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Qantas, Flight Centre tip return to travel in months as both count losses

Business

Qantas and Flight Centre have forecast a return to international travel in some form this year but both revealed the massive cost of the pandemic with $8 billion wiped from their revenue wiped in six months.

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Qantas also thinks state border closures could end by April as the vaccination rollout gathers pace and it could have 80 per cent of its domestic operations running by mid-year.

The airline had previously expected international flights to begin in July, but has pushed that back to October.

The airline reported a bottom-line loss of $1.47 billion after $6.9 billion in revenue was stripped from its operations. Flight Centre lost about $1 billion in revenue for the December half-year and reported a $317 million loss.

But Flight Centre has pointed to encouraging signs including an expectation of a near-term revival of domestic travel and the potential for some international travel later this year, while Qantas said international borders could re-open in October when Australia’s vaccination program was completed.

However, the end of JobKeeper could mean further redundancies in Flight Centre’s Australian operations, although it expected some level of support from the Government when the subsidy ends in March.

Staff could also remain stood down beyond the JobKeeper cutoff, but many were now leaving for other jobs.

Qantas chief executive Alan Joyce the profit and revenue figures were stark, but not surprising considering the lockdowns and travel restrictions which meant almost all international flying and 70 per cent of domestic flying was stopped.

“The COVID vaccine rollout in Australia will take time, but the fact that it is underway gives us more certainty … that domestic borders can stay open because frontline and quarantine workers will be vaccinated in a matter of weeks. And more certainty that international borders can open when the nationwide rollout is effectively complete by the end of October,” Joyce said.

Joyce said there was pent-up demand for travel and people were keen to get back in the air when they had confidence in borders.

“Hopefully, domestic border closures will soon be a thing of the past,” he said.

“The fact that we were able to limit a $7 billion drop in revenue to a bottom-line loss of circa $1 billion says a lot about how the Qantas Group is managing the crisis.”

In domestic travel, Qantas and Jetstar were cash flow positive for the half.

“In fact, 99 per cent of the time we were able to fly, we generated positive cash flow.”

Flight Centre said it was well placed for the recovery phase and it was now a leaner and more efficient organisation.

That would mean it would probably not return to the employment numbers it had before the pandemic.

It expected “some international travel in 2021” in low-risk travel corridors such as the South Pacific and Asia and “broader openings next financial year.

“We are reasonably confident there will be international travel. We are looking at (May) in North America,” Turner said.

But international would not return to normal. There was likely to be enhanced testing as well as health passports.

In Australia, Turner said around September to November period could see international flight return.

Managing director Graham “Scroo” Turner said while the recovery was in its early stages there were encouraging signs, including revenue of $33.5 million in December, a record for the COVID era.

He said there was significant pent-up demand which should fast-track the recovery and the company expected to return to its pre-COVID profits within three years.

He expected domestic restrictions in the UK could be lifted by April and international travel there could return by May ahead of the peak summer season.

“There are a lot of small business that won’t survive this. There will be M&A opportunities,” Turner said.

He said the 48 per cent owned Pedal Group (99 Bikes) performed very strongly and was now looking at expansion into London.

He said Pedal Group had picked up some of the staff stood down by Flight Centre.

 

 

 

 

 

 

 

 

 

 

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