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Sunday, August 14, 2022

Qantas sees a shift in demand

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As its domestic network recovers from the current COVID-19 wave and foreign services build up after resuming in November, Qantas reported good demand patterns.

Qantas CEO Alan Joyce stated during the airline’s half-year earnings call that forward reservation had been “encouraging and trending upward” in recent months.

According to Joyce, Qantas has experienced its highest foreign sales volumes since before the epidemic began in the last several weeks. The carrier recorded its best domestic bookings for the week beginning Feb. 14 since before the delta variant breakout in June 2021.

Qantas expects its group domestic capacity to rise to 90-100 percent of pre-COVID levels in the June quarter, after falling considerably in the quarter ending March 31. In the September quarter, domestic capacity is likely to exceed 100%, with LCC subsidiary Jetstar hitting 120 percent.

In the June quarter, international capacity is expected to reach 40% of pre-COVID levels, followed by 70% in the September quarter.

Joyce expressed confidence that these projections will be less subject to border restrictions than past forecasts. “We realize the path to recovery is still long, but we can see things are finally stabilizing as Australia completes its transition to actually living with COVID,” he said.

While additional crossings are opening to allow for the resumption of vital international routes, mainland China and Hong Kong markets remain severely constrained.

According to Joyce, before the epidemic, Hong Kong and Shanghai routes accounted for around 12% of Qantas’ international capacity in terms of available seat kilometers. Only roughly a third of that capacity is currently operational, primarily for freight transport.

Qantas is hoping that the Chinese mainland market will reopen in July, but Joyce noted that if it does not, the airline will have plenty of alternative choices for deploying the capacity that was previously assigned there.

The carrier is getting closer to finalizing its ultra-long-haul “Project Sunrise” services. Qantas, according to Joyce, remains committed to providing nonstop flights from Sydney (SYD) and Melbourne (MEL) to locations like London (LHR) and New York (JFK) (JFK).

According to Joyce, Qantas hopes to complete the business case for Project Sunrise by the middle of this year. If it succeeds, it might start such flights in 2025, roughly two years later than it had anticipated when COVID-19 forced it to abandon the project. For these routes, the airline plans to order Airbus A350-1000s.

The Qantas Group recorded a financial loss of A$456 million ($326 million) in its fiscal first half, which was the group’s fourth straight half-year loss.

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