Although the Qantas Group still forecasts a significant full year underlying EBIT loss for FY22 that includes the worst of the Delta and Omicron impacts as well as restart costs, the airline stated that the business remains on track for 2H22 Underlying EBITDA of between $450 million to $550 million. The Group is also on track to return to Underlying profit in FY23, confirmed Qantas in a market update.
With travel demand remaining strong across all categories, this has driven further improvement in net debt levels to around $4.0 billion by end FY22. This is an improvement of around $1.5 billion in the past six months.
Qantas has initiated domestic capacity reductions to help recover higher fuel prices; but with no change to International services. For July and August, an additional 5% of capacity will be removed on top of the 10% announced in May. This total 15 per cent cut will also be applied to September. A cut of 10 percentage points will be applied to schedules from October through to the end of March 2023. This brings the Group’s planned domestic flying down to 106 per cent of pre-COVID levels for the second quarter of FY23 and 110% for the third quarter.
Mindful of the industry-wide delays due to post-pandemic staff shortages Qantas says: “The Group is working with industry partners to improve the travel experience during the upcoming school holiday peak. While a tight labour market and COVID-related impacts persist, there will be a 15 per cent increase in ground handling staff compared with the Easter holidays and airports are increasing their security screening resources.”
Since April, Qantas and Jetstar have recruited more than 1,000 operational team members and hundreds of additional contact centre staff.
Qantas states that it has made schedule adjustments to better spread peak times and will have two widebody aircraft “on reserve to assist, if required”.
Following a two-year wage freeze, Qantas has confirmed up to 19,000 EBA-covered employees across the Qantas Group will be offered a $5,000 boost. The payment will be made to employees once a new enterprise agreement covering them is finalised. Nine agreements covering some 4,000 employees have been finalised already and will be paid shortly, says the airline. Qantas is also currently negotiating a two per cent annual pay increases across the Group.
Qantas believes that the reduction in domestic capacity combined with robust international and domestic travel demand, will t help the Group “substantially recover the elevated cost of fuel indicated by forward oil prices. They will also assist with the near-term resourcing pressures currently being felt across aviation and the broader economy”.
Qantas has also announced plans to start direct flights from Perth to Jakarta and Perth to Johannesburg in November 2022.
Qantas also announced that Jetstar CEO Gareth Evans has made the decision to step down from his current role in December 2022. Evans will remain with the Group into next year to work on key projects before leaving during 2023.
Qantas Group CEO Alan Joyce said: “Gareth has been a superb leader and member of the senior executive team for many years. He’s given an incredible amount to the organisation in several key roles, from his time as CFO through major restructuring and most recently as Jetstar CEO as we navigated COVID. When he leaves next year it will be with our sincere thanks and best wishes.
“We spend a lot of time developing our internal talent pipelines for succession opportunities like this and we’ll be appointing a new Chief Executive for Jetstar soon.”