Category Archives: QANTAS Group

QANTAS Group outlines its strategy for restarting international flights, will return some A380s

QANTAS Airways Airbus A380-842 VH-OQE (msn 027) LAX (Michael B. Ing). Image: 954807.

QANTAS Group has issued this report:

  • Gradual restart planned around National Cabinet’s phased reopening of international borders.
  • Current date of December 2021 remains in reach, based on pace of vaccine rollout.
  • Plans remain dependent on Government decisions in coming months, including future quarantine requirements.
  • Destinations with high vaccination rates are initial focus, including North America, UK, Singapore, Japan.
  • Early return of five A380s to meet high demand to Los Angeles and London from mid-2022.
  • Total of 10 A380s with upgraded cabins to return to service; two to be retired.

The Qantas Group has provided more detail on preparations for restarting its international flights, with plans linked to the vaccine rollout in Australia and key overseas markets.

On current projections Australia is expected to reach National Cabinet’s ‘Phase C’ vaccination threshold of 80 per cent in December 2021, which would trigger the gradual reopening of international borders.

Similarly, key markets like the UK, North America and parts of Asia have high and increasing levels of vaccination. This makes them highly likely to be classed as low risk countries for vaccinated travelers to visit and return from under reduced quarantine requirements, pending decisions by the Australian Government and entry policies of other countries.

This creates a range of potential travel options that Qantas and Jetstar are now preparing for. While COVID has shown that circumstances can change unexpectedly, the long lead times for international readiness means the Group needs to make some reasonable assumptions based on the latest data to make sure it can offer flights to customers as soon as they become feasible.

Flights to destinations that still have low vaccine rates and high levels of COVID infection will now be pushed out from December 2021 until April 2022 – including Bali, Jakarta, Manila, Bangkok, Phuket, Ho Chi Minh City and Johannesburg. Levels of travel demand – and therefore, capacity levels – will hinge largely on government decisions on alternative requirements to mandatory hotel isolation for fully vaccinated travelers.

Assuming current projections hold and the 80 per cent vaccine threshold is met in December, Qantas and Jetstar plan to trigger a gradual restart as outlined below. If those assumptions change or dates move, the restart plans will adjust accordingly.

SUMMARY OF INTERNATIONAL RESTART PLANS

  • From mid-December 2021, flights would start from Australia to COVID-safe destinations, which are likely to include Singapore, the United States, Japan, United Kingdom and Canada using Boeing 787s, Airbus A330s, and 737s and A320s for services to Fiji.
  • Flights between Australia and New Zealand will be on sale for travel from mid-December 2021 on the assumption some or all parts of the two-way bubble will restart.
  • Qantas’ ability to fly non-stop between Australia and London is expected to be in even higher demand post-COVID. The airline is investigating using Darwin as a transit point, which has been Qantas’ main entry for repatriation flights, as an alternative (or in addition) to its existing Perth hub given conservative border policies in Western Australia. Discussions on this option are continuing.
  • Five A380s will return to service ahead of schedule. These would fly between Sydney and LA from July 2022, and between Sydney and London (via Singapore) from November 2022. The A380s work well
    on these long-haul routes when there’s sufficient demand, and the high vaccination rates in both markets would underpin this.
  • Qantas will extend the range of its A330-200 aircraft to operate some trans-Pacific routes such as Brisbane-Los Angeles and Brisbane-San Francisco. This involves some technical changes that are now being finalised with Airbus.
  • Flights to Hong Kong will restart in February and the rest of the Qantas and Jetstar international network is planned to open up from April 2022, with capacity increasing gradually.
  • Qantas to take delivery of three 787-9s (new aircraft that have been in storage with Boeing) during FY23 to operate additional flights to key markets as demand increases.
  • Jetstar to take delivery of its first three Airbus A321neo LR aircraft from early FY23, the extended range of which will free up some of its 787s to be redeployed on other markets.

In total, 10 of Qantas’ A380s with upgraded interiors are expected to return to service by early 2024, with timing dependent on how quickly the market recovers. Two A380s will be retired.

Readiness for international travel to restart is supported by ongoing repatriation and charter flights using A330s and 787s, as well as specific funding from the Australian Government for crew training and engineering work to return idle aircraft to service.

