Qantas still incurring losses

[Melburnian1]

This is a small part of QF's update to the ASX this morning:

(A financial disaster!)

While the recent boost in travel activity has partially offset the material impact from months of lockdowns, the
Group nonetheless anticipates a significant loss in the first half. Assuming no further lockdowns or significant
travel restrictions, the Group expects an Underlying EBITDA loss for the first half of FY22 in the range of
$250 million to $300 million.
When compared to the prior corresponding period, this reflects stranded costs due to sudden lockdowns and
a lower level of aircraft hibernation to facilitate a faster ramp-up based on the national recovery roadmap.

 

[jb747]

There's no surprise here. Until we can travel easily domestically, recovery won't even start.

 

[Melburnian1]

There's no surprise here. Until we can travel easily domestically, recovery won't even start.

Inflation may also be of some concern, as at least for lesiure travel, expectations of a higher CPI mean those with mortgages fear increased repayments, and hence may devote a lower share of income to travel.

 

[AIRwin]

Loss exceeding $1b:

Qantas points to improving outlook after Omicron delays recovery plans

The reopening of Australia's internal and external borders has significantly boosted the outlook for Qantas Airways Ltd , although the Omicron COVID-19 outbreak has set back its business recovery plans by around six months.

www.reuters.com

Media release:

https://www.qantasnewsroom.com.au/media-releases/qantas-group-posts-half-year-loss-but-strengthens-balance-sheet/

 

[jrfsp]

Strong corporate demand will be key to QFs recovery, more so than VA etc.

Corporate demand still seems very subdued and thats domestic never mind international

 

[RichardMEL]

Inflation (and the current issues going on in the world) also has an effect on the oil price, which also is no doubt impacting on QF as it rises. It has been so low for some time now that QF (and other airlines) have benefited quite a lot specially during the pandemic so there's a double issue of the demand side but also the supply side costs going up....

none of this is a surprise of course.

 

[jrfsp]

Inflation (and the current issues going on in the world) also has an effect on the oil price, which also is no doubt impacting on QF as it rises. It has been so low for some time now that QF (and other airlines) have benefited quite a lot specially during the pandemic so there's a double issue of the demand side but also the supply side costs going up....

none of this is a surprise of course.

Oil is spiking today - close to $100 a barrel

 

[Franky]

Oil is spiking today - close to $100 a barrel

Indeed - have already seen prices for ULP @ $2.20 in the past few days here in Perth...

 

[jrfsp]

Indeed - have already seen prices for ULP @ $2.20 in the past few days here in Perth...

Tell me about it! I locked in on tuesday for 179 with the 7-11 app

 

[moa999]

Few other interesting operational tidbits in today's release.

FY23 deliveries (so Jul 2022 to Jun 2023)
3 789s for QF (the complete aircraft deferred when Covid started)
9 321neos for JQ.

Also seems that 2 JQ 788s will be permanently dedicated to domestic flights, as some have been for the last few months.

 

[sudoer]

Corporate demand still seems very subdued and thats domestic never mind international

I think there has been a strong rebound since NSW and VIC announcements late last week. Just before the announcements I booked a SYD-MEL return trip for this week, one-way VA one-way QF. Both fares were around $95-100, seat selection looked virtually empty.

Every single seat on VA SYD-MEL yesterday arvo was occupied and I'd estimate 60-70% business travellers based on the long priority boarding queue and traveller attire.

On arrival in Melb T3 was the most bustling I had seen it in some time, departure gates quite full, the new Uber rank had an actual queue of people! I think there is quite a bit of pent up corporate travel demand and I hope that means schedules steadily increase in line with demand.

 

[QF_Flyer]

I think there has been a strong rebound since NSW and VIC announcements late last week. Just before the announcements I booked a SYD-MEL return trip for this week, one-way VA one-way QF. Both fares were around $95-100, seat selection looked virtually empty.

Every single seat on VA SYD-MEL yesterday arvo was occupied and I'd estimate 60-70% business travellers based on the long priority boarding queue and traveller attire.

On arrival in Melb T3 was the most bustling I had seen it in some time, departure gates quite full, the new Uber rank had an actual queue of people! I think there is quite a bit of pent up corporate travel demand and I hope that means schedules steadily increase in line with demand.

