Qantas promises more cheap fares as domestic recovery soars

652
April 15, 2021
qantas

More cheap fares are promised as Qantas declares it’s back to 90 per cent of pre-COVID-19 domestic demand with the opening of a two-way travel bubble with New Zealand helping keep the airline’s recovery on track.

In an ASX update, Qantas said its short-term strategy remains to generate positive cash flow rather than returning to pre-COVID profit margins – meaning the positive impact on FY21 earnings from this increased activity will be relatively small.

It said that the continued growth in domestic capacity is expected to continue into FY22, with Jetstar to reach 120 per cent of pre-COVID levels, and Qantas to be at 107 per cent.

To compensate for a lack of international travel and support the Australian tourism industry the airline has added 34 new domestic routes since July last year.

To help meet increased demand for low fares leisure travel Jetstar will deploy six Airbus A320 aircraft on loan from Jetstar Japan on leisure routes and deploy up to five of its Boeing 787-8 aircraft, usually flown on international routes, in the domestic market from mid-year until international flying returns.

The Group has also engaged with Alliance Airlines to operate an initial three Embraer E190 aircraft from May to provide capacity on existing Qantas routes in northern and central Australia.

During the fourth quarter of FY21, the airline says 90 per cent of the Group’s aircraft will be active, compared with just 25 per cent at the height of the national lockdown in mid-2020.

All Qantas’ 787-9s have been reactivated and are operating repatriation flights on behalf of the Australian Government and some freight-only services.

The group said that both Qantas and Jetstar have seen strong demand since the two-way trans-Tasman bubble was announced with tens of thousands of bookings made in the first few days with the rate of Frequent Flyers using Qantas Points to book seats on the Tasman was 80 times higher than normal for the first four hours.

Qantas says that preparations for the reopening of international borders and the resumption of international flights in late October (beyond flights between Australia and New Zealand) are continuing, including reactivating aircraft and training employees.

However, it adds that it maintains flexibility to bring forward, push back or stagger the resumption of our international flights to align with any updates to the Australian Government’s COVID-19 vaccine roll-out timeline or approach to international travel.

Qantas chief executive Alan Joyce said “we’re 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.

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

“Corporate travel, including the small business segment, is now back to around 65 per cent of pre-COVID levels, and increasing month-on-month.”

But he added that “it’s important to keep this uptick in perspective. We are still facing a massive financial loss this year, which will be the second one in a row. We’ve lost more than $11 billion in revenue since the pandemic started and that number will keep growing until international travel recovers.

“We’ve used debt and shareholder equity to get through to this point, and our people have had the benefit of direct government support, which continues for those still stood down due to international border closures.