MIAMI – Qantas (QF) released its group market update and remarks from its CEO, Alan Joyce. Overall, the group has high levels of optimism about the recovery speed, even though 2021 might still be in the red, albeit slightly.
Expectations are that from the second half of 2021, the airline will start to see recovery, in the way that enough flights will be able to be operated to post profits. However, 2021 is still expected to be a break-even year as a whole.
As of the end of November, the Group has A$3.6bn in liquidity available and expects to further increase that by A$500m in 2020. Debt levels on November 30 were at A$5.9bn.
The total job losses for the Qantas Group is expected to come to 8,500 due to the pandemic, 5,000 by the end of 2020. The airline is expected to save 600 million AUD in 2021, and around 1 billion AUD in 2023 due to the restructuring and recovery plan.
Australia has been extremely successful in getting a handle on the pandemic. For December the airline plans on flying 68% of their pre-covid schedule, and this number will increase to 80% in Q3 of 2021. In comparison, QF flew 20% capacity in Q1 and 40% in Q2 of this year.
This estimation takes into account that the borders within Australia will not be closed again. Joyce stated that QF and Jetstar sold 200,000 fares in 72 hours once Queensland reopened its borders, indicating that demand is there for travel. Bookings on Jetstar are also up 175% compared to this time last year.
Qantas has also opened new routes within Australia, such as Hobart to both Perth and Brisbane, as well as Canberra to the Gold Coast. These have been opened due to demand and having the aircraft available. On top of standard fare bookings, QF also increased by 50% the number of seats which were eligible for frequent flyer redemptions on domestic flights. In turn, the amount of redemptions doubled.
With the boom in domestic travel has also improved the number of active employees at QF from 9,000 in October to 11,500 in December. However, there are still 13,500 employees not currently active.
At this point in time, QF anticipates no international travel improvement until at least June of 2021. This will hinge on the rollout of the vaccine, as entry into Australia is expected to either require quarantine or a valid vaccination certificate based on remarks from the Prime Minister.
Flights to New Zealand might have a waiver on the vaccine/quarantine requirements, but this is not yet official. However, above 85% of QF customer stated that they thought the vaccine should be required for international travel and that they would take it if required.
Limited flights to New Zealand will be offered due to the travel bubble between the two countries, but other international flights before June 2021 will consist of repatriation flights from around the world.
In contrast to the passenger services, Qantas Cargo has been performing well during the pandemic. Additional services to major cargo hubs in Asia and the USA have needed to be added, and some passenger aircraft have been hauling cargo to deal with demand.
Qantas Freight is also working on the logistics of vaccine transport, especially regarding the temperature challenge.
Outlook for the Industry
If we take these numbers and expand them across the industry, it appears that once the borders reopen, the demand is present. As Joyce stated in his remarks, “I’ve never seen so much hugging at domestic terminals, particularly between cities that are only an hour apart.”
As so far it is evident that the quarantine rules are not sustainable for travelers, recovery of the airline industry is directly dependent on the vaccine rollout worldwide. And with recovery of the airline industry comes the recovery of many other industries and locations.
It looks like 2021 will be significantly brighter than 2020.
Featured image: Qantas 737-838 VH-VXB. Photo: Aidan Pullino @ifly.aviation