Qantas’s “transformation” plan to return the airline group to profitability via 5,000 job cuts, aircraft retirements and order deferrals, and network consolidation is tracking better than first hoped, chief financial officer Gareth Evans says.
“The transformation is key for us, ensuring that we execute and implement the transformation goals that we have set, and it’s gone very well so far. It is still relatively early days and certainly so far so good, in fact somewhat better than we’d hoped so far,” Evans told Australian Aviation on the sidelines of the delivery ceremony for the airline’s retro 737 on November 16.
“But I suppose the good news for us as well is that it is happening today in a slightly more benign operating environment. It has been incredibly competitive over the last four or five years and that competitive environment is reducing somewhat,” Evans said.
“I think internationally the lower currency and the competitive dynamics for our international competitors has just meant there are less seats coming on to the market. Domestically whilst demand is pretty subdued, the capacity growth in the market this year is much lower than in the previous few years, we’ve had zero growth as a group for the first six months and we’ll continue to monitor how we’re tracking, which is good because it is a fairly subdued demand environment.
“And then over the top of that you do have those macro positives like a lower fuel price, which whilst it is not going to deliver huge benefits for the first half if it stays where it is then we’re very leveraged to that going forward.”
Evans said the transformation plan is “transforming the performance of the business”, and he noted that “the more benign operating environment will allow the result of that transformation program to shine through.”
Much of the transformation benefits are being experienced in the international operations, he said.
“We believe we are going to a see substantially better performance from our international business this year,” Evans said.
“And because of changes we’ve made to our network, things that we’ve done around asset utilisation as well as a less aggressive competitive environment we’ve seen yield growth in our international business for six consecutive months now, obviously we are getting a benefit from that on top of the benefits form the transformation.
“All of those things are heading in the right direction, we’re going to see a substantially improved performance from the international business and that’s fantastic for everybody involved in the organisation.”