Qantas has released its 2022 financial full-year results today, announcing another year of significant losses for Australia’s flagship airline. The impact of Delta and Omicron waves has seen Qantas lose more than $1 billion for what is now the third year in a row. All eyes were on CEO Alan Joyce, as he delivered the results this morning, following a week of solid calls for his resignation.
Qantas sees a major loss for the third year in a row
The Qantas Group has seen an Underlying Loss Before Tax of $1.86 billion and a Statutory Loss Before Tax of $1.19 billion. The first three quarters of the year were defined by ongoing border closures and travel restrictions, resulting in many aircraft staying on the tarmac. These substantial losses have seen the impact that Covid has had, costing Qantas more money in the past three years than what the airline made in the five years beforehand.
In a press release issued by Qantas, CEO Alan Joyce reflected on the airline’s cumulative loss over the past few years.
“This result takes the Statutory Loss Before Tax impact of COVID on the Qantas Group to nearly $7 billion and our total revenue losses to $25 billion. These figures are staggering and getting through to the other side has obviously been tough.”
The announcement of the staggering loss has also come in the same week the airline formally apologises to its customers, offering a $50 flight credit and status extension for its Frequent Flyers.
Next steps for Qantas
Despite a significant loss, the airline has announced that there are positive steps ahead for a full recovery. The Group’s recovery plan is on track for completion, with $1 billion savings in FY23, and its net debt has declined to $3.94 billion, below target range.
The loss also stemmed from three quarters of the year, with the last quarter recording a significant influx in travel demands. The Group’s flying levels jumped from an average of 33 per cent of pre-pandemic levels, finishing at 68 per cent. This also came with Qantas Loyalty accelerating its earnings growth and Qantas Freight posting another record annual performance.
“We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional. Our teams have done an amazing job through the restart and our customers have been extremely patient as the whole industry has dealt with sick leave and labour shortages in the past few months,” Joyce said.
Although the growth is encouraging for the aviation industry, customer key measures have continued to be at stake. These include lengthened contact centre wait times, increased cancellation rates, lost baggage and delayed flights. These factors will need to be improved to continue seeing a demand for Qantas. Recognising this with his apology, Joyce has also lessened flights to allow more crew to be available, in a step to combat one of the Group’s largest enemies at present, a labour shortage.
“We are the first admit we haven’t gotten everything right lately. But with the help of our people we are getting back to our best,” Joyce told the media at a press conference on Thursday morning.
Qantas has seen the rapid rise of travel occur, noting the rise of domestic travel. Despite cost-of-living increases and a rise in inflation, leisure travel has increased by 125 per cent compared to pre-pandemic levels, whilst business-related travel has increased to 90 per cent.
International travel still remains at a loss but is making steady progress with the Group resuming flying to 19 ports. Joyce sees the carrier rising above its competitors, predicting that the airline will be back to 100 per cent capacity levels next year, as it is currently at 75 per cent.
Investing, investing, investing
This morning, the carrier’s full-year results were unveiled at its Qantas Campus in Mascot. Joyce made it clear that going ahead, Qantas continues to have its eyes on investing. This includes staff, customers, the aircraft and future opportunities.
In its press release, Joyce displayed confidence in the airline’s full recovery by placing the concept of investing far and wide at its core.
“We’re even more confident in the future than we were six months ago, so today we’re announcing more investment in our people and our customers, including a major boost to staff travel benefits, new routes and new lounges. We’re also announcing the first capital return for shareholders since they provided us $1.4 billion at the start of the pandemic to support our Recovery Plan,” Joyce said.
The Australian flagship carrier has put emphasis on investing in the country next door, with New Zealand city Auckland receiving both lounge upgrades and a new flight route. The Auckland to New York flights will begin next year, offering Australians from Sydney, Melbourne and Brisbane, in particular, an easy connection option for travel. They will also be used as an enticement for American travellers to consider dual travelling.
An aviation issue, not just a Qantas issue
Despite being openly apologetic about the issues the airline has faced, Joyce ingrained the message that Qantas isn’t the only airline that is underperforming.
Reinforcing Qantas’ position as the national carrier, Joyce was quick to make sure that consumers are aware of rival competitor Virgin’s performance as well. As told by the CEO, July saw Virgin record a worse “on-time” performance than the flying kangaroo. Qantas, in fact, beat Virgin’s on-time performance for 10 out of the past 14 months.
When asked about the rise in ticket prices, Joyce recognised that all businesses in the aviation industry are seeing this impact, influenced heavily by the rise in the cost of fuel. The CEO said that for this year, it has been forecasted that the cost is 80 per cent higher than fuel costs pre-pandemic, adding another billion dollars to the fuel bill, despite having a hedging policy in place.
However, Joyce also took the time to recognise the Group’s greatest innovation of Jetstar still being able to offer attractive fares, with 47 per cent of its customers paying less than $100 for their flights, reinstating the excitement to travel again.
It was also recognised that many difficulties present are also out of control for the airlines, including significant weather events and delivery delays, noted as “the same story around the globe for aviation.”
The airline’s A380s are additionally making a comeback but are requiring heavy maintenance. The carrier is also still yet to see the Boeing delivery they had ordered that was supposed to have arrived 2 years ago. Staff sick leave and a major labour shortage were once again recalled by the CEO as something that wasn’t to be expected by the airline or its industry partners, an idea challenged by many as Joyce has been previously shamed for his handling of the redundancy of staff.
The future of Alan Joyce
Addressing the media, Joyce made it clear that he has no intentions of listening to the union and resigning. Noting that the unions have been lining up for his blood since 2011, and that he most likely has more resignation requests than any other CEO at the moment, Joyce instead embraces it as part of his job.
Joyce told the media, “At this other end of this, Qantas will be stronger than it ever was,” implying that in the meantime, he plans on staying and watching the airline pick back up again.
Joyce has recognised that currently, Australians may not be satisfied with Qantas but is making it known that the airline will not hold back in addressing the issues at large. He notes that they will continue to apologise and is one of the only airlines to do so, as it is, by his standards, the right thing to do. Joyce wants to see the Qantas that is so passionately loved by Australians bounce back, understanding that their brand reputation may be damaged but holds utmost confidence that the flying kangaroo will still remain Australia’s choice of airline.
What are your thoughts about Qantas’ recovery as an airline? Is Joyce doing the right thing by remaining as CEO? Let us know your thoughts in the comment below.
Joyce is a manipulative individual, and he and his chairman should go since they perform hand in hand.
I was alarmed when, years ago now, Joyce and his chairman colluded to write down to zero all the aircraft assets, creating the largest tax loss of any Australian company. The share price collapsed, and Joyce and his chairman topped off their share options at the lower price. With zero depreciation to offset earnings, Qantas then started earning record profits, the share price rose, and their share options earned them many millions in profit. The episode was outrageous manipulation yet nobody stood up.
Demand is back, planes are full, and excuses don’t count! Joyce has lost shareholders’ confidence and should go, along with his chairman.