Airline Qantas has announced a $2 billion loss detailing the extent of the pandemic hitting its bottom line.
Qantas CEO Alan Joyce announced the $2 billion loss, amounting to a reduction of Qantas’ annual revenue by more than 21%, which was down by $2.8 billion from its $840 million profit in 2019.
Qantas has said that the impact of the coronavirus, as well as the writing-down of its Airbus A380 fleet, and one-off costs of $642 million were the primary cause of its major restructure plan and wide scale staff layoffs.
The airline added that its underlying profit – excluding the aforementioned one-off costs -stood at $124 million, which was more than 91% down on 2019’s $1.33 billion profit figure. Qantas will not be paying its shareholders a dividend in an attempt to reserve cash.
The airline is expected to cut 4,000 of the total 6,000 planned staff from its books by September, with an additional 20,000 staff stood down until activity picks back up.
CEO Alan Joyce has said that “the impact of COVID on all airlines is clear. It’s devastating and it will be a question of survival for many. What makes Qantas different is that we entered this crisis with a strong balance sheet and we moved fast to put ourselves in a good position for the recovery.”
“We were on track for another profit above $1 billion when this crisis struck,” Joyce said. “COVID will continue to have a huge impact on our business and we’re expecting a significant underlying loss in FY21.”
Joyce remained confident as to Qantas’ long-term prospects, stating that “recovery will take time and it will be choppy. We’ve already had setbacks with borders opening and then closing again.”
“But we know that travel is at the top of people’s wish lists, and that demand will return as soon as restrictions lift,” Joyce added.
Qantas is running domestic flights at just 20% of its capacity compared to before the pandemic, and has said that international flights aren’t expected to return to its operations until July 2021.
A travel ‘bubble’ between Australia and New Zealand could see international flights return sooner than July 2021, however, this remains closely tied to infection numbers in both Australia and New Zealand.
Alan Joyce continued to explain that “looking further ahead, we’re in a good position to ride out this storm and make the most of the recovery. Our market position is set to strengthen as the only Australian airline with a full service and low fares domestic offering, as well as long haul international services.”
According to the release from Qantas, “the Qantas Group collected $267 million in JobKeeper payments, the majority of which was paid directly to employees on stand down and the rest used to subsidise wages of those still working.”
“To 30 June, 2020, the total gross benefit of Government support was $515 million and the net benefit (after costs for flights operated) was $15 million… the nature of ongoing industry assistance means the level of support received in FY21 will depend on the amount of flying activity.”
Key amongst its recovery plan initiatives was the retirement of its 747 fleet, the standing down of 20,000 employees, 6,000 redundancies and the raising of $1.4 billion worth of equity, in addition to the $1.75 billion long term debt funding that Qantas secured in the second-half of FY20.
“The plan targets $15 billion in benefits over three years from reduced activity, with $1 billion per annum in ongoing cost savings from FY23 through efficiency gains across the Group,” a Qantas statement reads.