Reporting Season

Qantas reports fourth consecutive half-yearly loss as covid delays turnaround

Thu 24 Feb 22, 11:44am (AEST)
Qantas Travel Plane Flight
Source: iStock

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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. 

Qantas Group Domestic Capacity Profile
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 Chart
Qantas 12-month price chart

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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