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Qantas in Trouble

Australian carrier Qantas reported a US$5.5 billion plunge in revenue during the second half of 2020 and said international passenger flights would not resume until October as the pandemic continued to devastate the industry.

The country’s biggest airline said it suffered an underlying loss of Aus$1.1 billion (US$858 million) in the six months to December 31, with statutory losses climbing to Aus$1.47 billion.

“These figures are stark, but they won’t come as a surprise,” said Qantas CEO Alan Joyce.

“A year ago, none of us knew just how big an impact Covid would have on the world, or on aviation. It’s clearly worse than anyone expected,” he said.

“Border closures meant we lost virtually 100 percent of our international flying and 70 percent of our domestic flying — three-quarters of our revenue -‒ around Aus$7 billion -‒ went with it.”

Joyce noted that the company had already seen revenue fall Aus$4 billion during the first half of 2020, bringing the total impact of the pandemic to Aus$11 billion.

“That is a massive number, probably a bigger number than any other company in Australia is experiencing because of Covid,” he told a press conference.

Joyce pushed back the expected resumption of international passenger flights from July to the end of October, but said the cost of keeping those planes on the ground was largely being offset by increased freight operations.

With Australia’s successful containment of the pandemic, Qantas flagged a return to 60 percent of pre-Covid domestic capacity by the end of March and 80 percent by the end of June.

Qantas had posted a US$1.9-billion loss for the year ending June 30 as the coronavirus pandemic gripped the global economy.

Joyce said a total of 8,500 staff would lose their jobs due to the crisis, and another 7,500 would remain suspended until the resumption of international flights.

Around 100 planes have also been grounded as part of a Aus$10 billion cost-cutting blitz and restructuring effort that Qantas said would save it Aus$1 billion a year from 2023.

S. Jack Heffernan Ph.Dhttps://www.shayneheffernan.com
S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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