Qantas Group will lay off several hundred more employees in addition to the 8,500 jobs already cut, with the airline aiming to cut costs by AUD 1 billion ($ 777 million) per year by FY2023, the company said in a market update.
With AUD 600 million (USD 466.2 million) in cost savings to deliver this exercise, several hundred international cabin crew are expected to take voluntary layoffs, while 99% of previously announced layoffs have been completed, the rest due to leave by the end of FY2021. Salaries across the Qantas Group, including management, have been frozen for the next two years, with annual increases of 2% thereafter, up from 3% before COVID-19.
About 6,000 of the 22,000 Qantas Group employees remain idle, which means they are not paid but remain employees.
This comes as the Group has revised its expectations for the return of a significant level of international flights from the end of October 2021 to the end of December 2021 (with the exception of the round trip without Trans-Tasman quarantine bubble between Australia and New Zealand). This is in line with the revised Australian government schedule for the effective completion of the National COVID-19 Vaccination Program.
Since the start of the pandemic, the total loss of revenue for the Group is now expected to reach AUD 16 billion (USD 12.4 billion) by the end of fiscal 2021, with a statutory pre-tax loss of over $ 2 billion. AUD (1.5 billion USD). ) in FY2021.
However, a sustained recovery in domestic travel demand and the performance of its freight and loyalty divisions continued to drive the Qantas Group to recover from the effects of COVID-19.
The Group expects positive cash flow for the second half of fiscal 2021. Net debt levels peaked in February at 6.4 billion AUD (4.9 billion USD) and are expected to be lower than expected. they were in December at the end of the fiscal year. Liquidity remained strong at AUD 4 billion (USD 3.1 billion), including liquidity of AUD 2.4 billion (USD 1.8 billion) and AUD 1.6 billion (USD 1.2 billion) in credit facilities. unused credit as of April 30, 2021.
Revenues from domestic activities are expected to almost double between the first and second half of this fiscal year. The Group was on track to reach 95% of its pre-COVID domestic capacity for the fourth quarter of fiscal 2021. Qantas and Jetstar Airways (JQ, Melbourne Tullamarine) are expected to reach on average 107% and 120% respectively of their Pre-pandemic domestic capacity in fiscal 2022. Business travel, including the small business segment, continued to recover and is now at 75% of pre-COVID levels (up from 65% in April). The demand for leisure increased sharply, with delayed international vacations turning into several domestic trips.
To meet domestic demand, Qantas (QF, Sydney Kingsford Smith) and Jetstar have returned all domestic aircraft to service. In addition, QantasLink has activated eight (out of 14) E190s under its agreement with Alliance Airlines (QQ, Brisbane Int’l). Jetstar reactivated up to five B787-8s for home use as well as six A320-200s on loan from Jetstar Japan (GK, Tokyo Narita). With the increase in domestic demand for leisure travel, Qantas and Jetstar have also announced 38 new routes since July of last year.
Meanwhile, demand for international travel between Australia and New Zealand is rebuilding steadily, but capacity has been limited to 60% of pre-COVID levels. All of Qantas’ B787-9s and about half of its A330s were active, providing both freight, repatriation and scheduled passenger services. The airline has eighteen A330-200s and ten A330-300s, according to the advanced ch-aviation fleets module.
Qantas Freight (Sydney Kingsford Smith) continued to serve as a natural hedge against the slowdown in international passenger travel. Freight was expected to exceed revenue in the first half of fiscal 2021.
“We still have a long way to go in this recovery, but we feel like we are slowly starting to turn the corner,” commented Alan Joyce, CEO of Qantas Group. “Cost management remains an essential part of our recovery, especially given the revenue we have lost and the extremely competitive market in which we operate,” he added.