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Wednesday, September 27, 2023

Qantas reports a significant annual loss of A$1 billion

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In light of the effects of Delta and Omicron as well as the initial expenditures associated with restarting the airline as lockdowns finally ended, the Qantas Group has reported its third consecutive Statutory Loss Before Tax of more than A$1 billion.

The Group had an Underlying Loss Before Tax of $1.86 billion and a Statutory Loss Before Tax of $1.19 billion for the entire 2022 fiscal year. The $686 million net gain from the sale of surplus land, which assisted in lowering COVID-related debt, is a major factor in explaining the difference between these two measurements.

The fourth quarter had the highest sustained levels of travel demand since the beginning of the pandemic, in contrast to the first three quarters of the year, which were characterized by border closures and waves of uncertainty brought on by COVID variations. The Group’s annual flying levels averaged 33 percent below pre-pandemic levels but ultimately reached 68 percent.

While Qantas Freight recorded another record annual performance and Qantas Loyalty advanced its earnings growth to double digits in the second half, Group Domestic operations were profitable at the Underlying EBIT level in 4Q22.

When combined with the Group’s recovery plan, the reopening of borders witnessed a sharp surge in forward travel demand, which significantly improved the balance sheet. At the conclusion of FY22, net debt has decreased from a peak of more than $6.4 billion to $3.9 billion, which is below the ideal target range of $4.2 billion to $5.2 billion.

Now that the pandemic’s existential threat has passed, the Group is concentrated on finding solutions to ongoing operating problems. During August 2022, key consumer metrics for Qantas, like as contact center wait times, cancellation rates, and mishandled luggage rates, are returning to pre-COVID standards.

The on-time performance increased from 52 percent in July to 66 percent for August, indicating a considerable improvement (to date). Depending on outside variables like harsh weather, this is predicted to reach 75 percent in September and roughly 80 percent in October 2022.

“This result brings the Statutory Loss Before Tax impact of COVID on the Qantas Group to approximately $7 billion and our cumulative revenue losses to $25 billion,” stated Alan Joyce, CEO of Qantas Group.

These numbers are astounding, and it has undoubtedly been difficult to go through. It has been a difficult year for everyone. As soon as Delta struck, we were forced to ramp down practically all flying and maintain that level for several months before ramping back up through several Omicron waves as we all learned to coexist with COVID in the neighborhood.

“We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional. Our teams have done an amazing job through the restart and our customers have been extremely patient as the whole industry has dealt with sick leave and labour shortages in the past few months,” Joyce said.

“Safety remains number one, but our service isn’t at the level expected of the national carrier. There is a lot of work happening to bring us back to our best, including hiring more people, rolling out new technology and reducing domestic flying so we have more sick leave cover.

We saw a big improvement in baggage handling and cancellations in August, which we expect will return to pre-COVID standards next month. On time performance also improved significantly and should be close to our usual high standard in September.

We’re even more confident in the future than we were six months ago, so today we’re announcing more investment in our people and our customers, including a major boost to staff travel benefits, new routes and new lounges. We’re also announcing the first capital return for shareholders since they provided us $1.4 billion at the start of the pandemic to support our Recovery Plan.”

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