Qantas has announced a further ramp-up in flying from October 2023 (including increasing the New York service from three to four times a week) that will see group international capacity reach around 100 per cent of pre-Covid levels by March next year.
Qantas group chief executive Alan Joyce said trading conditions remain very positive.
“More parts of the aviation supply chain are returning to normal, which means we’re able to put some of the spare aircraft and crew we kept in reserve back in the schedule. That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers.”
As forecast, the steady return of total market capacity has seen fare levels moderate from peaks reached in the first half of of the current financial year, but yields for the airline are expected to remain “materially above” pre-Covid levels through the next financial year, particularly on international routes.
Similarly, international freight yields have moderated to levels of around 1.5 times pre-Covid levels.
Forward booking trends indicate strong travel demand continuing into the next financial year.
Revenue has surged. The airline is enjoying 118 per cent of pre-Covid levels for domestic and 123 per cent for international.
The airline was plagued by flight delays and disruption that has hit the entire aviation system but it says customer experience continues to improve through a strong focus on reliability and on-time performance.
As expected, costs associated with the operational buffer the group applied to improve reliability are starting to roll off as the industry stabilises, enabling spare capacity to become revenue-generating.
Jet fuel prices remain elevated but recent falls will deliver a cost improvement in the second half of the year, which is partly offset by adverse movements in foreign exchange for an overall benefit of $A150 million.
Qantas Loyalty remains on track to reach the top end of its pre-tax target of A$425 million to A$450m.
It is also paying bonuses.
The group has now finalised 38 enterprise agreements under its revised wage policy, representing around 80 per cent of its total workforce.
These staff are eligible for a A$5000 recovery boost and around 20,000 employees are expected to be eligible for a recovery bonus of up to A$6500 based on the current Qantas share price, vesting after its full year results are announced in August 2023.
It announced today that given the group’s strong balance sheet and the positive outlook, the board has increased the existing on-market buy-back by up to A$100 million. The existing buy-back of up to A$500 million was announced in February and is now 78 per cent complete at an average price of A$6.49 per share.
Including the additional buy-back announced today, the group’s net debt is now expected to be between A$2.7b and A$2.9b as at June 30.
That is significantly below the bottom of its revised target range of A$3.7b to A$4.6b.
Joyce said the industry remains capacity constrained and the travel category remains strong, so there’s still a mismatch between supply and demand that’s likely to persist for some time, especially for international flying.
“We’re on track to take delivery of another eight new aircraft before the end of this calendar year and we’re working hard to bring the last of our stored aircraft through heavy maintenance so we can get them back in the air.”
The airline also announced former American Airlines chief executive and chairman, Doug Parker, will join Qantas, bringing more than 35 years of aviation experience.
