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Northern Beaches lockdown cost us $400m, says Qantas

written by Adam Thorn | April 15, 2021
Qantas B737 VH-XZI reaches for the sky off 34L YSSY 12.2.21
A Qantas B737 VH-XZI takes off from Sydney in February 2021 (Justin McCoy)

Qantas has revealed border closures resulting from the Northern Beaches COVID cluster at Christmas cost the airline $400 million in lost earnings.

The outbreak in Sydney caused large areas of the city to go into a snap lockdown in December and January, which caused all other states and territories to impose travel restrictions.

The timing was particularly problematic given airlines only weeks before chalked up record sales due to most borders opening up for the first time in months.

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On Thursday, Qantas said in a statement, “An earlier recovery in domestic travel received a major setback from lockdowns during the peak Christmas and New Year travel period, which had a prolonged impact on consumer confidence.

“This cost the group an estimated $400 million in lost earnings (EBITDA) for FY21.

“The recent Brisbane lockdown came on the eve of the peak Easter travel period but was much shorter and was met with far more measured responses from various states. The direct impact on the Qantas Group is estimated at $29 million EBITDA for FY21.”

The news came as the business said the current environment is “characterised by extremely strong leisure demand” sparked by the government’s half-price ticket offer.

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“As a result, the group is revising its estimates of reaching 80 per cent of its pre-COVID domestic capacity for the fourth quarter of FY21 and is now expecting this to be beyond 90 per cent, provided there are no significant border closures,” it added.

Chief executive Alan Joyce added he was now seeing “really positive signs of sustained recovery”.

“This is the longest run of relative stability we’ve had with domestic borders for over a year and it’s reflected in the strong travel demand we saw over Easter and the forward bookings that are flowing in each week from all parts of the market,” Joyce said.

The news of the lockdown losses and recent bounce-back came within an announcement the wider Qantas Group would soon be flying more aircraft on their domestic routes than before than pandemic.

The announcement came minutes after Virgin pledged to hire 150 new cabin crew and lease 10 new 737s because it was “committed” to restoring its pre-COVID market share.

Qantas chief executive Alan Joyce’s has repeatedly claimed his airline group would increase its slice of the domestic industry from 60 to 70 per cent.

The ambitious expansion will bring back memories of the so-called capacity wars between the two airlines nearly 10 years ago, as Virgin turned Virgin Blue into a more premium offering to challenge Qantas.

“The Australian government’s half-price fares program is having a direct and indirect impact on the sector,” said Joyce on Thursday. “The direct response to the program has been fantastic, with over 250,000 fares sold in the first two weeks.”

The flag carrier is able to fly more aircraft within Australia because Jetstar will deploy six Airbus A320s on loan from Jetstar Japan.

The business also plans to shift five of its 787-8s, usually flown on international routes, to the domestic market from mid-year. On sale today, these 335-seaters will initially be flown between Melbourne/Sydney-Gold Coast and Melbourne/Sydney-Cairns.

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