Easing travel restrictions lifts Qantas domestic capacity

While Australia slowly reopening its state borders, Qantas’ domestic flight capacity rises and offers hope for repairing the airline’s balance sheet. 

On December 3, 2020, Australia’s air carrier reported that domestic capacity will reach 68% of pre-pandemic level in December 2020. In the previous months it has been running at about 40%. The company expects to start repairing its balance sheet during the second half of fiscal year 2021. If the state borders remain open, the airline projects to be close to break even in the first half and net free cash positive in the second half of 2021. 

The Qantas group announced its intention to maintain strong liquidity in order to be prepared for unpredicted situations in the future. As of November 30, 2020, the Group had  $3.6 billion in available liquidity and said to be expecting that number to be increased by about $500 million before December 31, 2020.

“We’re adding more services to Perth now that the borders have opened. We were caught a bit short with the borders opening earlier than expected, but we’ll be using our 787s next week on Sydney to Perth to quickly bring in some extra capacity, and that’s brought airfares down essentially overnight,” said company’s CEO Alan Joyce in a market update on December 3, 2020. 

“Bringing domestic capacity back to almost 70% in December is very positive compared to where we’ve been, and so is seeing more of our people back at work. But overall the Group is still a long way off anything approaching normal,” said Joyce. 

However, the international flights from Australia are expected to restart only in summer of 2021. Qantas also said it would require passengers to be vaccinated from COVID-19 in order to fly abroad. 

“We will always put safety ahead of popularity but it seems the vast majority of our customers agree with us,” said Joyce. He added that 87% of customers said they would agree to be vaccinated if it was required for international travel, with a possible exception of travels to New Zealand. 

On November 30, 2020, Qantas announced the plans to cut 2,000 staff and outsource baggage handling in a bid to save more than $100 million. In June and August 2020, the airline cut up around 8,500 jobs out of a pre-COVID-19 workforce of 29,000.


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