Qantas hopeful travel will return with ‘bubbles’

Officials at flag carrier’s AGM say domestic ops back to 30% of pre-pandemic levels

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Qantas has grounded its A380s because of the collapse in international routes. (PHOTO: Shutterstock)

Use this oneAustralia’s flag carrier Qantas opened its annual general meeting Friday (23 October) with officials saying they hope to reopen various international routes next year as travel channels, so-called “bubbles”, are established with various countries.

Chairman Richard Goyder said in his opening remarks that the airline will be able to launch new routes to places like Taiwan and South Korea early but the United States and the UK remain shut off. Qantas officials also said on Friday that domestic operations have now recovered to almost 30 percent of the airline’ pre-pandemic network capacity, compared to previous expectations it would have bounced back to 60 percent by this stage. The carrier said it thinks it will be back to 50 percent by Christmas.

Goyder said the lifting of restrictions in New Zealand and the potential for Australia to join “travel bubbles” allowing quarantine-free travel to countries that also have COVID-19 cases under control were encouraging. “Qantas and Jetstar are keeping a close eye on new markets that might open up as a result of these bubbles – including places that weren’t part of our pre-COVID network,” he said in his remarks. “By early next year, we may find that Korea, Taiwan and various islands in the Pacific are top Qantas destinations while we wait for our core international markets like the US and UK to re-open.”

The airline has embarked on a three-year, A$15 billion cost-cutting program to help it recover from the COVID-19 crisis which devastated airlines globally. That includes making 6000 employees redundant, with another 2400 go following a decision to outsource all ground handling work, representing a reduction of Qantas’ workforce by close to a third since the start of the pandemic.

Qantas CEO Alan Joyce.

Qantas CEO Alan Joyce said the COVID-19 pandemic “has meant a sudden reversal of fortune for many companies and virtually every airline – including the Qantas Group. At the start of this year, we were on track for another strong profit. Dividends were set to increase. We were hiring new people and getting ready to order aircraft for Project Sunrise. And we were looking forward to celebrating 100 years of this great company. Instead, we’re dealing with the worst trading conditions in our long history. And the biggest crisis global aviation has ever faced.”

Joyce, as he has said previously, told the AGM online participants that “what has become crystal clear is that the Qantas Group after COVID has to be structurally different to the Qantas Group before COVID.

“We know the economy will be finding its way out of a recession, with all the implications that has for consumer confidence and spending. We know the domestic market will be extremely competitive. And we know that our revenue will be significantly lower for some time – especially with the continued grounding of most international operations. The only antidote when you’re faced with less revenue is to lower your costs,” Joyce said.

“We have identified A$15 billion in cost savings over the next three years, mostly through reduced flying activity. We’re also targeting A$1 billion in ongoing cost improvements” from the company’s 2020 financial year.

Joyce said the A$1 billion in savings are front-end loaded, with A$600 million due to be unlocked in this financial year. In addition to job losses, the company is reviewing its real estate holdings, stopped cash spending on sponsorships and is renegotiating arrangements with travel agents as well as reviewing its ground handling operations with a view to saving up to A$100 million a year.

“These are the kind of changes – the kind of reinvention – you need when IATA says that global travel demand is expected to take up to four years to fully recover,” Joyce said. “But we need to do this without losing sight of the things that make the Qantas Group an Australian icon and one of the world’s best airlines. The things that drive customer loyalty. Or our commitment to serving regional communities. To innovate and push boundaries. To be there, as the national carrier, when it counts.”

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