I second this, the last week or so T3 and T1 at MEL have been busy as, VA flight to LST on 11/2 and QF to BNE 15/2, and their corresponding returns over the weekend, busy airports at both ends, was nice to see.

 

[antycbr]

With fuel likely to go well north of $100USD/bl all airlines will struggle.

 

[Franky]

With fuel likely to go well north of $100USD/bl all airlines will struggle.

Not just the airlines, we poor motorists will also suffer. Thankfully I drive a VW 1.9 diesel, the price for which seems to sit in the midst of the other fuels mostly, though when I filled up a week ago, it was 35c cheaper than the nearest of the ULPs. Will be keeping an eye on our Fuel Watch app more so than usual…

 

[jb747]

I'm not seeing any surprises here. Everything seems to be conspiring to make it worse, not better.

 

[Harrison_133]

Interesting they only plan to be at 90-100% pre-covid capacity by 4Q22, rather than the 110% (or whatever the figure was) they aimed for countless border closures ago. Seems a much more realistic outlook.

QFd could still do with some more discipline in capacity as long as demand remains flat. Looking at MEL-SYD on QF, there is an awfully high frequency (15 min intervals in morn/arvo peaks, 30 min intervals throughout the day), but lots of these flights have double digit pax numbers. Meanwhile VA operating every hour (some 30 min intervals) have much healthier loadings, with a lot of flights full or close to it.

Looking at various routes around the country, JQ operations are rather scaled back compared to the QF mothership, with limited frequencies on a lot of sectors. I‘ve noticed this happen quite a few times over the last 18 months. Even in ‘stable’ covid periods, JQ frequencies remained lower than usual, while QF’s were beefed up. Take today for example, QF scheduled 31 MEL-SYD flights (3 were cancelled) while JQ had just 8 from Tullamarine and 2 from Avalon. Another data point - JQ had 29 departures from MEL today, compared to VA with 53.

I was sceptical of JQ reaching 120% pre-covid capacity as they touted last year. Their frequencies were remaining rather flat and their A320 family fleet reduced as machines were sent to QLink in WA or converted to freighters. So it’s interesting to hear the Group no longer chasing such figures.

 

[Melburnian1]

Interesting they only plan to be at 90-100% pre-covid capacity by 4Q22, rather than the 110% (or whatever the figure was) they aimed for countless border closures ago. Seems a much more realistic outlook.

QFd could still do with some more discipline in capacity as long as demand remains flat. Looking at MEL-SYD on QF, there is an awfully high frequency (15 min intervals in morn/arvo peaks, 30 min intervals throughout the day), but lots of these flights have double digit pax numbers. Meanwhile VA operating every hour (some 30 min intervals) have much healthier loadings, with a lot of flights full or close to it.

Looking at various routes around the country, JQ operations are rather scaled back compared to the QF mothership, with limited frequencies on a lot of sectors. I‘ve noticed this happen quite a few times over the last 18 months. Even in ‘stable’ covid periods, JQ frequencies remained lower than usual, while QF’s were beefed up. Take today for example, QF scheduled 31 MEL-SYD flights (3 were cancelled) while JQ had just 8 from Tullamarine and 2 from Avalon. Another data point - JQ had 29 departures from MEL today, compared to VA with 53.

I was sceptical of JQ reaching 120% pre-covid capacity as they touted last year. Their frequencies were remaining rather flat and their A320 family fleet reduced as machines were sent to QLink in WA or converted to freighters. So it’s interesting to hear the Group no longer chasing such figures.

Sensible and informative comments but QF's CEO has continually made way too optimistic assessments of future demand.

The latest contentions are highly likely to also fall into that category.

 

[Harrison_133]

QF's CEO has continually made way too optimistic assessments of future demand.

QF’s foray at the ill-fated NZ bubble last year springs to mind. 3 daily A330’s on AKL-SYD/MEL from the get go was….ambitious….and quickly scaled back. Meanwhile VA got flack for not rushing to NZ as soon as the bubble opened - not so silly in hindsight.

 

[Jacques Vert]

On arrival in Melb T3 was the most bustling I had seen it in some time, departure gates quite full, the new Uber rank had an actual queue of people! I think there is quite a bit of pent up corporate travel demand and I hope that means schedules steadily increase in line with demand.

+1 & I walked through the lower floor (baggage area) of QF T3 in SYD on Wed at around 1715. We were the only people there; not even a single staff member or security person!