Qantas Group plunged to a steep loss in its 2021 fiscal year, as the coronavirus pandemic cost the airline group a staggering A$12 billion ($8.7 billion) in revenue for the year.
For the year ended 30 June 2021, Qantas Group — comprising mainline operator Qantas and low-cost unit Jetstar — reported an underlying loss before tax of A$1.83 billion, reversing the A$124 million profit it eked out in the previous financial year.
The full-year revenue loss is marginally higher than the A$11 billion it first flagged in December. Amid operating conditions that group chief Alan Joyce calls “diabolical”, the airline group saw revenue plummet 58% year on year, to A$5.9 billion.
In a year marked by a number of domestic lockdowns and tightly-shut international borders, Qantas’s net passenger revenue plunged 69% year on year to A$3.8 billion. Against a pre-pandemic 2019 financial year, the difference is even starker: a 76% year-on-year decline.
Against pre-pandemic levels, Qantas saw traffic plunge 85%, while capacity declined 81%. The airline group attributes the decline to the grounding of most international flying, with a slower-than-expected domestic recovery.
As with other airlines in the region, freight performed better in the year, climbing nearly 26% year on year to A$1.3 billion. Qantas notes that the “record performance” by its Qantas Freight unit was a “valuable natural hedge” against the “idling international operations”.
The plunge in group revenue outpaced the reduction in costs, which fell 46% year on year to A$7.5 billion.
It ended the financial year with A$2.2 billion in cash and cash equivalents, lower than the A$3.5 billion a year ago.
Qantas’ individual segments were mostly in the red for the year, except for Qantas Loyalty, which continued to remain profitable, posting a A$272 million EBIT.
Qantas Domestic, which saw capacity and traffic fluctuate throughout the financial year amid several lockdowns within Australia, posted an EBIT loss of A$590 million, reversing the A$173 million profit it made the previous financial year.
Domestic capacity fell as low as 19% of pre-pandemic levels in July 2020, but recovered steadily before peaking at 92% in May 2021.
“Demand proved resilient throughout the year, with quick uptake in bookings when domestic borders re-opened. The group has announced 46 new domestic routes since the start of the pandemic, many to regional destinations, in response to a boom in leisure travel driven largely by the closure of international borders,” states Qantas Group.
Still, the current outbreak in Australia — caused by the highly contagious Delta variant, and subsequently triggering a series of long-drawn lockdowns — is expected to impact the airline group’s earnings in the segment.
Qantas Group expects a $1.4 billion plunge in underlying EBITDA for the first half of the current financial year.
As for Qantas International, it suffered an EBIT loss of A$575 million, compared to the A$56 million in the 2020 financial year.
The travel bubble arrangement between Australia and New Zealand — launched in April but subsequently suspended in the latest outbreak — helped lift revenue for the segment.
By the end of the financial year, Qantas Group carriers only flew 40% pre-pandemic capacity.
Qantas says it is “in a fundamentally better position” now to deal with the impact of the pandemic than it was at the start of the 2021 financial year.
Its recovery programme, first announced in June last year, “is ahead of schedule” in helping to deliver cost savings. Qantas notes that it has saved some A$650 million in the 2021 financial year, and is expected to save $850 million by the end of the 2022 financial year.
The group previously set a target of at least A$1 billion in permanent savings from the 2023 fiscal year, when it first announced its business recovery plan.
“Planned rightsizing is largely complete and much restructuring has been implemented. Central to these changes has been the ability to better manage costs in the face of sudden border closures,” the group adds.