nearly US$2.6 billion in the bank and group domestic capacity expected to reach nearly 70% this month, Qantas is slowly getting back on track after a torrid 2020. While the airline doesn’t expect any significant international flying until at least the second half of 2021, it does expect its core domestic flying to get back on track over the southern hemisphere summer.

Qantas is ramping up domestic flying over the next few months Photo: Qantas

In a market update on Thursday morning, Qantas Group CEO Alan Joyce said;

“Overall, we’re optimistic about the recovery, but we’re also cautious given the various unknowns.

“We’ve seen a vast improvement in trading conditions over the past month as many more people are finally able to travel domestically again.

“Bringing domestic capacity back to almost 70% in December is very positive compared to where we’ve been, and so is seeing more of our people back at work. But overall, the Group is still a long way off anything approaching normal.”

Stay informed: Sign up for our daily aviation news digest.

Key points in today’s Qantas market update

In the market update, Qantas emphasized a few key points. Firstly, group domestic capacity (that is, Qantas, QantasLink, and Jetstar) is at 68% of pre-COVID levels for December. It is expected to rise to nearly 80% for the January – March 2021 quarter. Secondly, the airline maintains a strong level of liquidity, boosted by a further US$381 million before the end of December. Thirdly, in the second half of 2021, balance sheet repair should begin. Finally, a previously announced restructuring and recovery program remains on track to deliver at least US$740 million in annual savings from 2023.

Qantas CEO Alan Joyce is cautiously optimistic about Qantas’ immediate prospects. Photo: Getty Images

Improved domestic performance is carrying the Qantas Group

Speaking to media after the release of today’s market result, Alan Joyce said the return of certainty to flying in Australia meant new routes and additional capacity. After continual problems with border closures within Australia, the final movement restrictions are finally falling by the wayside. That’s bringing welcome revenue back into the business and putting some lift under Qantas’ wings.

“We’re not back in the black, far from it. We will post a significant loss this year.

“The improving performance of Group Domestic covers the overheads from our stranded costs in International.

With domestic flying bouncing back, the Qantas boss was asked about when Qantas planned to resume international flying, especially in light of some competitor airlines maintaining services to Australia despite capacity restrictions.

Qantas CEO holds to a mid-2021 timeframe to resume international flying

Mr Joyce maintains that Qantas doesn’t expect any significant international flying to resume before the middle of 2021. He thinks a lot revolves around the successful rollout of a vaccine. Previously, Mr Joyce has said vaccinations would be mandatory for travelers on Qantas’ international services when they do return.

Noting that it takes nearly a week, or 550 man-hours, to reactivate an aircraft, Mr Joyce said Qantas has got planes ready from the international fleet to fly tomorrow if needed.

“We have been activating 787s in the fleet so we can do repatriations. And we are flying the A330s, which we are using on domestic routes, so we’ve got those.”

But in both his formal comments in a media statement and speaking to media later, Mr Joyce reiterated his belief that vaccinations would be critical to resuming significant international flying. He notes there’s a lot of good news on the vaccination front but still holds to his mid-2021 timeline.

Alan Joyce doesn’t expect any significant international flying from Qantas until mid-2021. Photo: Qantas

Asked about the impact of 2020 on Qantas and aviation in general, Alan Joyce said;

“It’s still a huge problem for the aviation industry, he said. Losing $11 billion in revenue, I don’t think anyone can underestimate the impact.”

But the Qantas boss finished on an upbeat note. Despite everything 2020 has thrown at the airline, Mr Joyce believes the worst is over.

“The outlook is a lot more positive than it was six months ago. We are optimistic it will keep getting better.

“We have plenty of domestic capacity for Christmas and New Year for a quick holiday.

“I think a lot of our people will be happy to see you back in the air, back in the lounges.”