Qantas - what will Coronavirus mean in the medium term?

[jase05]

EVERYTHING anyone posts here is speculation... EK seems to have grounded to a halt... friends on the ground there tell me some people have been stood down for 70 days on 25%, 50% pay. I personally know of people that cannot get out of DXB to anywhere..... so yeah, I reckon this could be bye bye EK... at least as we know it. I suppose we need to agree what "bye bye" means.... if they have one plane left are we counting that as a win?

So are you talking temporary bye bye or permanent?
The ME3 have the ability and funding to come out of this on the other side in far better shape than many airlines. I don’t see any huge changes happening to EK going forward.

 

[Max Samuels]

So are you talking temporary bye bye or permanent?
The ME3 have the ability and funding to come out of this on the other side in far better shape than many airlines. I don’t see any huge changes happening to EK going forward.

I think it will be significant. EK's business pretty much completely relies on tourism. Tourism is dead for a while I reckon. Australians aren't going anywhere as thr Government has locked us up. No one is coming here for 6 months either. Europe is locked up.... the oil price has plummeted. Maybe not bye bye as in 100% gone - but I think your view of no "huge changes" is pretty optimistic. I hope you're right though. I want you to be right. The thought of all of those jobs going is just heart breaking, But the reality is that we have seen this virus thing go from bad to worse to horrible and there doesn't appear to be a silver lining in sight. 2 weeks ago, who would have imagined the craziness we are seeing here? Not being able to cross from tweed Heads to Coolangatta without "papers"? WTF are papers? We aren't behind the iron curtain.

All bets are off on everything, in my opinion.

 

[jase05]

I think it will be significant. EK's business pretty much completely relies on tourism. Tourism is dead for a while I reckon. Australians aren't going anywhere as the Government has locked us up. No one is coming here for 6 months either. Europe is locked up.... the oil price has plummeted. Maybe not bye bye as in 100% gone - but I think your view of no "huge changes" is pretty optimistic. I hope you're right though. I want you to be right. The thought of all of those jobs going is just heart breaking, But the reality is that we have seen this virus thing go from bad to worse to horrible and there doesn't appear to be a silver lining in sight. 2 weeks ago, who would have imagined the craziness we are seeing here? Not being able to cross from tweed Heads to Coolangatta without "papers"? WTF are papers? We aren't behind the iron curtain.

All bets are off on everything, in my opinion.

Oh don’t get me wrong there will be huge changes to air travel and many airlines might not return but I think EK are probably in the best position of any to recover. People will still fly and travel again eventually.

 

[justinbrett]

Qantas will be eligible for the new Jobkeeper payments. At 20,000 stood down employees plus those still working this will be worth over 0.5 billion dollars to them. This in addition to the 1 billion loan they secured means they should be safe to come out of this - damaged and scaled down perhaps, but still operating.

 

[jase05]

Qantas will be eligible for the new Jobkeeper payments. At 20,000 stood down employees plus those still working this will be worth over 0.5 billion dollars to them. This in addition to the 1 billion loan they secured means they should be safe to come out of this - damaged and scaled down perhaps, but still operating.

I was under the impression that the business is required to keep the staff on and continue to pay them. The business then gets reimbursed in May.

 

[justinbrett]

I was under the impression that the business is required to keep the staff on and continue to pay them. The business then gets reimbursed in May.

Yes, and Qantas didn't sack those people so they will be eligible. The only condition relevant is the money is passed on - so those on leave are fine, but those on unpaid leave would have to go back to being paid - even if it's just the $1500/fn rate.

It does apply to people who were sacked after 01 Mar as long as they go back on the books now.

 

[moa999]

Interesting statement from AirNZ today on medium term outlook. Would think the same applies to Qantas (and Jetstar)

... it is clear the Air New Zealand which emerges from COVID-19 is a much smaller airline and could take years to get back to its former size. Therefore, we are planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future.

The Air New Zealand of pre-COVID-19 employed 12,500 people around the world. Clearly, we will be smaller for some time and we will need fewer staff. We expect that even in a year’s time we will be at least 30 percent smaller than we are today.

 

[p--and--t]

Interesting statement from AirNZ today on medium term outlook. Would think the same applies to Qantas (and Jetstar)

Not surprised at all. I have made similar comments on AFF before that they will be smaller and "different" in footprint for at least 2-3 years if not forever.

I expect the demand for J by businesses will be lower and leisure travellers will take a while to return for economic and other reasons.

 

[justinbrett]

I don’t think QF will have an financial inability to serve international routes (it owns most of its own aircraft unlike VA), the real question is whether there is a market to be served. Countries will not be rushing to open borders even if they have their domestic outbreak of C19 under control.

You also can’t compre QF and NZ too much, they are a much smaller market and were already pulling out of LHR. There is a lot of competition on the Asian routes so really the US routes were the only ones going for them - and that market is pretty crowded.

 

[jase05]

I don’t think QF will have an financial inability to serve international routes (it owns most of its own aircraft unlike VA), the real question is whether there is a market to be served. Countries will not be rushing to open borders even if they have their domestic outbreak of C19 under control.

You also can’t compre QF and NZ too much, they are a much smaller market and were already pulling out of LHR. There is a lot of competition on the Asian routes so really the US routes were the only ones going for them - and that market is pretty crowded.

Will be interesting to see how it pans out. With rumours that NZ may only become a domestic only airline or severely cut their routes I wonder if QF being the biggest airline in this neck of the woods will pick up the slack. I don’t see much demand for travel to NZ in the next 12 months though

 

[justinbrett]

Will be interesting to see how it pans out. With rumours that NZ may only become a domestic only airline or severely cut their routes I wonder if QF being the biggest airline in this neck of the woods will pick up the slack. I don’t see much demand for travel to NZ in the next 12 months though

Maybe QF & NZ will finally get their merger approved? Wouldn't rule it out.

