An industry-wide labour shortage and surging oil prices will see Qantas (ASX: QAN) trim domestic travel capacity to help recover higher fuel prices.
Qantas said travel demand remains strong across domestic and international categories, driving net debt levels to “well below” pre-covid levels.
Group debt is expected to fall to around $4.0bn by 30 June 2022, down from a pandemic peak of $6.4bn.
As previously warned, Qantas expects to deliver a “significant” loss for FY22, which includes the worst of Delta and Omicron impacts from late 2021 and early 2022. Though, the second-half of FY22 is expected to deliver $450m to $550m in earnings.
Qantas said it is on track to return to profit in FY23.
The company's stock is up 1.3% in early trade but down around -17% in June.
Qantas has been trimming its domestic capacity to offset high fuel prices and assist with near-term resourcing challenges.
May 2022 onwards: 10% reduction in capacity
July-August 2022: additional 5 percentage point reducing of capacity
September 2022: overall 15% reduction in capacity
October 2022 - March 2023: overall 10% reduction in capacity
The planned reduction will reduce domestic flying to 106% of pre-covid levels in the second-quarter of FY23 and 110% in the third-quarter.
International capacity plans will be left unchanged, with flights steadily increasing from around 50% of pre-covid levels currently to approximately 70% by the end of the first-quarter FY23.
Airport mayhem is expected to pick-up as the school holidays kick off this week.
"It's terrific to see the ongoing demand for air travel but we won't sugar-coat the fact that the terminals will be busy during the school holidays, and there will be queues," Sydney Airport CEO Geoff Culbert told 9 News.
Since April, Qantas Group has recruited more than 1,000 operational team members and hundreds of additional contact centre staff to meet upcoming school holiday travel.
To further boost headcount, Qantas said it will be offering a $5,000 boost to up to 19,000 EBA-covered employees.
With a 15% increase in ground handling staff compared to the Easter holidays and adjustments to better spread peak times, Qantas hopes to speed up what has previously been painful customer journeys.
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