Published on 16th December 2021 at 8:38
  • Growing travel demand underpinning continued recovery.
  • Net debt expected to be approximately $5.65 billion.
  • All stood down Australian-based employees able to come back to work.
  • Group domestic capacity expected to be 102% of pre-COVID levels for 3Q FY22 rising to 117% in 4Q FY22.
  • Group international capacity expected to be around 30% of pre-COVID levels for 3Q FY22 rising to around 60% in the fourth quarter.
  • Group EBITDA loss of between $250-300 million expected in 1H22.
  • Strong total liquidity position of approximately $4.2 billion, boosted by Mascot land sale.
  • Recovery program on track to deliver $850 million annual cost benefits by end FY22.
  • Qantas Loyalty continuing to make strong cash contribution.
  • Qantas Freight expected to deliver a record performance in 1H22.
  • Project Winton: Airbus A320neo and A220 families chosen as preferred aircraft for domestic fleet renewal. Order anticipated to be finalised by the end of FY22.

The Qantas Group has been able to accelerate the repair of its balance sheet and expects to finish the first half of FY22 with a materially better net debt position than it had prior to the start of Delta variant lockdowns in June.

This improvement was made possible by the $802 million[1] sale of land in Mascot that was not core to the Group’s long-term strategy and strong sales that flowed once firm opening dates for international and domestic borders were announced.

Continued strength from Qantas Freight and Qantas Loyalty have also made significant contributions to cash flow.

Collectively, these positive factors helped to partly offset trading conditions that were heavily depressed for most of the first half due to prolonged lockdowns in Melbourne and Sydney and compounded by border closures in other states that brought domestic flying down to a low of around 30 per cent of pre-COVID levels.

Based on current forecasts, the Group expects net debt to be approximately $5.65 billion by the end of December 2021.

Liquidity levels continue to remain strong and are forecast to be approximately $4.2 billion by the end of the current half. This includes cash of $2.6 billion and $1.6 billion of undrawn debt facilities. The Group has maintained its Baa2 investment grade credit rating.

While the recent boost in travel activity has partially offset the material impact from months of lockdowns, the Group nonetheless anticipates a significant loss in the first half. Assuming no further lockdowns or significant travel restrictions, the Group expects an Underlying EBITDA loss for the first half of FY22 in the range of $250 million to $300 million.

When compared to the prior corresponding period, this reflects stranded costs due to sudden lockdowns and a lower level of aircraft hibernation to facilitate a faster ramp-up based on the national recovery roadmap.

Once non-cash depreciation and amortisation costs are included, the 1H FY22 Underlying EBIT loss is expected to exceed $1.1bn.

The Group expects to incur additional ramp-up costs in the second half of FY22. This reflects the decision to return all Australian-based employees to work earlier than expected and ahead of demand to ensure capability is maintained and to end a long period of stand down for employees.

The Group’s fuel cost for 1H22 is expected to be around $495 million[2]. The Group is highly hedged for the second half of FY22 primarily in options and a significant portion of those are participating at current forward prices[3].


Across both Qantas and Jetstar, the Group is holding significant levels of domestic bookings over the Christmas and summer holiday period. Demand momentum slowed in late November due to uncertainty regarding the Omicron variant but there has been recent improvement.

With almost all states and territories now open, the Group expects domestic flying to be about 75 per cent of pre-COVID[4] levels by the end of December rising to more than 100 per cent in February 2022.

Domestic demand is being driven by leisure travel as Australians visit family and friends or take long-awaited holidays. Travel for business purposes continues to be underpinned by the resources, government and construction sectors, with initial signs of a broader recovery in other parts of the corporate market that is expected to gather pace after the summer holidays.

Domestic competition is expected to intensify in the second half of FY22. The Qantas Group is well placed to respond through its frequency of flights, network reach advantages and reduced cost base, and will continue serving customers through its dual brand approach. The Group expects its market share will normalise at around 70 per cent once all state borders open.


Qantas moved quickly to take advantage of the faster-than-expected opening of international borders into New South Wales and Victoria. Routes to London, Los Angeles and Singapore restarted in November, enabling the Group to capture high levels of pent up demand.

Bookings are extremely strong on new routes from Sydney and Melbourne to Delhi starting in December, and initial bookings on the recently announced Perth-Rome seasonal service are encouraging.

There was a significant drop in booking momentum for international flights due to news of the Omicron variant and the additional quarantine restrictions imposed, but current loads have held and booking activity has started to pick up.

