Qantas declares Covid-19 ‘existential crisis’ over as air travel demand surges

The airline announced it will buy back up to A$400 million (S$385 million) of shares. PHOTO: REUTERS

SYDNEY (AFP, REUTERS) - Australian national carrier Qantas reported on Thursday (Aug 25) that its business had started to bounce back after three years of pandemic turmoil, which cost the airline US$17 billion (S$23.7 billion) in revenue.

Releasing its full-year results, Qantas declared that “the existential crisis posed by the pandemic (was) now over” and it would shift focus to operational challenges.

“These figures are staggering and getting through to the other side has obviously been tough,” chief executive Alan Joyce said.

“We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional.”

By the end of June, domestic travel was above pre-pandemic levels, Qantas reported, with 20 new routes added to meet demand for leisure travel around Australia.

A sluggish rebound in international travel - still lagging below 50 per cent of pre-pandemic highs - was “offset by a record performance” in the group’s freight business.

But the fourth quarter travel surge was not enough to make up for a year plagued by Omicron and Delta wave lockdowns, which caused a third straight loss before tax of A$1.2 billion (S$1.16 billion).

Jefferies analyst Anthony Moulder said in a note that Qantas looked well-positioned to return to profitable growth this financial year despite higher oil prices.

Qantas chief financial officer Vanessa Hudson said a measure combining ticket prices and the percentage of seats filled would need to rise 10 per cent in the domestic market and 20 per cent in the international market to recover the higher fuel cost.

Part of the reason the airline has cut domestic capacity increases is to ensure that occurs, Mr Joyce said. Domestic capacity for 2022/23 is now forecast at 101 per cent of pre-Covid levels, down from around 110 per cent previously.

Another reason Qantas has been trimming domestic capacity from earlier forecasts is due to widespread staff shortages at airports and high rates of crew illness in winter.

Earlier this month, the airline asked its senior executives to work as baggage handlers because of the labour shortages.

On Sunday, Qantas said it would offer A$50 flight vouchers, loyalty status extensions and lounge passes to frequent flyers, a move to apologise for a rise in delays, cancellations, lost baggage and staffing issues since travel demand rebounded.

The airline now faces industrial action from engineers, beginning with one-minute work stoppages, as they push back against its standard offer to unions of a two-year wage freeze followed by 2 per cent annual increases amid soaring inflation.

Qantas said it expected to spend A$50 million on pay increases for employees covered by union agreements this financial year and to improve staff travel benefits. It had already set aside A$200 million for a A$5,000 recovery bonus and 1,000 share rights for more than 17,000 staff.

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