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Qantas losses coming to an end

Qantas has predicted its underlying profit before tax will reach between $1.2-1.3 billion for the first half of 2023, signalling the end of the carrier’s run of statutory losses totalling $7 billion.

THE profit upgrade came as part of a wide-ranging update by CEO Alan Joyce, covering staffing and operations as well as the carrier’s healthy financial prospects..

“It’s been a really challenging time for the national carrier but today’s announcement shows how far we’ve come,” CEO Alan Joyce said, revealing he is confident about the positive forecast, which factors in forward bookings, fuel prices and the latest expectations about the second quarter.

“Strong travel demand, both domestically and internationally, is benefiting our recovery plan and our growth in market share compared with 2019,” Joyce said.

Qantas’ net debt is set to shrink around $3.3 billion by the end of the year, more than the $4 billion that was initially predicted. Leisure travel revenue has exceeded pre-COVID levels, now at 130% compared to 2019, while business travel has also overtaken pre-pandemic revenue.

The Qantas Loyalty program is also bouncing back strongly and is on the way to hit its EBIT target of $425-$450 million for the 2023 Financial Year.

The airline’s operational performance has also shown significant improvement, with flight cancellations falling from 4% in August to 2.4% in September, and on track to be better than pre-COVID levels for the month of October.

While the Flying Kangaroo’s operations are “largely back to the standards people expect”, Joyce admitted that further changes are necessary, including having extra crew and aircraft on standby, as well as adjusting the flying schedule.

“It’s clear that maintaining our pre-COVID service levels requires a lot more operational buffer than it used to, especially when you consider the sick leave spikes and supply chain delays that the whole industry is dealing with,” he explained.

Following the quarterly update, the carrier’s Chief Financial Officer Vanessa Hudson revealed that “very strong” demand for international travel is helping to offset the impact of higher travel costs due to a weakening Aussie dollar.

Qantas is expecting its group international capacity to rise from 61% of pre-COVID levels in the first half of FY23 to 77% in the second half, while domestic capacity is forecast to reach 94% of 2019 levels for the first half of the financial year – a 6% dip on previous capacity guidance.

The carrier said the reduction domestically is designed to “protect the improvement in operational performance as the broader industry recovers”.

Meanwhile, Qantas’ domestic airfares are likely to remain higher than pre-pandemic levels in order to help recover significantly higher fuel costs.

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