Qantas Airways said Thursday the pandemic cost it 4 billion Australian dollars ($2.9 billion) in revenue in the last fiscal year and warned that international travel won’t resume before mid-2021.
The Australian airline reported an underlying profit before tax of AU$124 million ($89 million) for the fiscal year that ended on June, a 90.6% decline from the AU$1.33 billion profit posted a year before.
“We potentially could see a vaccine by the middle or the end of next year and countries like the U.S. may be the first country to have widespread use of that vaccine, so that could mean that the U.S. is seen as a market by the end of ‘21,” he added.
The first six months of 2019 had been the toughest conditions in Qantas’ 100-year history, Joyce said.
The airline recorded a AU$771 million ($554 million) pre-tax profit in the first half of the fiscal year before the pandemic struck.
Joyce said Qantas was in a better financial position than many airlines to survive the pandemic.
“We have the lowest cash burn, we believe, of any major airline group in the world,” Joyce said.
“AU$40 million ($29 million) a week is still a big number, but that is a lot lower than other airlines in North America and Europe and that gives us the longest runway of any airline group out there, well through to ’21 and into ’22 and we may need that,” he added.
Mr Joyce added that Qantas, and its budget subsidiary Jetstar, would continue to extend a furlough for about 15,000 workers “as we wait for the recovery we know is coming”.
Australia has flattened its virus curve faster than other nations, meaning demand for domestic flights has returned and is expected to fully recover by 2022.
But international demand at that time is forecast to be half of what it was, Qantas said.
The airline also plans to raise A$1.9bn (£1.05bn; $1.3bn) in equity – its first such move in 10 years – to bring in new funds and help “accelerate” its recovery.
Other short-term savings will be found by grounding up to 100 planes, including its A380 fleet, and deferring the purchase of new planes, it said.
Greg Waldron, Asia managing editor of FlightGlobal, told the BBC that the measures should help support the airline as it deals with the fallout from the pandemic.
“Qantas’s mix of job cuts, fleet reductions, and capital raising are designed to reduce costs during a demand crisis for the industry, and retain a solid core for the eventual rebound. In the short to medium term, Australia’s strong domestic market should help Qantas’s revenue partially revive.”
Decisions offer insight on Australia border question
Simon Atkinson, BBC News in Sydney
Australia’s borders remain pretty much shut in and out – apart from returning citizens or for passengers with exceptional circumstances. And the comments by Qantas today are telling.
By grounding most of its international fleet “for at least the next year”, the airline is clearly not expecting international borders to open up in a meaningful way until at least June 2021.
Should the much talked-about trans-Tasman bubble between Australia and New Zealand open up, Qantas will doubtless be part of that.
But for non-Australians hoping to visit family abroad – or for Aussies eyeing a holiday to Bali – there’s no need to pack the passport for a while yet.
Of course today the biggest thoughts go to the 6,000 or so Qantas staff who are losing their jobs, and the 15,000 employees who remain stood down.
Mr Joyce is hopeful about half of that latter group will be back helping the airline run domestic routes by the end of the year on the back of ramped-up demand to fly around this vast country. That hinges on Australia’s states opening borders to allow free travel.
And that depends on Australia keeping Covid-19 well under control – so outbreaks like the one we’re seeing right now in Melbourne do not become the norm.
The airline said its massive loyalty programme – which has 13 million members or around half Australia’s population – would be its best hope of recovery while borders remain closed.
The International Air Transport Association (IATA) – the peak body for airlines – has warned that global airline revenue has seen a 55% decline on 2019 levels. IATA says it will take more than three years for global travel to return to 2019 levels.
Aviation industry analyst Shukor Yusof from Endau Analytics warned that worse is still to come for the world’s airlines as they deal with the impact of the coronavirus.
“The crisis is deeper and wider than what many think it is, and it will have a debilitating effect on the industry. We are seeing just the beginning of what is going to be at least 12 to 18 months of pain and suffering before airlines slowly recover.”