Qantas Reports $1.96 Billion Loss and Sees More Pain to Come

(Bloomberg) -- International travel won’t resume until mid-2021 as coronavirus flareups keep borders closed, Qantas Airways Ltd. Chief Executive Officer Alan Joyce said.

Routes to the U.S. might be closed for even longer, only opening widely to overseas airlines once a vaccine has been developed and distributed, Joyce said Thursday.

Next year “is going to be another bad year,” Joyce told media on a briefing call after reporting Qantas’s first loss since 2014. “Recovery will take time and it will be choppy.”

Expectations for a prolonged recovery reflect Covid-19 resurgences around the world, from Europe and Japan to Australia, Hong Kong and New Zealand. These outbreaks have dashed hopes for controlled flight corridors between some countries that had earlier suppressed the virus.

Most of Qantas’s international fleet will be grounded until June 2021. Even in the following 12 months, the airline will probably operate only half its pre-virus offshore schedule, Joyce said.

The Sydney-based carrier on Thursday joined loss-making peers such as Cathay Pacific Airways Ltd. and American Airlines Group Inc. after a near-destruction of their normal business. Qantas doesn’t expect to make money next year, either.

Aviation’s worst-ever crisis has wound back the clock for the Qantas boss, who must turn around the airline once again after pulling it back from the brink in 2014.

The industry faces a record $100 billion black hole this year and next, according to the International Air Transport Association. Traffic won’t return to pre-crisis levels until 2024, the trade group has said.

“The impact of Covid on all airlines is clear,” Joyce said. “It’s devastating and it will be a question of survival for many.”

Qantas has repeatedly made deeper cuts as the scale of the crisis became apparent. In recent weeks, the airline raised more than A$1.4 billion ($1 billion) -- its first equity call in a decade -- and it’s also cutting at least 6,000 jobs.

Qantas swung to a net loss of A$1.96 billion from a profit of A$840 million a year earlier. The result reflected a slump in passengers, the cost of staff layoffs, and the writedown of the airline’s entire fleet of Airbus A380s, redundant superjumbos that are now grounded for three years.

Underlying profit before tax, Qantas’ preferred measure of earnings because it strips out one-time costs, fell 91% to A$124 million.

The airline had A$4.5 billion in available liquidity at June 30, including A$1 billion of undrawn facilities, according to the statement. Net debt stood at A$4.7 billion.

©2020 Bloomberg L.P.