Outlining the restart assumptions as part of the national carrier’s full year results, Qantas Group CEO Alan Joyce said: “The prospect of flying overseas might feel a long way off, especially with New South Wales and Victoria in lockdown, but the current pace of the vaccine rollout means we should have a lot more freedom in a few months’ time.

“It’s obviously up to government exactly how and when our international borders re-open, but with Australia on track to meet the 80 per cent trigger agreed by National Cabinet by the end of the year, we need to plan ahead for what is a complex restart process.

“There’s a lot of work that needs to happen, including training for our people and carefully bringing aircraft back into service. We’re also working to integrate the IATA travel pass into our systems to help our customers prove their vaccine status and cross borders.

“We can adjust our plans if the circumstances change, which we’ve already had to do several times during this pandemic. Some people might say we’re being too optimistic, but based on the pace of the vaccine rollout, this is within reach and we want to make sure we’re ready,” added Mr Joyce.

Qantas has recently extended its Fly Flexible policy, offering customers who book international flights before 28 February 2022 with unlimited ‘fee free’ date changes when travelling before 31 December 2022. (A fare difference may apply).

Qantas has also extended credit vouchers for bookings made on or before 30 September 2021 to enable travel until 31 December 2023. Jetstar customers issued with a voucher due to COVID-19 disruptions are able to use their voucher to book flights until at least 31 December 2022, for flights up to the end of 2023.

International flights remain subject to Government and Regulatory approval.

NATIONAL CABINET ‘PHASE C’ REOPENING PLAN

  • Triggered when vaccine rate among eligible Australians reaches 80 per cent
  • Highly targeted lockdowns only
  • No caps on returning vaccinated Australians
  • Lift all restrictions on outbound travel for vaccinated Australians
  • Extend travel bubble for unrestricted travel to new candidate countries
  • Gradual reopening of inward and outward international travel with safe countries and proportionate quarantine and reduced requirements for fully vaccinated inbound travelers

Top Copyright Photo: QANTAS Airways Airbus A380-842 VH-OQE (msn 027) LAX (Michael B. Ing). Image: 954807.

QANTAS Airways aircraft slide show:

QANTAS Group posts significant loss from full year of COVID

QANTAS Group has issued this financial report:

  • Underlying Loss Before Tax: $1.83 billion
  • Statutory Loss Before Tax: $2.35 billion
  • $12 billion revenue impact from COVID-19 crisis in FY21
  • Net debt reduced in 2H21 to $5.9 billion
  • Statutory Net Free Cash flow of $267 million in 2H21
  • Restructuring program ahead of target, delivering $650 million in year one
  • Total liquidity of $3.8 billion, providing buffer against uncertainty
  • 95 per cent of domestic flying cash positive
  • Record performance by Qantas Freight mostly offsetting cost of idling international operations
  • Continued strong cash generation, growth in members at Qantas Loyalty
  • Updated plan for restart of international services from end-2021
  • Ongoing flexibility for customers in response to booking uncertainty

The Qantas Group has posted a substantial full year loss as a result of the COVID crisis – but has started FY22 in a fundamentally better position to deal with uncertainty and manage its recovery compared with 12 months ago.

Total revenue loss from COVID reached $16 billion as the full year impact of minimal international travel and multiple waves of domestic border restrictions continued to hit travel demand.

The Group’s Underlying PBT loss was $1.83 billion. The statutory loss before tax – which includes one-off costs such as redundancies and aircraft write downs – was $2.35 billion. Underlying EBITDA was $410 million, in line with guidance provided in May.

Periods of open domestic borders in the second half saw significant cash generation by Qantas and Jetstar, which helped the Group to reduce net debt from $6.4 billion in February 2021 down to $5.9 billion by the end of June. Throughout the year, cash flow was underpinned by continued strong performance by Qantas Loyalty and significantly higher international yields for Qantas Freight.

As well as delivering an essential service under very challenging circumstances, the Group made significant progress towards its recovery program. Planned rightsizing is largely complete and much restructuring has been implemented. Central to these changes has been the ability to better manage costs in the face of sudden border closures. Cost benefits from the recovery program were ahead of expectations for FY21 at $650 million.

