Shareholders were told there were plenty of positive signs on the border issue and “assuming Queensland opens to NSW in coming weeks” the airline could reach 50 per cent capacity by Christmas.
At its annual general meeting this morning, chief executive Alan Joyce said the company also expected to steal about 10 per cent of market share from its competitors as Virgin adjusts to a new business model and ditches its full service model.
It also had big cost savings.
“We have identified $15 billion in cost savings over the next three years, mostly through reduced flying activity,” Joyce said.
“We’re also tageting $1 billion in ongoing cost improvements from financial year 2023.
“The $1 billion in savings is front-end-loaded, with $600 million due to be unlocked this financial year.”
Joyce said the airline was expecting domestic travel to be at 60 per cent of pre-COVID levels by now, but the continued border closures meant it was operating at below 30 per cent.
“This delay resulted in a $100 million negative impact on earnings for the first quarter of full year 2021 and we will have an impact in the second quarter, as well,” he said.
Deputy Premier and Health Minister Steven Miles said a decision was likely later next week on whether to maintain the NSW border restrictions.
Miles said the unlinked cases reported in NSW in recent weeks would have to be taken into account, but the 28 day clear period was only one of the considerations.
Queensland’s roadmap for a November 1 easing of NSW restrictions was predicated on the southern state being able to control outbreaks.
“We’ll try to give Queenslanders as much notice as we possibly can before that deadline,” Miles said.
“Victoria is further down the track, it’s not currently on our road map.”
Miles also dismissed claims by Flight Centre boss Graham Turner relating to his bid to uncover written health advice on the border closure.
“The Turners have lost a lot of money” and had a financial interest in borders being reopened but government had to put health first.
Joyce said the demand for tickets on Qantas’s recent scenic flight to nowhere showed the latent demand for travel was strong. It also sold 20,000 seats in 36 hours when borders between South Australia and NSW were opened.
“In fact, our domestic market share is likely to increase organically from around 60 per cent to around 70 per cent, as our main competitor changes strategy,” Joyce said.
“When international travel does eventually return, our market share is expected to grow too, as overseas carriers take a conservative approach to capacity and focus on opportunities closer to their home markets.”
Chairman Richard Goyder said that the company was also watching overseas markets for developments.
“By early next year we may find that Korea, Taiwan and various islands in the Pacific are top Qantas destinations while we wait for our core international markets like the US and UK to re-open,” Goyder said.
He described the delay in reopening borders as “frustrating inertia”.
“This inertia does not seem to be based on any health risk. And that seems to ignore the broader economic and social risk involved with staying shut, especially as federal income support winds down.”
Shares in Qantas rose steeply this morning as did travel group Webjet. Both were up more than 2 per cent. Flight Centre fell and Corporate Travel Management was up 1.7 per cent.
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