Qantas updates air fleet, expects $1.1b loss by end of 2021

Qantas have ditched their Boeing contemporaries and chosen Airbus A320neo and A220 jets to renew the airlines ageing narrow body fleet, as the airline revealed it expects an earnings loss of up to $1.1 billion in the first half of the 2022 financial year.

The carrier said it would be able to accelerate the repair of its balance sheet as border rules relaxed and predicted its net debt would be about $5.65 billion at the end of December 2021.

Coming out of the pandemic, the return of air travel has been so strong that Qantas predicts domestic capacity to be 102 per cent of pre-COVID levels by March, and 117 per cent by the end of June.

Although international travel is lagging behind, with predictions that it will hit 30 per cent of pre-COVID levels by March and 60 per cent by the end of June.

Qantas attributes its strong liquidity position of approximately $4.2 billion in part to the sale of land around its Mascot headquarters for $802 million.

However, the carrier said it expected an earnings before interest, tax, depreciation and amortisation (EBITDA) of between $250 million and $300 million for the half.

Once non-cash and amortisation costs are considered, the EBITDA loss could stretch to $1.1 billion.

The airline also announced that by mid next year it will order 40 planes, alongside 94 purchase options, subject to board approval, and the jets would start arriving by the end of 2023.

Qantas CEO, Alan Joyce, said this had been one of the worst periods for the airline since the start of the pandemic after the delta variant shut down Sydney and Melbourne air travel.

“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,” Joyce said.

“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.”

Joyce went on to say how Omicron had hurt growing confidence in international travel, but Qantas had not seen a large number of cancellations yet.

“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,” Joyce concluded.

Image: Computer rendering of Qantas Airbus

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