Alan Joyce flags a new-look Qantas in a post-pandemic world
Alan Joyce says Qantas will have to become a different airline after the coronavirus pandemic and will consider shrinking its fleet and network in line with demand during a years-long recovery from the health crisis.
Qantas’ chief executive on Tuesday confirmed it had put an order for new aircraft to operate its much-hyped non-stop "Project Sunrise" flights to New York and London on ice and will also consider offloading some of its 12 Airbus A380 super-jumbos.
CEO Alan Joyce says Qantas will be a different looking airline in the coming years. Credit:Renee Nowytarger
Mr Joyce said international travel demand will take years to recover, however he did see "light at the end of the tunnel" with the potential for domestic restrictions to soon ease and a possible trans-Tasman "bubble" to open up travel to New Zealand.
However with any recovery expected to be gradual - and slowed by a likely global recession - Mr Joyce said Qantas was reconsidering its fleet, where it flies and how it spends it cash.
"The Qantas of 2021 and 2022 will not be the Qantas of 2019," he said following a market update on the company's pandemic response. "We’re looking at the scope and scale of our businesses going forward."
Mr Joyce said there would be some pent-up demand from people who want to visit family or go on holiday when domestic travel restrictions lift, but Qantas would also look to stimulate demand with cheap airfares. Melbourne to Sydney fares on its budget arm Jetstar could fall to $39 or even $19, he said.
"We’ll make sure we get as many people travelling as possible,” he said.
Qantas on Tuesday said it expected to burn through $40 million a week from late June until travel demand returned. But Mr Joyce said the company had the financial firepower to sustain that until the end of 2021.
Though the international and domestic travel markets will be smaller, Mr Joyce said Qantas could use its relative financial strength to grow its share against weaker competitors at the end of the pandemic.
COVID-19 has devastated airlines around the world, including Qantas' domestic competitor Virgin Australia, which went into voluntary administration a fortnight ago owing almost $7 billion. Administrators are looking for new owners.
"Qantas is well positioned to pick up share domestically and internationally and our intent would be to have a bigger share," Mr Joyce said.
Qantas says it was extending domestic and trans-Tasman cancellations through to the end of June and other international fights through to the end of July.Credit:Jason South
"We think we’re well positioned as one of the strongest airlines in the world and to take advantage of our strength."
Qantas on Tuesday said it had secured another $550 million in debt and would extend its widespread flight cancellations in response to the coronavirus shutdown.
The fresh debt funding, secured against three Boeing 787s it owns, comes on top of $1 billion raised in March and gives Qantas sufficient liquidity to survive through to December 2021 even under current trading conditions, the airline said.
Qantas is currently flying the equivalent of about 5 per cent of its pre-pandemic domestic capacity and 1 per cent of its international capacity. The company said on Monday it was extending domestic and trans-Tasman flight cancellations through to the end of June and other international fights through to the end of July, but could quickly return to capacity if required.
The company said around 25,000 of its 30,000 staff would remain stood-down until at least until the end of June.
Qantas said that after standing down staff, cutting spending and renegotiating contracts with suppliers, it expects its net cash burn rate to be $40 million per week by the end of June.
The airline had previously hedged - or locked in - its fuel contracts for most of this financial year, which became loss-making as its reduced flying and the oil price plummeted. Qantas said it closed out its over-hedged position in early April.
"The Group’s remaining Brent crude oil hedging to September 2020 is in outright options with no risk of further hedge losses," it said.
Qantas said it had some hedging contracts beyond September subject to market price movements but they were "expected to be effective given they are likely to coincide with increased flying activity".