Qantas records $1.47bn statutory loss before tax

written by Adam Thorn | February 25, 2021
Qantas 100th birthday centenary fly past Harbour Bridge 3
A Qantas 787 celebrates the carrier’s 100th birthday with a flypast of the Harbour Bridge (Destination NSW)

The Qantas Group has announced a $1.47 billion statutory loss before tax in the six months to 31 December, which it blamed on Victoria’s second lockdown and border closures.

Chief executive Alan Joyce said the results were “stark but not surprising” and again reiterated he had seen “pent up travel demand” during spells when restrictions eased.

Today’s half-year results revealed:

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  • Underlying loss before tax of $1.03 billion;
  • $6.9 billion revenue impact from COVID-19 crisis in HY21 (down 75 per cent);
  • Underlying operating cash flow of $1.05 billion;
  • Total liquidity of $4.2 billion;
  • The business’ restructuring program is on track to deliver $0.6 billion in savings in FY21;
  • Underlying EBITDA loss of $86 million for the International Group, with depreciation and amortisation taking this loss to $549 million;
  • Qantas Freight had received its first of three Airbus A321 freighters in October 2020, taking its fleet to 19;
  • Since the start of the pandemic, the Group has operated more than 200 flights as part of repatriation efforts by the federal government to bring Australians home.

More positively, the airline group said domestic operations across Qantas, QantasLink and Jetstar generated positive underlying cash flow despite a circa 70 per cent decline in revenue and capacity.

The business put that good performance down to an “improved planning processes” that allowed it to rapidly change its network to respond to border closures.

Jetstar recorded a trebling of bookings in November, before a second spate of snap lockdowns and restrictions.

“During the half we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began,” said Joyce. “Virtually all of our international flying and 70 per cent of domestic flying stopped, and with it went three-quarters of our revenue.

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“Despite the huge challenges, these results show the group’s underlying strength. When we had the opportunity to fly domestically, we saw significant pent up travel demand and generated positive cash flow.

“Qantas Loyalty still had significant income because the program has evolved to the stage where the vast majority of points are earned from activity on the ground. Qantas Freight had a record result and has been a natural hedge to the lack of international passenger flying, which has created a shortage of cargo space globally.

“These factors couldn’t overcome the massive impact of this crisis, but they have softened it.

“We’ve maintained a high level of liquidity because we were quick to cut costs and because we’ve been able to raise debt and equity. This gives us the breathing room to deal with the levels of uncertainty we’re still facing, and funding for the restructuring that will ultimately speed up our recovery.

“Our priorities remain the safety of everyone who travels with us, getting as many of our people back to work as possible and generating positive cash flow to repair our balance sheet.

“The COVID vaccine rollout in Australia will take time, but the fact it’s underway gives us more certainty. More certainty that domestic borders can stay open because frontline and quarantine workers will be vaccinated in a matter of weeks. And more certainty that international borders can open when the nationwide rollout is effectively complete by the end of October.”

The results also coincided with an announcement that Qantas plans to push back its plan to restart international flying from 1 July to 31 October following government criticism of the earlier date.

The business said it will then operate 22 of its 25 routes to destinations including Los Angeles, London, and Johannesburg in line with Australia’s vaccine rollout.

Its change of strategy comes after Deputy Prime Minister Michael McCormack issued a stinging rebuke of Qantas’ decision to go earlier, a move which he said would be dictated by border policy.

On Thursday, the business said it’s now in “close consultation with the federal government” around the reopening of borders

Most of its network will restart on 31 October, but it won’t initially resume flights to New York, Santiago and Osaka.

Jetstar will resume flights to all 13 of its destinations and both carriers will offer improved flexibility to change flights, in line with its domestic announcement.

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