Australia’s Qantas posts $1.96bn loss and confirms job cuts

Sydney — Qantas Airways reported its first loss in six years and predicted it will not make money in the next financial year as travel restrictions due to the pandemic smash the airline industry.

Australia’s national carrier swung to a net loss of A$1.96bn from a profit of A$840m a year earlier. The result reflects a slump in passengers, the cost of staff layoffs, and the writedown of the airline’s entire fleet of Airbus A380s, redundant superjumbos now grounded for three years.

“The impact  of Covid on all airlines is clear. It’s devastating and it will be a question of survival for many,” CEO Alan Joyce said in a statement. “Recovery will take time and it will be choppy.”

Joyce said the airline does not expect to resume international operations until July 2021, and expects a “significant underlying loss” in fiscal 2021. Underlying profit before tax, its preferred measure of earnings because it strips out one-time costs, fell 91% to A$124m.

Aviation’s worst-ever crisis has wound back the clock for Joyce, who must turn around the airline once again after pulling it back from the brink in 2014.

The Sydney-based carrier joins loss-making peers the world over, from Cathay Pacific Airways  and Etihad Airways to Deutsche Lufthansa   and American Airlines Group  after a near-destruction of their normal business.

All told, the industry faces a record $100bn black hole in 2020 and 2021, according to the International Air Transport Association. Traffic will not return to pre-crisis levels until 2024, the trade group has said.

Qantas has repeatedly made deeper cuts as the scale of the crisis became apparent in the first half of 2020.

Most recently, the airline in June said it would ask investors for as much as A$1.9bn, its first equity raising in a decade, and trim at least 6,000 jobs.

The airline had A$4.5bn in available liquidity at June 30, including A$1bn of undrawn facilities, according to the statement. Net debt stood at A$4.7bn. It expects further cuts to capital expenditure in the next financial year.

About 4,000 of the planned 6,000 redundancies will be completed by the end of September.

Bloomberg