GROUP DOMESTIC

Qantas and Jetstar’s combined Underlying EBITDA from domestic flying was $304 million, falling to an Underlying EBIT loss of $669 million after non-cash depreciation and amortization.

The Group’s domestic capacity fell as low as 19 per cent in July 2020 before steadily recovering and then peaking at 92 per cent in May 2021, until outbreaks of the Delta variant triggered a series of lockdowns.

Demand proved resilient throughout the year, with quick uptake in bookings when domestic borders re-opened. The Group has announced 46 new domestic routes since the start of the pandemic, many to regional destinations, in response to a boom in leisure travel driven largely by the closure of international borders. Corporate travel demand had recovered to around 75 per cent of pre-COVID levels in May[1] and Qantas won an additional 34 major accounts across the year. Demand from business, along with leisure travel, is expected to bounce back strongly once lockdowns end.

To better meet this demand, Jetstar is bringing in idle Airbus A320 aircraft from Asia and QantasLink accessed capacity via Alliance Airlines’ Embraer E190 aircraft. Going forward, this will help the Group exceed its pre-COVID capacity and market share as restrictions are removed.

GROUP INTERNATIONAL AND FREIGHT

Group International (including Freight) posted an Underlying EBITDA loss of $157 million, increasing to an Underlying EBIT loss of $1.0 billion after depreciation and amortization.

Qantas and Jetstar’s international flying remained largely grounded for most of FY21 due to the continued closure of Australia’s borders. A travel bubble between Australia and New Zealand saw some flying return but ongoing outbreaks meant this corridor was heavily restricted at various stages; Qantas’ capacity reached an average of 40 per cent of pre-COVID levels during quarter four.

Since the start of the pandemic the Group has operated almost 400 flights repatriating Australians and maintaining critical links to the Pacific and Timor-Leste on behalf of the Australian Government, as well as freight missions to key export markets, with its Airbus A330 and Boeing 787 aircraft. These flights are continuing into FY22 and, together with specific government funding for crew training and engineering support, assist with readiness for regular international travel.

Jetstar airlines in Asia, which are based in Singapore and Japan, continued to suffer from minimal travel demand and incurred losses.

Demand for air cargo capacity remained extremely strong through FY21 due to a surge in online shopping in the Australian market and the belly space lost due to the cancellation of most international passenger flights. Qantas Freight was able to capitalize on this demand, delivering a record profit that significantly offset the costs of the Group’s grounded international operations.

QANTAS LOYALTY

Qantas Loyalty continued to perform well, generating over $1 billion in gross cash and achieving record member satisfaction.

Underlying EBIT was $272 million despite a full year of COVID-related travel restrictions. Earnings in the second half were higher than the first half of FY21 and higher than the second half of FY20.

While opportunities to redeem Qantas Points in the air were limited, there was extremely strong demand when borders did open. Between January and lockdowns in June, redemption levels on domestic flights were 30 per cent above pre-COVID levels.

Members remained highly engaged, earning and redeeming large volumes of points on the ground. Spending on credit cards linked to Qantas Points returned to pre-COVID levels in the fourth quarter and over 500,000 members have now earned points through the partnership with bp Australia. There were record levels of points redeemed via Qantas Wine and the Qantas Store, in line with broader consumer trends.

In a year with minimal air travel, the total number of Frequent Flyer members grew by almost 200,000 to reach 13.6 million. The Qantas Insurance portfolio also continued to grow.

SUPPORTING OUR CUSTOMERS

A number of initiatives have been introduced to make travel easier and safer for customers in the midst of the COVID crisis, including:

  • Extending Frequent Flyers status and offering status match to high-tier members of other airline programs.
  • Offering unlimited date changes on all Qantas domestic and international fares through to at least February 2022.
  • Increasing the number of reward seats available on domestic, Trans-Tasman and international flights by up to 50 per cent, providing members with more opportunities to use their points to travel when borders are open.
  • Practical support of the national COVID-19 vaccine rollout to help create a safer travel experience, including plans to make vaccination a requirement for all Qantas Group employees and offering rewards to Frequent Flyers who are fully vaccinated. The COVID-safe Fly Well and Work Well programs remain in place.

