Alan Joyce reports ‘frustrating’ $1.3 billion loss

But Mr Joyce said air fares have always resisted rising inflation when competition was strong. Australia, which has traditionally operated as an airline duopoly, will have its fourth domestic competitor – alongside Qantas, Virgin Australia and Regional Express – when budget carrier Bonza launches mid-year.

He recalled the launch of Jetstar in 2004 to undermine what was then Virgin Blue with fares of $29, and again selling fares of $22 just earlier this year. “So inflation has disappeared from air fares over the past two decades,” Joyce said.

He branded Qantas an outsider in a mainly mid-market fight between Virgin, Rex and Bonza, despite Australian Competition and Consumer Commission data showing Qantas losing market share.

“I think we should all be grateful that it’s a very competitive market. Australian consumers are doing very well, and that’s a positive. I’m sure the ACCC is watching everyone, it’s part of their job. We told the ACCC that in the meantime we will fly for cash,” the CEO said.

“We will generate revenue in the air.”

Revenue rose 31.9% to $3.1 billion in the first half as consumers resumed booking flights before the Christmas borders opened. The underlying earnings before interest, tax, depreciation and amortization (EBTIDA) loss fell within the forecast to $245 million.

Mr Joyce said the half was frustrating but the recovery was underway even though the spread of omicron in January had nicked $650 million from its annual revenue and the delay in the opening of the border of the Western Australia an additional $60 million.

“We saw a sharp rebound in travel demand when the borders started to open in November and December, only to be hit by the omicron wave and all the uncertainty that came with it,” he said. declared.

Executives will miss their bonus for the third year

“Uncertainty continued into January, but demand has started to recover as Australia adapts to really living with COVID.

“Our frequent flyer surveys show that travel intent is extremely high, and we are seeing good leisure demand in the fourth quarter.

“We have also seen a strong increase in international ticket sales over the past few weeks,” Joyce said.

Qantas Domestic reported an underlying profit loss of $388m, but careful capacity management meant 92% of flights in the half were cash positive.

Qantas Freight and International generated $89 million in EBITDA, with the freight segment again making up for shortfalls in overseas flights.

Business reservations still low

So far, business travel has lagged behind the resumption of leisure. Leisure travel is at 100% of pre-COVID-19 levels, SME bookings at 50% and corporate bookings at just 33%.

Qantas raised its domestic capacity forecast for the March quarter to 68% of pre-COVID-19 levels, but lowered the fourth quarter forecast to between 90% and 100%.

Ms Hudson said the airline was confident it would not need to raise equity again with net debt in its comfortable $5.5 billion range.

Jarden analyst Jakob Cakarnis said it was a “decent result”.

“The balance sheet issues are not as dramatic as they were 12 months ago,” he said. “They have demonstrated to investors what they can produce when they operate a new normal capacity until the return to what a more pre-COVID-19 normal looks more like in calendar year 2023 or 2024.”

“But there’s no question that management thinks there will be near-term earnings volatility, and that’s what we have in our guidance as well.”

Staff retention plan

Qantas shares fell further than the benchmark, ending down 5.0% at $5.08.

Meanwhile, the airline also revealed a new staff retention program which was originally announced at its annual shareholder meeting last year; 20,000 non-executive employees will be entitled to 1,000 Qantas shares worth nearly $5,100.

“The rights are subject to conditions, including the group achieving the key objectives of its COVID recovery plan and keeping the employee in the company. If the conditions are met, the rights will be converted into shares in August 2023. These will be new shares issued by Qantas to employees,” Qantas said.

The executives, however, will live their third year without a bonus. They will become eligible for a similar retention and recovery program on the same terms as non-managerial staff in August 2023.

“The past few years have been difficult and retention is an issue among our managers and executives,” Mr. Joyce said. “The hard work of our employees has been a key factor, and we need to retain their skills and experience for the future.

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