Over the past month, the Group has adjusted the restart timing for some routes, including Japan, New Zealand, Hong Kong and Shanghai in response to extended border restrictions in those countries. The return of Sydney-San Francisco and Brisbane-San Francisco have been paused.

Due to these and other smaller adjustments, the ramp up of Group international capacity has been slowed by about 10 per centage points in 2H FY22 and is now expected to be at the bottom end of the previously quoted 40-55 per cent range of pre-COVID levels.

Qantas Freight continued to benefit from a growth in e-commerce and favourable international yields and is on-track to deliver record earnings[5] in the first half of FY22. While yields are expected to ease as more international passenger flights return, domestic freight demand is expected to remain strong through a structural expansion of e-commerce.

This expansion underpinned the recent announcement that two A330s will be converted for freight use in partnership with Australia Post and a third A321 converted freighter being added to the fleet.


Qantas Loyalty continues to perform well, generating significant positive cash flow in the first half of FY22.

Following the announcement of international borders re-opening, Qantas Loyalty had its single biggest day for flight redemptions with almost half a billion points redeemed in 24 hours.

In November points earned from credit card related spend recovered to pre-COVID levels. A five year renewal was signed with American Express in the half, meaning four of Qantas Loyalty’s major financial services partners have re-signed since the start of the pandemic.

New partnerships, including with Accor and Optus, have already proved popular with members, and Qantas Loyalty will continue to build its portfolio in the coming months.

Plans for a new ‘Green’ Frequent Flyer tier have been announced, providing rewards in return for customers making eco-friendly decisions on the ground and in the air.


After a detailed tender process, Qantas has selected the Airbus A320neo and A220 families to renew the airline’s existing domestic narrowbody jet fleet. Both aircraft types will be powered by Pratt & Whitney GTF™ engines.

Subject to final Board approval, an order is anticipated by the end of FY22 consisting of 40 firm commitments and 94 purchase right options, with flexibility on timing and mix of aircraft from within these two families. (See separate media release.)

Aircraft would start arriving by the first half of FY24 and deliveries would be spread over the following 10-plus years as the airline’s existing Boeing 737-800s and 717s reach the end of their economic lifespan.

Qantas will enter discussions with its key work groups on the arrangements required to operate the aircraft and meet the business case for this investment, before Board approval is sought for an order to be placed.


Qantas Group CEO Alan Joyce said:

“This has been one of the worst halves of the entire pandemic, where most states had their borders closed and the majority of Australians were in lockdown. Domestically, our capacity fell to around 30 per cent of pre-COVID levels for several months.

“Fortunately, the structural changes we made earlier in the pandemic put us in a good position to weather these extremely poor trading conditions while the national vaccination rate reached a point where states started to open back up.

“Australia now has one of the highest levels of vaccination and it’s still rising. That sets us apart from many other countries and puts us in a much better position to manage uncertainty around variants and seasonal surges.

“One of our biggest strengths throughout the pandemic has been the fact we’ve responded quickly to change. We’ve significantly reduced our cost base which improves our ability to recover. We were able to switch on an initial wave of international flights in time for the accelerated border opening in November, which meant we could capitalise on pent-up demand.

“We added new domestic routes based on changing demand patterns and we’re now doing the same internationally. Our new flights to India are some of the fastest selling Qantas has ever had, with virtually all flights in December full.

“The news of the Omicron variant had a clear impact on people’s confidence to book international trips in particular, but we haven’t seen large numbers of cancellations. Many customers have strong intentions to travel if the border and quarantine settings are right and in the past few days we have seen intakes improve.

“Domestic demand has started to pick up again and we’re expecting a strong performance over the Christmas period and continued strength into early next year as more restrictions ease,” added Mr Joyce.


ASKs vs FY19 (%) 1Q22* 2Q22 1H22 3Q22 4Q22 2H22 FY22
Group Domestic 37% 50% 43% 102% 117% 109% 76%
Group International 3% 7% 5% 30%-40% 50%-70% 40%-55% 20%-30%
Total Group 15% 22% 18% 50%-60% 70%-85% 60%-75% 40-45%

* Actual


[1] $758 million settled on 16 December 2021.

[2] The total fuel cost includes an “into plane” logistics cost which is averaging A$14 per barrel for 1H22.

[3] Average 2H22 current forward Brent Price of USD$73.71 as at 14 December.

[4] Pre-COVID is the prior corresponding period of FY19.

[5] Underlying EBIT.