FINANCIAL FRAMEWORK

The Qantas Group remains one of only seven airlines in the world to retain an investment grade credit rating[2] throughout the pandemic. Its focus remains on cost control and cash generation to enable continued debt reduction back to its target range.

As at 30 June 2021, the Group had total liquidity of $3.8 billion – made up of $2.2 billion in cash plus committed undrawn facilities of $1.6 billion. Major cash outflows associated with redundancies, refunds and delayed supplier payments are largely complete. The Group has more than $2.5 billion in unencumbered assets.

Net capital expenditure was $693 million, mostly for maintenance on the Group’s fleet.

An Expression of Interest process was launched in July 2021 to sell up to 14 hectares of under-developed industrial land in Mascot, which, if sold, could unlock several hundred million dollars to further assist with
debt reduction.

RECOVERY PROGRAM

The Group’s COVID recovery plan targets at least $1 billion in permanent annual savings from FY23 onwards.Progress is ahead of schedule, with $650 million in benefits delivered in FY21; this is targeted to increase to $850 million by the end of FY22.

A total of 9,400 people have now left the Qantas Group – an increase on the prior estimate of 8,500 largely due to offshore job losses at airports and sales offices, some automation and an increase in voluntary redundancies.

Approximately 6,000 employees associated with international flying remain stood down due to the closure of Australia’s external border, while an additional 2,500 employees are stood down as a result of domestic restrictions. Federal Government income support is available to Australian-based employees during this acutely challenging time.

CEO COMMENTS

Qantas Group CEO Alan Joyce said: “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.

“It comes on top of the significant loss we reported last year and the travel restrictions we’ve seen in the past few months. By the end of this calendar year, it’s likely COVID will cost us more than $20 billion in revenue.

“We’ve had to make a lot of big and difficult structural changes to deal with this crisis, and that phase is mostly behind us. As a result we’re geared to recover quickly, in-line with a national vaccine rollout that is speeding up.

“Things remain tough, especially for thousands of our people waiting to return to their jobs when borders open and hopefully stay open. Our focus is getting them back to work as soon as possible, which is why we were ramping up our flying and adding new destinations before the most recent lockdowns.

“Despite the uncertainty that’s still in front of us, we’re in a far better position to manage it than this time last year. We’re able to move quickly when borders open and close. We’re a leaner and more efficient organisation. And our requirement for all employees to be vaccinated will create a safer environment for our people and customers.

“When Australia reaches those critical vaccination targets later this year and the likelihood of future lockdowns and border closures reduces, we expect to see a surge in domestic travel demand and a gradual return of international travel.

“I’d like to specifically recognise everyone across this company, for dealing with a huge amount of upheaval due to this crisis and showing enormous commitment and professionalism in the process. Our people maintained an absolute focus on safety and on serving our customers, who have likewise been extremely understanding as we’ve all gone through this difficult period.”

FOCUS ON SUSTAINABILITY

The Qantas Group has previously announced clear and substantial sustainability goals, including capping its total emissions at 2019 levels, investing in a local Sustainable Aviation Fuel industry and reaching zero net emissions by 2050. The pandemic has slowed progress but the Group remains committed to reaching these targets, and has today announced a new Group Management Committee (GMC) position to drive this.

Current Group Executive, Andrew Parker, will become the Chief Sustainability Officer for the Qantas Group, having led these efforts since 2017 through his existing portfolio of Government, Industry, International and Sustainability.

As part of this change, the Group’s Chief Corporate Affairs Officer, Andrew McGinnes, will take on responsibility for Government Relations in addition to his existing responsibilities and become a permanent member of GMC as Group Executive, Corporate Affairs.

OUTLOOK

Recent outbreaks and associated domestic and trans-Tasman border closures are expected to have an impact in the order of $1.4 billion on the Group’s Underlying EBITDA in the first half of FY22. This estimate assumes borders in Victoria and New South Wales re-open in early December 2021. If borders open earlier and flying returns more quickly, capacity can be adjusted accordingly.

Unfortunately, the extended border closures will also extend the stand downs of domestic crew and airport staff beyond the eight weeks previously announced – however, no job losses are expected.

