Qantas Turns Corner to Recovery With Forecast of Profit

Qantas Airways Ltd. is on the path to recovery from the coronavirus crisis thanks to a domestic holiday boom, with the airline forecasting an underlying profit for the current financial year.

Revenue from routes within Australia -- which has almost completely suppressed Covid-19 -- is expected to almost double in the half year ending June 30 from the previous six months as people holiday at home, Qantas said Thursday. Domestic air-travel demand is even greater than it was before the pandemic, the airline said.

“We have a long way still to go in this recovery, but it does feel like we’re slowly starting to turn the corner,” Chief Executive Officer Alan Joyce said in the statement. “The business is now on a more sustainable footing.”

With a global air-travel rebound still in its infancy, airlines with extensive domestic networks, from Qantas to American Airlines Group Inc. and Delta Air Lines Inc. in the U.S., are faring best. Qantas and low-cost unit Jetstar have together added 38 new routes since July last year.

Shares of Qantas climbed 4.9% to A$4.74 at 10:30 a.m. in Sydney.

By contrast, Singapore Airlines Ltd. on Wednesday reported a $3.2 billion full-year loss. Even by June this year, passenger capacity will be little more than one quarter of pre-Covid levels, the city-state’s airline said.

The International Air Transport Association last month widened its estimate for losses this year to about $48 billion as new Covid flare-ups push back the timeline for a start of international air travel. A long-awaited travel bubble with Hong Kong was delayed again this week after an increase in unlinked cases.

Yet Sydney-based Qantas now forecasts underlying earnings of between A$400 million ($309 million) and A$450 million for the 12 months ending June 30, and says net debt has peaked. The pretax loss for the period, including aircraft writedowns and staff layoff costs, will exceed A$2 billion, it said.

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The airline said consumer confidence is “proving more resilient” compared with the early days of the crisis. Corporate travel has reached 75% of pre-Covid levels and overall domestic capacity will be almost completely back to normal in the current quarter, it said.

Still, Qantas has pushed back the restart of international flights to late December because of delays to Australia’s vaccination program and indications from the government that it will keep borders mostly closed until mid-2022.

CEO Joyce on Thursday warned Australia risks being “left behind” while the U.K. and the U.S., with more progressed inoculation programs, are already restarting overseas flights.

“Australia has to put the same intensity into the vaccine rollout as we’ve put on lockdowns and restrictions,” Joyce said in the statement. “Only then will we have the confidence to open up.”

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