SYDNEY – Qantas Airways and Air New Zealand said separately on Thursday that they believed international travel would return later this year, led by the launch of a coronavirus vaccine, even as both airlines reported heavy losses as travelers stayed home for most of 2020.
The Australian airline has signaled a possible resumption of international air travel by the end of October, in line with a time frame for completing vaccinations in the country, which starts this week. The airline expects domestic capacity to increase to 80% from pre-pandemic levels in the fourth quarter of 2021.
“The rollout of the COVID vaccine in Australia will take time, but the fact that it is ongoing gives us more certainty,” said Qantas CEO Alan Joyce in a statement.
Qantas incurred a fundamental loss – the most closely watched financial measure – of A $ 1.03 billion ($ 816.7 million) over the six months ended December 31, the airline’s fiscal first half, compared to an underlying profit of AU $ 771 million in the same period the previous year. Six-month revenue fell 75% to AU $ 6.9 billion as international travel collapsed and domestic flights were capped at 30% capacity.
Under the law, Qantas reported a net loss of AU $ 1.08 billion for the six month period, compared to a net profit of AU $ 445 million a year earlier.
Qantas said it remains on track to provide at least AU $ 1 billion in permanent annual savings in a fiscal year starting July 1, 2022, after laying off 8,500 of its staff last year. It has AU $ 4.2 billion in cash and undisbursed facilities at the end of December, which will help airlines deal with ongoing uncertainty.
“Delivery of a strong cash flow performance, coupled with additional liquidity, further eliminates the risk of rising equity,” said Jefferies analysts Anthony Moulder and Amit Kanwatia in a report. “We believe Qantas remains well positioned for the recovery of domestic travel in the near future and international travel in the coming years, supported by a more streamlined cost base,” they said.
Like its counterparts in the Asia-Pacific region, Qantas has also seen a sharp turnaround in its freight division as a lack of international flights leads to a temporary shortage of cargo space due to increased demand.
Meanwhile, Air New Zealand also benefited from strong cargo demand. Cargo revenue in the fiscal first half ended December 31 jumped 91% compared with the same period a year earlier to New Zealand dollars 373 million ($ 275.6 million).
However, that was not enough to make up for the loss of international passenger capacity, which resulted in the national airline having a net loss of NZ $ 72 million, compared with a net profit of NZ $ 101 million the previous year. Six months of total revenue slumped 59% to NZ $ 1.2 billion, largely due to the impact of border restrictions on international travel.
Air New Zealand, which in August reported its first annual loss in 18 years in 12 months ending June 30, 2020, said it had more than NZ $ 700 million in cash and outstanding facilities, thanks to a loan from the New Zealand government – shareholder. the majority. It also previously announced a potential increase in capital before the end of June.
The airline said it had spent more than NZ $ 1 billion in cash reserves since the start of the pandemic, but they expect spending levels to slow in the second half of the current fiscal year ending June 30. The airline has laid off a third of its 12,000 staff, grounded aircraft and leased office space.
Air New Zealand chairman Therese Walsh said she was optimistic the changes made to business over the past year had organized the airline well when borders reopened.
“This will be important as we enter recovery mode because it means we will not only be very cost effective but with the changes we have made to our fleet we will also have one of the most modern and efficient fleets in the world,” he said in a statement. .
Both Qantas and Air New Zealand have indicated that international travel is likely to remain calm even after borders have opened. That is, their medium-term prospects will be largely determined by domestic operations.
Air New Zealand has taken the lead over the greater Qantas. The airline said its domestic capacity had reached 76% of pre-pandemic levels, resulting in 1,800 flights over the six months ending December 31, which helped move 4 million passengers across the country.
Qantas, which derives most of its profits in the domestic market, has been particularly affected by the closure of state borders in Australia amid the second wave of COVID-19 infections in Victoria and smaller outbreaks in Queensland and Western Australia.
The airline said that state border restrictions would continue to weigh on the finances of the fiscal second half. It is estimated that earnings before interest, taxes, depreciation and amortization, or EBITDA, will be AU $ 350 million lower to AU $ 450 million due to the closure of domestic borders since late December.
The airline is also facing increased competition on some of its major domestic routes from restructured Virgin Australia – now under the supervision of US private equity firm Bain Capital and local airline Regional Express Holdings – which will begin operating lucrative Sydney flights – the Melbourne route begins in March 1st.
In response to difficult market conditions, the three domestic carriers have been offering promotional prices ranging from AU $ 50 to AU $ 150 over the past few weeks.
In an effort to clamp down on its smaller rivals, Qantas has also started operating on several regional routes previously operated only by Regional Express, prompting smaller airlines to raise the issue with Australian competition regulators earlier this month.
Qantas shares were up 2.9% to AU $ 5.16 in afternoon trade on the Australian Securities Exchange, while Air New Zealand shares were up nearly 1% to NZ $ 1.59.