In a stunning reversal of form announced today, Qantas has forecast it will return to profitability in the six months ending December 31, the first half of its 2022/23 financial year (1H23). Australia's flag carrier says its underlying profit for 1H23 will be between AU$1.2 billion and AU$1.3 billion ($752.9 - $815.6 million).

For the past three years, Qantas has posted annual losses of more than AU$1 billion ($627.7 million), racking up total losses of more than AU$7 billion ($4.39 billion) in the pandemic era. In FY22, it posted an underlying loss of AU$1.19 billion ($747.2 million), a loss it expects to erase between July to December this year. At its peak, net debt reached AU$6.4 billion ($4 billion), but by the end of December, Qantas says it will be between AU$3.2 billion and AU$3.4 billion. ($2 - $2.1 billion).

What will his critics say now?

Qantas CEO Alan Joyce has delivered an exceptional half year
Photo: Getty Images

Just a few weeks ago, commentators and market analysts were calling for CEO Alan Joyce to resign. He has been the face of the airline for more than 14 years and was taking the heat for the losses and poor performance that was trashing the airline's brand. Without a hint of hubris, Joyce said today:

"It's been a really challenging time for the national carrier, but today's announcement shows how far we've come. Since August, we've seen a big improvement in our operational performance and an acceleration in our financial performance."

Driving the result has been domestic travel, with capacity in 1H23 to be around 94% of pre-covid levels and reaching 100% in the second half. Qantas had previously forecast 106% but reduced capacity to protect performance as it recovered from operational shortages. Business travel has been a surprise, with revenue at more than 100% of pre-COVID levels, with leisure revenue at more than 130%.

More A380 capacity is needed

Qantas Airbus A380-841
Photo: Vincenzo Pace | Simple Flying

Even before the pandemic, Qantas struggled to make its international operations profitable. Between July and December, it says international capacity will be around 61% of pre-COVID levels and climb to 77% in 2H23. International yields have been particularly strong, but Qantas expects these to moderate as it, and other carriers, steadily increase capacity. More capacity will come by returning additional Airbus A380s to service and the delivery of three Boeing 787-9 Dreamliners, plus the arrival of more Airbus A321LRs for group airline Jetstar.

Looking at the data from ch-aviation.com, Qantas is currently operating 112 of its 125 aircraft, including four of its eleven A380s. Jetstar, which has recently faced severe operational trouble with its Boeing 787-8 services, has 71 of its 76 aircraft flying, with one 787-8 and four Airbus A320-200s listed as inactive. At one point, Jetstar had six of its eleven 787s out of service due to lightning strikes, a bird strike, parts shortages and damage from runway debris.

Jetstar Boeing 787-9 on takeoff
Photo: Jetstar

Industrial action

Qantas has had some difficult times with staff unions recently and, perhaps driven by knowledge of the return to profits, there has been talk of strike action by cabin crews. Today, Qantas announced "a change to the wages policy covering around 20,000 employees." Joyce said the accelerated return to profit means "we can invest more in rewarding our employees, who do an amazing job."

"We'll spend an additional AU$40 million ($25 million) a year on permanent pay increases for our people on top of the AU$200 million ($125 million) in cash and share bonuses we've announced for our people."

This week the Flight Attendants Association of Australia said two groups of domestic cabin crew had filed applications with the Fair Work Commission to undertake work bans and strikes. Flight attendants will be asked to vote on work bans or strikes if the commission accepts the application for a protected industrial action ballot. Qantas says it is already in discussions with the union for a new enterprise agreement and will continue negotiating in good faith.

Cancellations, mishandled bags, and delays have bugged Qantas and Jetstar for most of 2022, but those are rapidly improving. Cancellations have fallen from 4% in August to 2.4% in September and are currently running at 1.7%, which is better than pre-COVID levels. Domestic on-time performance has reached 69%, and mishandled bags are now down to six per 1,000 passengers.

Operational performance has been improved by adding staff and reducing capacity, with Qantas now holding aircraft 'on standby' to meet unforeseen events. It has up to ten narrowbodies, six widebodies and four regional aircraft on standby across Qantas and Jetstar, which is about 20% of the groups' flying capacity.

Are the Qantas and Jetstar passengers celebrating, or does the anger with Joyce and Qantas run more deeply than that?

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    Qantas
    IATA/ICAO Code:
    QF/QFA
    Airline Type:
    Full Service Carrier
    Hub(s):
    Brisbane Airport, Melbourne Airport, Sydney Kingsford Smith Airport
    Year Founded:
    1920
    Alliance:
    oneworld
    CEO:
    Vanessa Hudson
    Country:
    Australia