Qantas has posted a $1.08 billion half-year loss, following a dramatic $6.9 billion plunge in revenue due to continued travel restrictions.
The net loss before tax was $1.47 billion, but the airline will be able to offset part of that against future tax bills.
“These figures are stark but not surprising,” Qantas chief executive Alan Joyce said.
“During the half we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began. Virtually all of our international flying and 70 per cent of domestic flying stopped, and with it went three-quarters of our revenue.”
The airline said it still has $4.2 billion in available cash to keep going until Australia’s international border reopens and domestic travel ramps up to more normal levels.
Qantas is expecting international travel to resume more broadly at the end of October, when the national vaccine rollout is scheduled to be complete, having previously started selling tickets to Britain and the US for travel as early as July.
The airline is hopeful of a “material increase” in trans-Tasman flying, despite the current COVID-19 outbreak in Auckland that has prompted several states to reimpose quarantine restrictions on New Zealand arrivals.
Qantas is tipping a return to 60 per cent of pre-COVID domestic capacity by the end of March and 80 per cent by the end of June.
But this remains vulnerable to any future state border closures, with Qantas estimating that the border closures so far in 2021 have already cost it between $350-450 million in lost earnings. The impact was exacerbated due to the timing in the middle of the key summer travel period.
The airline is running at just 8 per cent of international capacity through trans-Tasman and repatriation flights.
Frequent flyer scheme survives grounding
Alan Joyce said other areas of the company had helped soften the blow from the massive decline in passenger traffic.
“Qantas Loyalty still had significant income because the program has evolved to the stage where the vast majority of points are earned from activity on the ground,” Mr Joyce said.
“Qantas Freight had a record result and has been a natural hedge to the lack of international passenger flying, which has created a shortage of cargo space globally.”
Qantas Loyalty contributed $454 million cash towards the group, with its underlying pre-tax earnings down a relatively modest 29 per cent on pre-COVID levels to $125 million.
The airline also grew its health and home insurance businesses, while revenue from its wine and rewards store businesses jumped 74 and 41 per cent respectively.
However, Qantas has also worked very hard on the other side of the ledger, slashing costs, mostly staff.
The airline is targeting at least $1 billion a year in permanent savings, mainly achieved through 8,000 redundancies.
More than 5000 staff have already left the airline, with the others to leave by the end of June.
Qantas has also embarked on a move, which unions contend is illegal, to outsource about 2000 ground staff jobs.
The airline said 14,500 full-time equivalent staff are “stood-up”, but about 11,000 remain stood down. The airline is still relying heavily on JobKeeper support, with total government support adding up to $700 million, including $459 million in JobKeeper – a scheme that ends in late March.