Qantas CEO expects 50% of international operations to return by fiscal 2022

Australian carrier Qantas expects about half of its international operations to get back on track by the middle of 2022, CEO Alan Joyce said on Thursday. 

“International, we think, will take a bit of time to recover. In financial year 2022, we are only expecting to get 50% of our international operation back and we’re thinking it will take three years before we can get our A380s back in the air,” Joyce said on CNBC’s “Squawk Box Asia.” 

“When we do, we’ll start getting back to pre-Covid-19 levels,” he added.

Air travel demand has suffered a near-total collapse this year due to the coronavirus pandemic. That has forced airlines to cut costs by suspending flight routes, putting many of the planes in their fleet in long-term storage. Many have sought government support, with some even succumbing to administration

Resumption in international travel will differ in various parts of the world, according to Joyce. Countries that have similar levels of infection may open up borders and create a travel “bubble,” he said, referring to a proposed trans-Tasman safe travel route between Australia and New Zealand. The plan has now been put on hold due to new Covid-19 cases in both countries, according to reports

“For some of the big markets like the United States, I think we are going to be dependent on a vaccine,” Joyce said. The U.S. is the world’s worst-affected country, with more than 5.5 million reported cases and over 172,000 deaths. 

Joyce said, however, Qantas research indicates that there’s customer interest in domestic travel. Covid-19, the disease caused by the coronavirus, appears to be under control in most Australian states except for Victoria, which experienced a recent resurgence. The state government has since reimposed lockdown measures. Other states are slowly easing border restrictions, which is potentially good news for the airline group as most of its profits come from the Australian market. 

“We are very confident there is demand, there’s pent-up demand and that we should be able to benefit from that domestically,” he said.

Still, the border reopening between Australian states has not been very consistent, according to Joyce. He explained that Qantas is talking to the federal and state governments about having a rules-based, medical-advice-based criteria for when borders open and close. “I think that would give certainty to our business, to a lot of the tourism industry in Australia,” he said. 

Joyce’s comments come after Qantas reported a full-year statutory net loss of 1.964 billion Australian dollars ($1.41 billion) for the 12 months that ended on June 30. That marked a massive decline from the A$840 million net profit Australia’s flag carrier recorded a year prior. Australia’s financial year begins on July 1 and ends on June 30 the following year. 

The airline group, which also operates the low-cost carrier Jetstar, said it had to do a non-cash write down of assets including its Airbus A380 fleet and incur one-off redundancy and other costs as part of restructuring. Qantas’ A380 aircraft are in long-term storage in the U.S. while its Boeing 747 aircraft have been retired ahead of schedule. At least 6,000 people are expected to be laid off and “thousands more” will be furloughed for a long time, according to Qantas. 

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