Good morning and thanks for joining us.
Can I start by recognising the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to their elders – past, present and emerging.
Today we’ve given an update on how the Qantas Group is performing, and what we expect the end of the Financial Year will look like.
We’ve also given some new detail on our recovery program.
In broad terms, the numbers show we’re slowly turning the corner – but we still have a long way to go.
Let me highlight some of the reasons we say that.
RECOVERY AND REPAIR
Firstly, most of our people are now back at work. That’s all of our domestic crew, all of our corporate employees and a small number of our international crew. Of course, we want more back – but it’s a huge improvement on where we’ve been.
Secondly, the business is now generating enough cash to start paying back some of the debt we took on to get through COVID. That’s a really significant milestone that shows we’re on a sustainable footing.
But today’s figures also show the ongoing financial damage of COVID. We expect to post a statutory loss (before tax) of more than $2 billion in FY21. That’s on top of a $2.7 billion loss last year.
We also know that the pandemic will have cost us at least $16 billion in lost revenue by the end of this financial year.
So – we clearly have a lot of repair work to do. But the business is showing all the signs of being able to achieve that.
Today, we’ve given detail on some additional steps we’re taking to manage the ‘cost’ side of our recovery.
Briefly, they are:
- A two-year wage freeze for all Qantas Group employees, including management.
- This certainly isn’t a reflection of the hard work of our people, but the tough reality we face.
- A reduction in the sales commissions we pay travel agents on international fares, from 5 per cent to 1 per cent.
- This won’t take effect until mid next year, to give agents time to adjust their business models in line with many overseas markets. The Australian Federation of Travel Agents has already recognised the need for the industry to change.
- A limited voluntary redundancy program for Qantas International cabin crew.
- We think this is important given the extra delays these crew now face, but we’re also focused on retaining skills for the future.
We have to stay focused on managing our costs, especially given the competitive environment. But ultimately, this is part of being able to one day grow again.
Turning to the revenue side, the main driver of recovery is domestic travel.
As far as Australians are concerned, flying is back – and it shows in our figures.
Qantas and Jetstar are on track to reach a combined 95 per cent of pre-COVID domestic capacity for the quarter ending in June, and well over 100 per cent next financial year.
That’s powered by leisure demand and also by the continued return of corporate travel, which is now back to 75 per cent of pre-COVID levels.
Our strategy of adding new domestic routes – 38 at last count – is generating revenue from our assets rather than leaving them on the ground. It’s generating work for our people. And it’s generating visitors for tourism operators around the country.
This return to flying is also good news for members of our Frequent Flyer program. Redemption levels – that is, people using points for flights – first rose above pre-COVID levels in November last year. Last month, they surged to 85 per cent above.
Clearly, people are keen to use the points they kept earning during lockdown – and this engagement shows the strength of Qantas Loyalty overall.
It’s now a month since the two-way bubble with New Zealand opened. Our capacity on the Tasman is about 60 per cent of pre-COVID levels and we expect that to gradually increase as confidence grows.
The combination of New Zealand flying, plus the continued strong performance of Qantas Freight, has lowered the net cost of carrying the stranded assets from our International flying operations.
This has now dropped from $5 million a week, to $3 million a week.
That’s important, because those assets will be stranded for a bit longer.
Last week, we adjusted our expectations for the restart of international services from the end of October to late December. That’s in line with the Australian Government’s new timeline for the vaccine rollout to be complete.
There’s been a lot of discussion about how and when borders should open. We know from surveying our own customers, they want it to be sooner rather than later. But everyone can agree: it has to be safe.
The vaccine is key to that.
Australians have done an amazing job keeping a lid on COVID. Imagine if we put that same focus on the vaccine rollout. Opening up by the end of the year seems very achievable under those circumstances.
There are lots of good economic arguments about why borders matter – and a lot of human ones as well.
Fifty per cent of Australians were either born overseas themselves, or have a parent who was.
That’s a lot of people with family abroad. Hopefully, they don’t have to wait a day longer than absolutely necessary to be able to see them again.
In the meantime, there are some international reunions we can make possible.
The Australian Government has asked Qantas to operate more repatriation flights in the months ahead.
Can I say how proud and grateful we are to the crew who put their hands up to operate these services, and the team of people behind them who work so hard to make sure this process is a safe one for our people, passengers and the community more broadly.
Ultimately, that’s what Qantas does best.