MIAMI – The Qantas (QF) Group has published the results for its Fiscal Year (FY) 2021, which ended on June 30, and the outline of its strategy for future resumption of international flights. QF CEO, Alan Joyce, speech comments on both the press releases published earlier this week.
QF performance during FY is negatively influenced by the perduring Covid-19 pandemic which, with its renewing variants, continues to create perturbance and disruption in air travel. The statutory pre-tax loss posted stands at US$1.72bn (AU$2.35bn) with revenues showing a minus US$8.787bn (AU$12bn) due to the impact from COVID-19.
On a more positive note, QF debt was reduced in FY2021 and brought down to US$4.31bn (AU$5.9bn) while the statutory net cash flow stood at US$195m (AU$267m). The restructuring program started by QF to compensate for the losses suffered brought its first results by permitting economies of up to US$475mn (AU$650m).
QF posted total liquidity of US$2.78bn (AU$3.8bn), which shall provide protection against perduring uncertainty, indicated that 95% of domestic activity was positive in terms of cash while reporting record performances by QF freight services which reduced costs for idling international operations.
Domestic Network Good Performances
On the domestic network, after capacity fell to a low 19% in July 2020, QF and associated Jetstar (JQ) started recovering and peaked at 92% in May 2021 but this exceptional growth was impaired by the Covid Delta variant and consequent lockdown which still perduring.
Notwithstanding the uncertainty, during FY 2021 QF and JQ have opened up to 46 new domestic routes, mainly to regional leisure destinations, to meet the demand arising from the closure of international leisure travel. Domestic corporate travel has also recovered approximately 75% of its pre-Covid consistency and a complete bounce-back as soon as lockdown measures are eased.
International Network Still Perturbed, Cargo Record Performances
On the international side, with the continuing border’s closure, QF and JQ fleets were almost completely grounded during FY 2021 and the travel bubble opened between Australia and New Zealand, after the flash start, came to an almost stop when new outbreaks of the pandemic brought in new travel restrictions.
The strongest activity remained within the operations of approximately 400 repatriation flights or to maintain critical links, to the Pacific region on behalf of the government. Cargo space demand remained very strong during FY 2021 mainly owing to the surge in e-commerce and the non-availability of belly cargo space on canceled passenger services. QF Cargo has capitalized on this situation and delivered record earnings.
Strategy on Restarting International Operations
Qantas is planning to restart its operations in accordance with the government-phased decisions on borders opening with a possibility for December 2021 remaining valid and based on the current vaccination progress and the evolution in quarantine requirements. At present, destinations with high vaccination rates, such as North America, the UK, Singapore, and Japan being those being focused on by QF in terms of operations resumption.
Two high demand and yield destinations, Los Angeles (LAX) and London-Heathrow (LHR) will see the return in service of the Airbus A380 possibly from the middle of 2022. 10 Airbus A380, operated with upgraded cabins, are expected back in service while two will be definitively retired.
Qantas has published a more detailed plan on its international re-start strategy:
- From mid-December 2021, flights would start from Australia to COVID-safe destinations, which are likely to include Singapore, the United States, Japan, United Kingdom and Canada using Boeing 787s, Airbus A330s, and 737s and A320s for services to Fiji.
- Flights between Australia and New Zealand will be on sale for travel from mid-December 2021 on the assumption some or all parts of the two-way bubble will restart.
- Qantas’ ability to fly non-stop between Australia and London is expected to be in even higher demand post-COVID. The airline is investigating using Darwin as a transit point, which has been Qantas’ main entry for repatriation flights, as an alternative (or in addition) to its existing Perth hub given conservative border policies in Western Australia. Discussions on this option are continuing.
- Five A380s will return to service ahead of schedule. These would fly between Sydney and LA from July 2022, and between Sydney and London (via Singapore) from November 2022. The A380s work well
on these long-haul routes when there’s sufficient demand, and the high vaccination rates in both markets would underpin this.
- Qantas will extend the range of its A330-200 aircraft to operate some trans-Pacific routes such as Brisbane-Los Angeles and Brisbane-San Francisco. This involves some technical changes that are now being finalised with Airbus.
- Flights to Hong Kong will restart in February and the rest of the Qantas and Jetstar international network is planned to open up from April 2022, with capacity increasing gradually.
- Qantas to take delivery of three Boeing 787-9s (new aircraft that have been in storage with Boeing) during FY23 to operate additional flights to key markets as demand increases.
- Jetstar to take delivery of its first three Airbus A321neo LR aircraft from early FY23, the extended range of which will free up some of its 787s to be redeployed on other markets.
QF CEO speech on FY 2021
Qantas CEO Alan Joyce has commented FY 2021 with a speech detailing the results posted for FY 2021 and on the strategy, financial and operational, to recover from the present losses and re-start international operations as soon as the situation allows it.
In his speech, Alan Joyce pointed out that “this loss shows the impact that a full year of closed international borders and more than 330 days of domestic travel restrictions had on the national carrier. The trading conditions have been diabolical.” He went on to add that “It comes on top of the significant loss we reported last year and the travel restrictions we’ve seen in the past few months. By the end of this calendar year, it’s likely COVID will cost us more than $20 billion in revenue.
He also made considerations on the fate of QF employees by stating “Things remain tough, especially for thousands of our people waiting to return to their jobs when borders open and hopefully stay open. Our focus is getting them back to work as soon as possible, which is why we were ramping up our flying and adding new destinations before the most recent lockdowns.”
Alan Joyce pointed out QF’s ability to adapt to fast-changing conditions: “Despite the uncertainty that’s still in front of us, we’re in a far better position to manage it than this time last year. We’re able to move quickly when borders open and close. We’re a leaner and more efficient organization. And our requirement for all employees to be vaccinated will create a safer environment for our people and customers.”
He concluded by recognizing the effort deployed by everyone in QF while dealing “with a huge amount of upheaval due to this crisis and showing enormous commitment and professionalism in the process. Our people maintained an absolute focus on safety and on serving our customers, who have likewise been extremely understanding as we’ve all gone through this difficult period.”
Featured image: Qantas Airbus A380 VH-OQH. Photo: Andrew Henderson/Airways