Qantas FY21 Financial Results

Qantas’ 2021 Yearly Report is in, and the results were very ugly. Qantas reported a substantial (Underlying) loss of $1.83 million because of the COVID crisis. When you factor in their aircraft write-downs and redundancy costs Qantas actually made a statutory loss of $2.35 billion. Qantas ratios in particular profitability and gearing have been smashed as domestic and international border restrictions have decimated air travel. This can be clearly seen in Fig A below where the 2021 ratios are compared to 2020 (which included 5 months of COVID) and pre-COVID 2019.

Qantas boss Alan Joyce said that it had been a diabolical year. Revenue fell to $5.9 billion – a fall of $12 billion compared to its pre-pandemic result in 2019. The airline estimates the pandemic will have cost it $20 billion in lost revenue by the end of 2022.

A silver lining for Qantas was the record performance of Qantas freight due to the surge in online shopping and the surge in domestic travel to above pre-COVID levels while state borders were open because people could not travel overseas.

Despite these ugly results Qantas management has been extremely proactive in navigating the impacts of COVID. When you look at Qantas’ competitors you realise that Qantas has fared remarkably well. Virgin Australia as we know totally collapsed in a few weeks and Singapore Airlines has just reported a $4.3 billion loss. Emirates fared even worse reporting a $6 billion loss.

An aggressive cost-cutting program (which has including axing around 9400 jobs – or a third of its workforce), was ahead of schedule, with $650 million taken out of its cost base in the 2021 FY. More than 8000 employees remain stood down as they wait for domestic and international borders to reopen. A massive $1.06bn in taxpayer-funded federal government handouts have helped keep Qantas afloat, the biggest chunk being $588m in JobKeeper payments.

Qantas has started to plan for a surge in domestic travel demand and a gradual return of international travel when critical vaccination targets are reached. Restarting an airline to bring aircraft and staff back into service is a complex process.

Qantas plans to resume international flying to “COVID-safe destinations” such as the UK and US gradually from December. Flights to destinations where vaccine rates were low and Covid infections high, such as Bali, Manila, Bangkok, Phuket, Ho Chi Minh City and Johannesburg, would be pushed back until April 2022. Qantas is integrating the International Air Transport Association travel pass into their systems to help customers prove their vaccine status and cross borders.

Qantas expects NSW and Victoria will remain cut off from the rest of Australia until the start of December due to COVID-19 outbreaks there. The airline is forecast to be flying at 52 per cent of normal domestic capacity in the December quarter before rising again to around 110 per cent in the first half of the next calendar year.

Source: Qantas posts $2.35bn annual loss at the airline looks to resume international flights in December by R Ironside The Australian Aug 26th, Qantas receives more than $1bn in government assistance by K Yeo The Australian Aug 26th, Qantas says its primed for profits after $1b pandemic cleanout by P Hatch SMH Aug 26th.