Qantas already has traffic rights between NZ - USA so could easily re-introduce AKL-LAX or similar.

 

[dajop]

Maybe QF & NZ will finally get their merger approved? Wouldn't rule it out.

Qantas already has traffic rights between NZ - USA so could easily re-introduce AKL-LAX or similar.

There is no reason that if Qantas and NZ were to merge that you would necessarily see a single brand. NZ could still serve AKL-LAX within the ownership structure. Think IAG, Lufthansa Group, AF/KL. Merged airlines that run separate brands, independently but coordinated, whilst achieving efficiencies in purchasing and back office operations.

 

[justinbrett]

There is no reason that if Qantas and NZ were to merge that you would necessarily see a single brand. NZ could still serve AKL-LAX within the ownership structure. Think IAG, Lufthansa Group, AF/KL. Merged airlines that run separate brands, independently but coordinated, whilst achieving efficiencies in purchasing and back office operations.

Yeah that’s what I was thinking (NZ would retain its own brand). The biggest issue would be maintaining two widebody fleets. It would be cheaper to maintain one fleet.

 

[Bundy Bear]

So much doom and gloom on this thread, my bet next year will be back to 90% of where we were.

Everyone will be hanging out to go traveling, some countries may not see a rebound in tourism numbers but other areas will almost back to where they were.

I think domestic tourism will turn out ok for the next 12 months or so.

 

[Happy Trails]

Papers, typing? When I was a lad I used to have to get up before I went to bed ..... (please excuse Monty Python comedy reference).

At last The 1948 Show, rather than Monty Python.
But try telling that to young folk these days and they won't believe you.

 

[AIRwin]

Jetstar's Vietnam offshoot in spotlight amid sale talk

amp.smh.com.au

 

[RichardMEL]

For what little it's worth I think QF will definitely be leaner definitely on the international front.

It really will be based on how soon international business demand will return, and THAT will return probably in waves and be very market dependent as various regions and even countries open up (or not) at different rates and the confidence to travel for business ramps up in different ways.

Leisure travel I think will take much longer for two reasons:

1. Disposable income will be limited for some time for many as we deal with the fallout of CV - obviously many reasons here why

2. Fear to return to (hopefully former) hotspots such as Asia, Disneyland/USA, europe etc.

And all of THAT obviously predicated on DFAT and the govt lifting travel restrictions and advice.

For example I could well seeing the first place to relax restrictions would be NZ - in terms of AU-NZ traffic. That would probably make some sense even with NZ's more agressive stage 4 response at this point in time.

Domestically I think travel will rebound quite well if/when state borders are re-opened. Remember we were doing OK before all this hit and internally we should return OK in the medium term for business travel and I suspect leisure and VFR should return in a shorter term than int - people going on Oz holidays, visiting again their friends/family etc after long times.

Sure scehdules will be pretty sparse at first but I do think we should see a ramp up in the range of 3-6 months (seasonally adjusted of course) post easing of restrictions probably to 70^ is of former levels.

I could see QF shedding some older 738's but not too many. Some routes may not return the way they were but in general I think domestic will be far less impacted than international.

Having the 787's gives QF a lot of flex to operate many of the routes (such as SYD-DFW) where the 380 will be too big for quite some time, so even if the 380 is restricted to just flying to LAX initially and maybe, just maybe SIN, the 787's can cover all the other missions until demand returns and they can fill those elephants.

I also expect there will be a LOT more co-operation with alliance partners (worldwide, by all airlines) as things ramp up to cover slow returns in demand. For example QF/CX to HKG and points beyond, possibly into China (PVG/PEK), JL to Japanese cities like CTS/KIX and AA. I could also see a "return" to LHR flying via DXB in the form of pushing some London traffic via EK.

Just a mixture of thoughts.
IMO.

 

[milehighclub]

For example I could well seeing the first place to relax restrictions would be NZ - in terms of AU-NZ traffic. That would probably make some sense even with NZ's more agressive stage 4 response at this point in time.

I also was thinking this. NZ - AU would pick up faster than any other international route from either country. I hope both Governments consider seeing this as almost domestic travel to remove those high taxes further stimulating travel with lower fares.

 

[jakeseven7]

I think once international restrictions are lifted (whenever that might happen) the Government will probably underwrite QF's international network to help start the tourism machine back up again as well. They will also tip $$$ into advertising AU as a destivation.

 

[p--and--t]

Of course the future is the future, and even after all these decades of free trade agreements etc, there is still no official standard for crystal balls for us to refer to.

As always, there will be counterbalancing reactions from the general public.

Some will be panicked as per the aftermath of the GFC and down scale their expenditure, looked at their mortality and risks after the pandemic and start paying off their mortgages faster and staying closer to home. Some will have been crippled by the effects of the economic downturn/loss of income. There will also be those who wish to maintain social distancing for quite some time until the shock of what has happened wears off - a reluctance to be cooped up in any form of public tin can including planes trains buses and trams. We could see a temporary reversal of recent years trends to move to public transport rather than taking the car. Maybe time to invest in tollways

The opposite will also occur, with some people thinking that they need to get out and explore in case a lock down comes again in a second wave, realise how short life is and want to use it to the full. Also the pent-up demand from those who have realised how far they are from loved ones and friends who now will make an effort to reconnect in person - a significant driver for the rebirth of domestic travel particularly.

As always there will be the sheep effect. An initial reluctance to do anything until the next door neighbour does it, or the media spins up a story, or a half price deal not to be missed, then it will be OK.

The next 36 months is going to be very interesting until the pain and shock of both the loss of life & liberty and economic impacts start to be taken over by a return to some form of normality.