Based on strong forward bookings for the next couple of months, Qantas expects to close HY1 of its FY23 with a better-than-anticipated result. The airline counts on a headline profit before tax of A$1.2 to $1.3 billion, it said on October 13 in a trading update. Strong recovery to thrust Qantas to higher profit.
While high inflation and higher fuel prices (up 75 percent over 2019 levels) are making the current operating environment “complex”, Qantas is positive about how the market is going. CEO Alan Joyce said last week at the World Aviation Festival in Amsterdam that the recovery is going faster than expected. At the same time, Qantas has built in some redundancy in its capacity to be prepared for the unexpected.
This is reflected in Domestic capacity, which will recover to 94 percent this HY1, which ends on December 31 and return to 100 percent in HY2. In August, these numbers were 95 and 106 percent respectively. “This reduction (in capacity) is designed to protect the sustained improvement in operational performance as the broader industry recovers,” the airline says.
International capacity is expected to go to 61 percent in HY1 and 77 percent in HY2, which compares to 65 and 84 percent in the August forecast. As Joyce explained last week, Qantas will have three aircraft as spares available around the Christmas period, just to make sure that it is prepared for any schedule disruptions. Today, the carrier said that twenty percent of its flying capacity will be on standby, which includes ten narrowbodies, six widebodies, and four regional jets for Jetstar.
“It’s clear that maintaining our pre-Covid service levels requires a lot more operational buffer than it used to, especially when you consider the sick leave spikes and supply chain delays that the whole industry is dealing with. That means having more crew and more aircraft on standby and adjusting our flying schedule to help make that possible, until we’re confident that extra support is no longer needed,” Joyce says in a media statement.
International capacity is largely determined by how quickly it will bring more Airbus A380s back out of storage and when it will take delivery of three Boeing 787-9s and one A321LR for Jetstar. Right now, there are six A380s back in service, with four more to come.
Qantas Group capacity as expected for FY23. (Qantas)
Operational performance has improved
After serious operational issues earlier this year caused by a record-high sick leave and bad weather, operational performance on the domestic network increased to 69 percent in September. So far, October looks good at 75 percent, which is the target Qantas has set for itself. Flight cancelations dropped to 2.4 percent in September. Jetstar’s performance for September is much worse, as six widebody aircraft out of eleven were out of service after they were hit by lightning, bird strikes, or foreign object damage on runways. Qantas is investing A$200 million to improve its operational resilience by training and rostering extra crew.
After two years of wage freezes, Qantas announced it will adjust wages by two to three percent for its 20.000 staff. This will cost the airline A$40 million per year. The wage increase is additional to the A$5.000 one-off bonus and 1.000 shares to non-executive staff announced in June with a total value of A$200 million. The carrier also commenced a A$400 million share buy-back program in mid-September, of which 26 percent has been completed. Despite these extra costs, Qantas expects to reduce its net debt to A$3.2 to 3.4 billion, which is below its target of A$3.9 billion.
Qantas, QantasLink, and Jetstar launched a massive sales campaign today, offering one million one-way seats that can be used for travel across Australia next year too. Ticket prices start at A$35 for Jetstar and A$99 for Qantas and QantasLink. A quarter of Qantas’ tickets is offered for under A$200 million.
Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.