The Qantas Group has posted a substantial full-year loss as a result of the COVID crisis. Total revenue loss from COVID reached AU$16 billion as the full-year impact of minimal international travel and multiple waves of domestic border restrictions continued to hit travel demand.
The Group’s underlying PBT loss was AU$1.83 billion. The statutory loss before tax – which includes one-off costs such as redundancies and aircraft write downs – was AU$2.35 billion. Underlying EBITDA was AU$410 million, in line with guidance provided in May.
Periods of open domestic borders in the second half saw significant cash generation by Qantas and Jetstar, which helped the Group to reduce net debt from AU$6.4 billion in February 2021 down to AU$5.9 billion by the end of June. Throughout the year, cash flow was underpinned by continued strong performance by Qantas Loyalty and significantly higher international yields for Qantas Freight.
As well as delivering an essential service under very challenging circumstances, the Group made significant progress towards its recovery program. Planned rightsizing is largely complete and much restructuring has been implemented. Central to these changes has been the ability to better manage costs in the face of sudden border closures. Cost benefits from the recovery program were ahead of expectations for FY21 at AU$650 million.
Group International (including Freight) posted an Underlying EBITDA loss of AU$157 million, increasing to an Underlying EBIT loss of AU$1.0 billion after depreciation and amortization.
Qantas and Jetstar’s international flying remained largely grounded for most of FY21 due to the continued closure of Australia’s borders. A travel bubble between Australia and New Zealand saw some flying return but ongoing outbreaks meant this corridor was heavily restricted at various stages; Qantas’ capacity reached an average of 40% of pre-COVID levels during quarter four.
The Qantas Group is preparing for restarting its international flights, with plans linked to the vaccine rollout in Australia and key overseas markets. On current projections Australia is expected to reach National Cabinet’s ‘Phase C’ vaccination threshold of 80% in December 2021, which would trigger the gradual reopening of international borders.
Similarly, key markets like the U.K., North America and parts of Asia have high and increasing levels of vaccination. This makes them highly likely to be classed as low risk countries for vaccinated travelers to visit and return from under reduced quarantine requirements, pending decisions by the Australian Government and entry policies of other countries. This creates a range of potential travel options that Qantas and Jetstar are now preparing for. (US$1.00 = AU$1.38 at time of publication.)