Vaccination rates are expected to reach 70 per cent of the eligible population during November, enabling domestic lockdowns and border restrictions to be steadily eased.

The Group’s liquidity, strong position in the domestic market and progress on restructuring gives confidence that the overall recovery plan remains on track despite these significant setbacks.

Key assumptions for FY22 are[3]:

  • Net debt expected to be in target range by end of FY22.
  • Group Domestic capacity expected to increase from 38 per cent in Q1 to 53 per cent of pre-COVID capacity in Q2 and rise to ~110 per cent in 2H22.
  • International border closures and quarantine restrictions expected to ease once 80 per cent of eligible Australians are vaccinated from December 2021.
  • Qantas International flying in 1H22 expected to be at approximately 15 per cent of pre-COVID levels (through government-sponsored freight services and repatriation flights) on a block hour basis.
  • Once Australia’s borders start to reopen, Group International capacity is expected be 30 to 40 per cent in Q3 and 50 to 70 per cent in Q4 compared with pre-COVID levels on an ASK basis.
  • Recovery plan expected to deliver additional $200 million of cost benefits in FY22.
  • Continued strong cash contribution from Qantas Loyalty, with plans to offer more ways to earn points and status credits on the ground.
  • Domestic freight demand expected to remain strong; international freight belly space expected to be constrained until international capacity stabilises.

[1] Based on May weekly intakes.

[2] Investment grade credit rating issued by either Moody’s or S&P.

[3] Please see Investor Presentation for more detail on assumptions.

QANTAS rewards its vaccinated frequent flyers

QANTAS Airways and the QANTAS Group made this announcement:

  • A year’s worth of free flights, Accor hotel stays and bp fuel up for grabs*
  • Free Qantas Points, Status Credits or $20 flight discount for fully vaccinated Australians
  • Qantas teams up with Australian singer Tones And I to launch TVC to ‘Be Rewarded’

The Qantas Group is launching its reward campaign for COVID-19 vaccinated Australians to recognize their role in helping the country get out of lockdown.

From tomorrow, fully vaccinated Australian-based Frequent Flyers who are 18 and over will be able to claim their reward through the Qantas App by choosing one of three options:

  • 1000 Qantas points
  • 15 status credits (which help Frequent Flyers move up between Silver, Gold and Platinum tiers)
  • $20 flight discount for Qantas or Jetstar

Members will then be automatically entered into a mega prize draw to win a year’s worth of flights, accommodation and fuel.

Ten mega prizes will be up for grabs with a winner selected from each state and territory and two mega prize winners as part of a national TV campaign.

Winners of ten mega prizes will receive a year’s worth of flights to take off to more than 60 destinations around Australia, with free accommodation across 345 Accor hotels, resorts and apartments (including Sofitel, Pullman, Peppers, Mantra, Mercure, Mövenpick, Novotel and Ibis) and top up their cars with free fuel from any of bp’s 1,400 service stations across the country.

Winners will also be able to take off to any Qantas and Jetstar international destination when borders start to open.

Qantas Group CEO Alan Joyce said the vaccine rollout was critical for protecting public health and key to breaking the cycle of lockdowns.

“Getting vaccinated is an important step that every Australian can take that brings us that little bit closer to life as we knew it.

“As the national carrier, we want to recognize those who have made the effort to protect themselves and the community.

“This is one of the biggest giveaways we’ve ever done. The impact of the pandemic on the travel industry and our own Qantas Group team members means we have a clear vested interest in the success of the vaccine rollout.

“Our crews can’t wait to get back to reuniting family and friends, taking people on holiday and putting some energy back into the whole tourism industry. For us, getting the vaccine rate up to 70 and 80 per cent means thousands of people can go back to work.

“With the Federal Government’s vaccine program ramping up across the country, now is the ideal time to say thank you to Australians for stepping up and protecting themselves and others.”

Australians can claim their points, status credits or flight discounts and be automatically entered in the mega prize draw by downloading the Qantas App (via the App Store or through Google Play), using their Medicare app to access and upload their COVID-19 digital vaccination certificate and selecting their reward choice.  Vaccination certificate information will be deleted upon verification.

