Qantas Group is enjoying a rebound as the coronavirus pandemic abates, with both domestic and international travel demand picking up strongly.
In a trading update for the third quarter of 2022 to 31 March, the carrier says it is enjoying strong revenue growth compared with a year earlier.
This helped reduce net debt from A$5.5 billion ($3.9 billion) on 31 December 2021 to A$4.5 billion by the end of April 2022. At the peak of the country’s border closures, net debt stood at A$6.4 billion.
Nonetheless, the group still expects to post an underlying EBIT loss for its 2022 financial year.
Qantas expects its domestic business to be EBIT positive in the fourth quarter, and the international business is on a “clear pathway to full recovery.”
“After a few false starts, we’re finally seeing a sustained recovery in travel demand,” says Qantas chief executive Alan Joyce.
“People have confidence in domestic borders now that we’ve shifted to living with COVID and that’s bringing us back towards pre-pandemic levels of flying.”
In the domestic market, both Qantas and low-cost unit Jetstar operated 110% of pre-pandemic capacity over the recent Easter holidays, and business travel is performing better than expected.
International travel is getting a lift from the easing of border restrictions, particularly in New Zealand.
Freight volumes and yields remain strong. Qantas believes structural shifts in Australia’s ecommerce markets will continue to support domestic freight.
In regard to higher fuel prices, Qantas notes that 90% of its fuel requirements for the second half of FY2022 are hedged below market prices.
Underlining the carrier’s optimism is the announcement of an order for 12 Airbus A350-1000s that will support ultra-long-haul flights to London and New York under the airline’s Project Sunrise programme.
The carrier also firmed orders for A321XLRs and A220s.
In February, Qantas announced that its underlying loss before taxes widened to A$1.3 billion in the six months to 31 December 2021 from A$1 billion in the previous corresponding period.