Australian airline Qantas has posted a statutory loss before tax of US$1.17 billion for the six months to December 31, 2020. Qantas CEO Alan Joyce called the figures stark, but not surprising. And despite the red ink, the airline boss says he’s becoming more and more optimistic about the future.
Stark, but not surprising results says Qantas CEO Alan Joyce
“Despite the huge challenges, these results show the Group’s underlying strength,” said My Joyce on Thursday morning. The airline notes over the six months, during which internal and international borders hamstrung Qantas’ efforts to fly, the Qantas Group managed to limit a $6.9 billion drop in revenue into a $1.03 billion underlying loss before tax.
“During the half (of 2020) we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began. Virtually all of our international flying and 70% of domestic flying stopped, and with it went three-quarters of our revenue.”
Underlying operating cash flow was US$840 million in the six months to December 31. The airline has US$3.35 billion in liquidity, offering it a buffer against future financial turbulence. While international services remain mostly off the schedules and caused Qantas significant financial pain over the last six months, a record freight performance, continuing strong performance from Qantas loyalty, and underlying positive cash flow from Qantas Group domestic services helped prop up the airline.
Included in the $1.17 billion loss were redundancy and restructuring costs of US$226.3 million and a further $56.5 million write-down of the Qantas A380 fleet.
An upbeat tone from the Qantas boss
In his briefing notes, the Qantas boss struck an optimistic tone. Alan Joyce said no-one could have predicted how big COVID-19 would be nor its impact. “It’s clearly worse than anyone expected,” he said. While noting Qantas now didn’t expect any significant international services to resume before the end of October (pushed back from July 1), Mr Joyce thinks Qantas is on the road to recovery.
“The Group’s liquidity, position in the domestic market, and progress towards restructuring gives confidence that the overall recovery plan remains on track. This is bolstered by the latest data on vaccine effectiveness and the increased pace of rollout globally.”
In a significant boost to the Qantas Group, their domestic market share is now running at 70%. Qantas is learning to live with (if not like) internal border closures and has improved its planning processes. Since July, Qantas has kickstarted 23 new domestic routes. Many of those were intrastate regional routes that dodge border issues.
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Increased certainty at Qantas
There’s also increased certainty at Qantas about resuming international flights. Most international services are now slated to restart on October 31, four months later than originally anticipated. It’s a more realistic timeline that lines up with local vaccination timelines. That can’t come soon enough for Qantas. Their international operations lost US$438 million in the six months to December 31.
But like many other airline CEO, Alan Joyce puts faith in the vaccination program seeing border restrictions eased and people moving again.
“Despite these setbacks, the Group’s liquidity, position in the domestic market, and progress towards restructuring gives confidence that the overall recovery plan remains on track. This is bolstered by the latest data on vaccine effectiveness and the increased pace of rollout globally.”
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