Airlines down under reported full-year losses a week ago as the COVID-19 pandemic surged in New Zealand and Australia. Qantas said it suffered an annual loss of A$1.73 billion (US$1.26 billion) while Air New Zealand reported a full year loss of Air New Zealand posts NZ$289 million (US$202 million) full year net loss.
Qantas, in announcing its results, said it planned to bring back five of its 12 Airbus A380 super-jumbos from mid-2022 to fly to the United States and Britain, a year earlier than previously forecast. The airline said it is a hopeful sign for travel in the Asia-Pacific region, where borders are largely closed and international travel is 95 percent below pre-COVID levels, though the Qantas plan is dependent on government decisions and could be delayed. Pending government decisions, Qantas said it expected flights to countries with high vaccine rates like Singapore, Japan, the United States, Britain and hopefully New Zealand to resume from mid-December. The statutory loss of A$1.73 billion, including impairments and restructuring charges, was better than last year’s A$1.96 billion loss.The airline reported A$3.8 billion of liquidity as of June 30, down A$200 million from April 30.
“One of the biggest unknowns is the quarantine requirements for fully vaccinated travellers entering Australia,” Qantas Chief Executive Alan Joyce said. “If it’s 14 days in a hotel, demand levels will be very low. A shorter period with additional testing and the option to isolate at home will see a lot more people travel. Talking to airline CEOs overseas, it’s clear the rest of the world is opening up – especially across the UK, Europe and United States. Australia now also has a plan for re-opening. And based on that plan, we’ve reshaped our own assumptions about restarting international flights. The nature of COVID means we’ve had to change our plans a couple of times already. And we can’t rule out having to move them again. I know the prospect of flying overseas might feel a long way off – especially with New South Wales and Victoria in lockdown. Some people might say we’re still being too optimistic. But the current pace of the vaccine rollout means all Australian states are on track to reach the 80 per cent target by December – which is the trigger for starting to carefully open to some parts of the world. That means there’s a lot of work that has to begin now. That’s why today we’re sharing some detail of what restarting international will look like. And if the emotional response to our recent vaccine ad is any indication, the idea of planning a trip might encourage even more people to get the jab.
Meanwhile, Air New Zealand has reported an after tax loss of NZ$289 million for the year to June 30, its first full year result operating in a COVID-19 environment. In 2020 the national carrier posted a $454m loss, its first annual loss in 18 years. To help it weather the pandemic Air New Zealand has drawn down NZ$350 million of a NZ$1.5 billion loan from the government, which owns 52 percent of the airline. It expects to draw down further in the coming months. In the 2021 financial year Air New Zealand benefited from about NZ$450 million of government assistance including airfreight support schemes. Border restrictions resulted in revenue falling 48 percent to NZ$2.5 billion and capacity fell 55 percent on the prior year. Cargo revenue increased 71 percent to NZ$769 million.
ANZ Summary financial results
|Loss before other significant items and taxation||(440)||(87)||(405.7%)|
|Other significant items||29||(541)||105.4%|
|Loss before taxation||(411)||(628)||34.6%|
|Net loss after taxation||(289)||(454)||36.3%|
|Operating cash flow||323||230||40.4%|
Given uncertainty surrounding the current national lockdown, ongoing international travel restrictions and uncertainty regarding the level of demand as these restrictions lift, Air New Zealand has suspended 2022 earnings guidance.
Air New Zealand Chief Executive Officer Greg Foran said the 2021 financial year was one in which the airline played the hand it was dealt, kept planes flying every day and took some important steps in the delivery of its refreshed strategy. “Our people developed new capabilities and dexterity, adapting quickly when conditions changed. Although the return of long-haul travel seems some time away, the changes the team made this year will serve us well when it returns,” he said. “We have reimagined our domestic business, increasing the choice of flight times and introducing greater price differentiation for peak and off-peak flying. This allows us to offer more lower priced fares, which will unlock new demand for domestic tourism. We capped fares to ensure travel isn’t out of reach when it’s needed most, reintroduced the popular Fast Bag service with new features, and improved our unaccompanied minors service to make travel easier for our most valuable cargo and safer for our people.”
Foran also acknowledged the ongoing uncertainty in the airline’s operational and financial performance, including following the latest COVID-19 cases in New Zealand and subsequent lockdown. “More than ever, this is a time to look after our people who continue to deliver those essential services, keeping cargo moving and getting Kiwis back home.”