Qantas has announced an annual loss of nearly US$2 billion this morning. Despite having a strong first half to the 2019/20 financial year, there was a US$2.88 billion decline in revenue in the second half of the financial year. Notwithstanding Qantas’ first loss in years, the Australian airline is remaining upbeat about the future and its ability to survive.
Not a standard set of financial results
Despite grounding its international fleet in April, Qantas’ international operations made a profit of US$40 million in the financial year that ran to June 30. Australian domestic operations by the Qantas Group resulted in earnings before interest and tax of US$205 million. Qantas Loyalty had earnings before interest and tax of US$245 million. Offsetting this was US$2 billion in one-off mostly non-cash charges, including asset write-downs, redundancy charges, and upfront restructuring costs.
Hard decisions inevitable as borders stay closed
Saying more hard decisions were inevitable, the Qantas boss confirmed the A380s, currently parked in California, would remain grounded for at least the next three years.
Alan Joyce does not expect to see Australia’s international borders open up until the middle of 2021. Further, the airline boss says he doesn’t think Australia will allow travel to and from the United States until a COVID-19 vaccine is available.
Retiring the remaining 747 fleet and putting much of the remaining international fleet into storage reflects this view. Mr Joyce says Qantas doesn’t plan to fly any international routes over the next 12 months. Given that international flying typically generates US$5.75 billion in annual revenue for the airline, that’s a big financial shortfall on the immediate horizon. Further, the airline anticipates fixed expenses of nearly US$600 million just to keep its international planes on the ground until then.
“We will manage flexibly and manage for all scenarios in the coming period. That will hold us in good steed,” said chief financial officer, Vanessa Hudson today.