Qantas reports fourth consecutive half-yearly loss as covid delays turnaround
Qantas expects Group Domestic capacity to bounce back to 90-100% by the fourth quarter of FY22
Source: iStock
Mentioned
KEY POINTS
- Qantas managed to lower debt thanks to its $649m Mascot land sale
- Customers' travel intentions in the next 12-months remains high
- Domestic capacity expected to reach 90-100% by fourth-quarter of FY22
Delta lockdowns and omicron has kept the Qantas (ASX: QAN) turnaround narrative grounded, as the airline posted its fourth consecutive half-yearly loss.
Financials at a glance:
Revenue of $3.1bn, up 32%
Net loss of -$456m versus -$1.1bn loss a year ago
Net debt of $5.5bn, -7%
Cash of $2.7bn and undrawn facilities of $1.6bn
The net loss beat Bloomberg estimates of -$765.5m and Bell Potter forecasts of -$932m.
“Most of Australia was in lockdown for several months of the first half, so the loss we’ve announced today isn’t surprising but it is frustrating,” CEO Alan Joyce said in a statement.
“We saw a sharp rebound in travel demand when borders started opening in November and December, only to be hit by the Omicron wave and all the uncertainty that came with it.”
“Our frequent flyer surveys show the intent to travel is extremely high and we’re seeing good leisure demand into the fourth quarter. We’ve also seen a sharp uptick in international ticket sales in the past few weeks," added Joyce.
Crippling lockdowns
Delta-related lockdowns drove domestic flying capacity to 42% of pre-covid levels. The traditional summer peak in November and December was below expectations due to omicron uncertainty.
Source: Qantas Group HY22 Investor Presentation
Balance sheet repair
Qantas generated positive cash flow in the first-half, supported by the $649m Mascot land sale and strong Loyalty segment cash contributions.
As a result, net debt declined by $400m to $5.5bn, which is within the company’s optimal target range of $4.4bn to $5.5bn.
Outlook
Qantas expects group domestic capacity to be 68% of pre-covid levels in the third-quarter of FY22, increasing to 90-100% in the fourth quarter.
International capacity is forecast to be 22% in the third quarter, rising to 44% by the fourth quarter.
“Our frequent flyer surveys show the intent to travel is extremely high and we’re seeing good leisure demand into the fourth quarter. We’ve also seen a sharp uptick in international ticket sales in the past few weeks.”
Qantas 12-month price chart