Australian singer Tones And I made an exclusive rendition of her hit single “Fly Away” for Qantas’ ‘Be Rewarded’ campaign. The campaign will run across TV, digital, outdoor, print and radio thanks to media support.

 

QANTAS Group to require employees to be vaccinated against COVID-19

 

 

The QANTAS Group will require all employees to be fully vaccinated against COVID-19 as part of the national carrier’s commitment to safety.

Frontline employees – including cabin crew, pilots and airport workers – will need to be fully vaccinated by 15 November 2021 and the remainder of employees by 31 March 2022. There will be exemptions for those who are unable for documented medical reasons to be vaccinated, which is expected to be very rare.

The policy follows consultation with Qantas and Jetstar employees including a survey sent to 22,000 people to seek their views on vaccination. The 12,000 responses received makes it one of the biggest single surveys on this topic in Australia. The results showed that of those who responded:

  • 89 per cent had already been vaccinated or are planning to be.
  • 4 per cent were unwilling or unable to get the jab.
  • Around three-quarters think it should be a requirement for all employees to be vaccinated and would be concerned if other employees in the workplace weren’t vaccinated.

Thousands of aviation workers supporting international flights in New South Wales, South Australia and New Zealand are already required to be vaccinated by those jurisdictions. Multiple airlines around the world have also made it a requirement.

Announcing the policy, Qantas Group CEO Alan Joyce said: “Having a fully vaccinated workforce will safeguard our people against the virus but also protect our customers and the communities we fly to.

“One crew member can fly into multiple cities and come into contact with thousands of people in a single day. Making sure they are vaccinated given the potential of this virus to spread is so important and I think it’s the kind of safety leadership people would expect from us.

“We provide an essential service, so this will help guard against the disruptions that can be caused by just one positive COVID-case shutting down a freight facility or airport terminal,” Mr Joyce said.

“It’s clear that vaccinations are the only way to end the cycle of lockdowns and border closures and for a lot of Qantas and Jetstar employees that means getting back to work again. This was one of the largest responses to any survey we’ve conducted, even with thousands of our people stood down, which shows just how important this is for them.

“Since vaccines became available, we’ve strongly encouraged all of our people to get the jab and are offering paid time off to get it done. We were really pleased to see from the survey that more than three quarters of those who responded have already rolled up their sleeve at least once and 60 per cent have had both jabs.

“Many of our people said they would feel concerned about working with unvaccinated colleagues, which is something that many workplaces across the country are grappling with.

“We understand there will be a very small number of people who decide not to get the vaccine, and that’s their right, but it’s our responsibility to provide the safest possible environment for our employees and for our customers,” added Mr Joyce.

Further discussions will take place with employees, their health and safety representatives and unions over the coming weeks on the detail of the policy, including how medical exemptions will be applied.

In a separate survey of more than 1000 Qantas customers, 92 per cent said they expect Qantas crew to be fully vaccinated.

QANTAS GROUP EMPLOYEE SURVEY ON VACCINATIONS

Almost 12,000 responses to survey, representing 60 per cent of Australian-based Qantas Group employees.

  • 89 per cent have had at least one vaccine dose or plan to be vaccinated
    • 77 per cent have had at least one dose
    • 60 per cent are fully vaccinated
    • 12 per cent are booked or planning to book
  • 7 per cent undecided or preferred not to say
  • 4 per cent are unwilling or unable to get the vaccine

QANTAS Group temporarily lays off 2,500 crew members due to COVID-19

QANTAS Group made this announcement:

Around 2,500 frontline Qantas and Jetstar employees will be stood down for an estimated two months in response to ongoing COVID outbreaks.

The stand down is a temporary measure to deal with a significant drop in flying caused by COVID restrictions in Greater Sydney in particular and the knock-on border closures in all other states and territories. No job losses are expected.

Today’s decision will directly impact domestic pilots, cabin crew and airport workers, mostly in New South Wales but also in other states given the nature of airline networks. Employees will be given two weeks’ notice before the stand down takes effect, with pay continuing until mid-August.

