Qantas says competition to intensify, will report large H1 loss
Qantas Airways Ltd (QAN.AX) said on Thursday it expects domestic competition to intensify in the second half of the financial year as state borders open, after forecasting a first-half loss due to months of lockdowns.
The airline, which separately said it would switch its narrowbody fleet to Airbus SE (AIR.PA) jets from Boeing Co (BA.N), forecast a first-half underlying loss before interest and tax of more than A$1.1 billion ($788 million).
Qantas will focus next year on generating cash rather than posting a bottom-line profit as it begins to recover from pandemic-related border closures, Chief Executive Alan Joyce said.
“For us 2022 is not about making money,” he said. “It is about getting people back to work, generating positive cashflow and repairing the balance sheet.”
Qantas said it boosted its liquidity position during the half through the A$802 million sale of land near Sydney Airport. It expected to have A$5.6 billion of net debt as of Dec. 31, the end of the first half of its financial year, lower than its June 30 debt position of A$5.9 billion.
Joyce said the emergence of the Omicron variant in late November led to an initial pause in international bookings and a slowdown in domestic bookings but that had started to recover.
“We have confidence the market recovery is fundamentally on track,” he said.
Australia’s domestic airline industry, held back during the pandemic by state border closings, is gearing up for a price war as new entrants in the jet market challenge Qantas and its biggest rival, Virgin Australia.
In the international market, Qantas has slowed the ramp up of capacity by around 10 percentage points for the second half and now expects it to reach around 40% of pre-pandemic levels.
Chief Financial Officer Vanessa Hudson said the supply of international capacity in the market, including from competitors, remained “very rational” at a time when Australia’s border is only partly open.
“We are not seeing an oversupply of capacity,” she said.
($1 = 1.3959 Australian dollars)