Qantas has widened its half-year loss as the impact of COVID-19 lockdowns and emergence of the Omicron variant in late-2021 weighed on its finances.
Australia’s national carrier on Thursday reported an underlying pretax loss of $1.28 billion for the six months to December 3, compared with the $1 billion loss of a year ago.
Revenue rose 32 per cent to $3.07 billion, boosted by a record performance in the airline’s freight business and a rebound in travel bookings when domestic borders reopened in the December quarter after lockdowns.
“Most of Australia was in lockdown for several months of the first half, so the loss we’ve announced today isn’t surprising but it is frustrating,” group chief executive Alan Joyce said on Thursday.
“It’s been a real roller-coaster.”
By 1130 AEDT, Qantas shares were down 2.2 per cent at $5.23 in a weak Australian market.
The airline said it had prepared for a jump in holiday demand as the Delta variant lockdowns receded by recalling about 11,000 employees in December. But the swift spread of the Omicron variant – which led to in widespread closures and restrictions across Australia – forced it to cut capacity.
“The impact of Omicron has pushed everything out by around six months from where we thought we would be,” Mr Joyce said on a post-earnings call.
Domestic capacity across Qantas and its budget arm Jetstar was at 42 per cent of pre-COVID levels in the December half. The loss of peak summer demand meant domestic operations recorded an underlying earnings loss of $388 million.
The ongoing hit to international travel also weighed, but this was made up by a strong performance in the freight segment, with Qantas freight and international together reporting underlying earnings of $89 million.
The delayed Western Australian border opening from February 5 to March 3, would cost the airline $60 million, Mr Joyce said.
The carrier is seeing some tailwinds with travel demand strengthening and positive developments on reopening international borders in recent weeks.
Its frequent flyer surveys show intent to travel is extremely high and there has been a sharp uptick in international ticket sales in recent weeks.
Qantas expects domestic capacity to be 68 per cent of pre-COVID levels in the March quarter, rebounding to 90-100 per cent in the June quarter.
International capacity is expected to be 22 per cent of pre-COVID levels in the March quarter, lifting to 44 per cent in the fourth quarter.
However, it expects a hit of $650 million on group earnings before interest and tax in the second half of the financial year, due to the spread of Omicron.
The carrier will not pay any interim dividend for the half year.
Qantas half-year results
- Revenue up 31.9 per cent to $3.07 billion
- Underlying loss before tax $1.28 billion vs $1.01 billion loss
- Statutory net loss 456 million vs $1.01 billion loss
- Dividend nil