What does the future hold for Qantas?

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Dating back to the 1920s, Qantas has operated for more than 10 decades as one of the most recognizable and oldest full-service carriers (FSC) in Asia-Pacific.  


However, like most airlines across the globe, Qantas has reported losses since the beginning of the COVID-19 pandemic, which resulted in a significant reduction in air travel demand.  


But now, more than two years into the global health crisis, experts have suggested that COVID-19 is likely to ‘fade away’ in 2022, becoming an endemic disease. Aviation is also continuing to show signs of recovery.  


So, what does that mean for Australia’s flag carrier? And what does the future hold?  


Two years of turbulent crisis 


Australia’s quarantine requirements and border restrictions were one of the strictest public health responses to the COVID-19 pandemic. In February 2022, Australia reopened its border for international visitors for the first time in almost two years. 


During those two years, Qantas operated mostly on its domestic route network, resulting in huge financial losses and aircraft delays. 


“Australia was actually one of the most impacted markets through the first 18 months of the pandemic (when looking at domestic and international markets compared to other similar markets globally),” independent aviation analyst Brendan Sobie told AeroTime.  


During the fiscal year of 2020/21, which ended on June 30, 2021 (the Australian financial year runs from July 1 until June 30), Qantas reported a net loss of AD$1.8 billion (US$1.3 billion). This compares to a net profit of AD$124 million (US$89 million) in FY2019/20 and a net profit of AD$1.3 billion (US$937 million) in FY2018/19.  


In a full year report for FY2020/21, Qantas Group CEO Alan Joyce commented: “This loss shows the impact that a full year of closed international borders and more than 330 days of domestic travel restrictions had on the national carrier. The trading conditions have frankly been diabolical.” 


During the first half of the financial year 2021/22, the group’s operations continued to be impacted by the global pandemic.  


Commenting on the financial situation at Qantas, Sobie told AeroTime that during the COVID-19 pandemic Qantas did manage to boost liquidity significantly as have other strong airline groups from Asia-Pacific.   


“They were able to do this given their strong competitive position in their home market and their strong financial position entering the crisis. So, they were never really threatened. Qantas responded to the crisis quite well, allowing them to weather the storm and enter the post-pandemic era in a very strong position,” Sobie added. 


Now the airline predicts a strong and sustained recovery in travel demand, as Australia navigates the ‘living with COVID’ phase.  


According to the latest Qantas Group trading update issued in May 2022, the return of domestic travel demand was ahead of expectations and the airline experienced a solid international performance. Despite the good performance, Qantas still expects to post a full year net loss for FY22 “that includes the worst of the Delta and Omicron impacts as well as one-off restart costs”. 


“After a few false starts, we’re finally seeing a sustained recovery in travel demand. People have confidence in domestic borders now that we’ve shifted to living with COVID and that’s bringing us back towards pre-pandemic levels of flying,” Qantas Group CEO Alan Joyce said.  



Fleet changes: What lies ahead? 


Currently, the airline group has a total of 344 aircraft in its fleet with an average age of 14.7 years old, according to Planespotters.net. The group’s fleet mainly consists of Airbus-built aircraft, including 95 Airbus A320s, 28 A330s, 12 A380s, and 11 A321s.  


Qantas also has 80 Boeing 737s, 22 Boeing 787 Dreamliners, 20 Boeing 717s, and one Boeing 767 aircraft.  


The airline has recently reaffirmed news regarding fleet changes that will be made across the airline group. The airline has ordered 12 Airbus A350-1000 aircraft, which will be used for Qantas’ Project Sunrise. In terms of domestic fleet replacement, Qantas has also picked Airbus over Boeing. 


The new single-aisle aircraft order comprises 20 Airbus A220s, and 20 Airbus A321 Extra Long Range (XLR) aircraft. The A320s and A220s will be used by the Qantas Group on domestic services across the country, which can extend to over five hours. Qantas will take delivery of 20 Airbus A321XLRs from 2025 and 20 A220s from 2024. 


“The A320s and A220s will become the backbone of our domestic fleet for the next 20 years, helping to keep this country moving. Their range and economics will make new direct routes possible. The Board’s decision to green light what is the largest aircraft order in Australian aviation is a clear vote of confidence in the future of Qantas,” Joyce said, commenting on the new aircraft order. 


Qantas expects to take delivery of its three remaining Boeing 787 Dreamliners during the second half of FY2023.  


Looking ahead, Qantas’ regional subsidiary Jetstar is on track to take delivery of 18 Airbus A321LRs from July 2022. Additionally, 20 of Jetstar’s existing A320neo orders will be converted to A321XLRs with delivery expected by mid-2024.   


Since the onset of the COVID-19 pandemic, the status of the A380 has often been brought into question. While there was a lot of talk about the Airbus A380, Qantas’ CEO remained confident about the airline’s plans to continue operating the A380.  


Echoing the same sentiment, Sobie said that the remaining A380 aircraft will need to be operated for several years to come because they have only just been retrofitted.  


Will project sunrise ever take-off? 


Project Sunrise is Qantas’ long-desired goal to establish direct flights between Australia and the cities of New York and London.  


While the airline had already completed three test flights and was even considering the purchase of new aircraft before the onset of the COVID-19 pandemic, Qantas was forced to suspend development of Project Sunrise. However, Qantas’ CEO has always remained optimistic about its future.  


Now, as global aviation continues to open up, the airline has finally firmed its order for 12 Airbus A350-1000s. According to the airline’s May 2022 trading update, the long-held plan for flights from Australia to London and New York is expected to start in FY2026. 


Want to find out more about Qantas’ Project Sunrise? Then click the article link below for an in-depth analysis. 


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