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Qantas’ Half Yearly Report is in, and the results were fantastic. After $7 billion of cumulative losses due to the pandemic Qantas posted a record $1.43bn half year profit. To put this figure in perspective for the same period last year Qantas posted a $456 million loss. The key drivers for this huge turnaround for the airline were strong demand, rising fares and lower costs.

Alan Joyce said it had been a “long and frankly difficult” journey to return the airline to profit. He also reaffirmed his intention to step down as CEO at the end of the calendar year, after 15 years in the top job. Behind the scenes the Qantas board has succession planning underway, reviewing internal contenders as well as looking outside the company for the next CEO.

Domestic capacity is expected to rise this year to 103 per cent pre-Covid levels while international capacity is forecast to rise to 81 per cent. And with the prospect of a brand-new Airbus aircraft arriving every three weeks for the next two years; more staff on the ground; new business and first-class seats; $100m to be spent on upgraded lounges here and around the world and the roll out of high-speed Wi-Fi to its international flights in time for the first ultra-long haul Project Sunrise services, scheduled for 2025 Qantas is on a very different flight path from just 12 months ago.

Despite Qantas’ impressive recovery Joyce faces a number of challenges in 2023.

Supply chain and design certification issues have created manufacturing delays, impacting both Airbus and Boeing delivery timelines. Fuel costs were up 65 per cent, compared to pre-pandemic levels and elevated interest rates have increased the cost of Qantas’ borrowings.

Australia’s labour supply is tight across numerous industries which makes it harder for Qantas to recruit staff. The airline has sent recruitment emails to 1500 cabin crew who left during the pandemic, asking them to come back to help keep pace with demand for travel.

Qantas also remains embroiled in major disputes with sections of its staff, notably the airline’s high court challenge to a Federal Court ruling that it unlawfully outsourced its ground handling operations which resulted in around 2,000 redundancies.

The Qantas balance sheet remains wafer thin from 3 years of massive losses, leaving it exposed to any unforeseen shocks. At the end of December, Qantas’ net assets were just $16m. Four years ago, it was closer to $4bn.

After record numbers Qantas needs to win its customers back. Alan Joyce conceded this when he said that it’s been a tough time for passengers who stuck with us even though we were a long way from delivering the service they normally expect. Qantas is under pressure to extend or scrap the end-of-year expiry date on $800 million worth of unused COVID travel credits, as the travel credit policy comes under scrutiny. Qantas has also copped plenty of flack about the fairness of high fares against the backdrop of a large profit. Investing in customers has begun with the most on-time of the major domestic airlines for five months in a row, new planes, upgrades to lounges and ongoing improvements in catering, in-flight entertainment, customer-facing apps and staffing levels but there is still much ground to make up to restore Qantas’ brand.

Source: Qantas sets a date for free high-speed Wi-Fi on international flights by R Ironside The Australian Feb 22nd, Qantas $1b profit means Alan Joyce needs to start delivering for customers again by E Johnston Australian Business Review Feb 23rd, Qantas under pressure to scrap expiry date on $800m unused credit by J Yun SMH Feb 24th.