Income support in the form of government disaster payments will be key to helping eligible employees get through this challenging period and the Qantas Group welcomes the targeted Federal Government support offered for those stood down outside of declared hotspots and to retain domestic aviation capability.

Qantas Group CEO Alan Joyce said the difficult decision to trigger stand downs reflected the reality confronting many businesses operating in New South Wales.

“This is clearly the last thing we want to do, but we’re now faced with an extended period of reduced flying and that means no work for a number of our people.

“We’ve absorbed a significant amount of cost since these recent lockdowns started and continued paying our people their full rosters despite thousands of cancelled flights.

“Qantas and Jetstar have gone from operating almost 100 per cent of their usual domestic flying[1] in May to less than 40 per cent in July because of lockdowns in three states.

“Hopefully, once other states open back up to South Australia and Victoria in the next week or so, and the current outbreak in Brisbane is brought under control, our domestic flying will come back to around 50 to 60 per cent of normal levels.

“Based on current case numbers, it’s reasonable to assume that Sydney’s borders will be closed for at least another two months. We know it will take a few weeks once the outbreak is under control before other states open to New South Wales and normal travel can resume.

“Fortunately, we know that once borders do reopen, travel is at the top of people’s list and flying tends to come back quickly, so we can get our employees back to work.

“This is extremely challenging for the 2,500 of our people directly impacted, but it’s also very different from this time last year when we had more than 20,000 employees stood down and most of our aircraft in hibernation for months on end.

“The vaccine rollout means the end is in sight and the concept of lockdowns will be a thing of the past. Australia just needs more people rolling up their sleeves as more vaccine arrives.

“The challenge around opening international borders remains. There are still several thousand Qantas and Jetstar crew who normally fly internationally and who have been on long periods of stand down since the pandemic began. Higher vaccination rates are also key to being able to fly overseas again, and finally getting all our people back to work,” added Mr Joyce.

[1] Based on FY19 capacity levels.

QANTAS Group reports its yearly profit was down 91%

QANTAS Group made this announcement:

  • Underlying Profit Before Tax: $124 million (down 91%)
  • Statutory Loss Before Tax: $2.7 billion (majority of which is non-cash, including aircraft
    write downs)
  • $4 billion revenue impact from COVID crisis in 2H20
  • Operating cash flow: $1.1 billion
  • Liquidity of $4.5 billion providing considerable buffer to manage uncertainty
  • Significant progress on initial steps of three-year recovery plan

 

In what has been the most challenging period in its long history, the Qantas Group reported a $124 million Underlying Profit Before Tax for the 12 months ended 30 June 2020, down 91 per cent on the prior year.

This reflects a strong first half of the year ($771 million Underlying Profit Before Tax) followed by a near total collapse in travel demand and a $4 billion drop in revenue in the second half[1] due to the COVID-19 crisis and associated border restrictions.

Fast action to radically cut costs and place much of the flying business into a form of hibernation helped minimise the financial impact from this extraordinary sequence of events. From April to end of June, Group revenue fell 82 per cent while cash costs were reduced by 75 per cent, helping to limit the drop in Underlying Profit Before Tax in 2H20 to $1.2 billion[2].

At the statutory level, the Group reported a $2.7 billion Loss Before Tax –– due mostly to a $1.4 billion non-cash write down of assets including the A380 fleet and $642 million in one-off redundancy and other costs as part of restructuring the business for recovery.

Despite significant uncertainty across most markets, the Group remains well positioned to take advantage of the eventual return of domestic and, ultimately, international travel demand. In the meantime, Qantas Freight and Qantas Loyalty continue to generate significant cashflow and charter operations for the resources sector are performing strongly.

 

CEO COMMENTARY

Qantas Group CEO Alan Joyce said the second half of FY20 was the toughest set of conditions the national carrier had faced in its 100 years – but that it had the resilience to deal with them.

“The impact of COVID on all airlines is clear. It’s devastating and it will be a question of survival for many. What makes Qantas different is that we entered this crisis with a strong balance sheet and we moved fast to put ourselves in a good position to wait for the recovery.

“We’ve had to make some very tough decisions in the past few months to guarantee our future. At least 6,000 of our people will leave the business through no fault of their own, and thousands more will be stood down for a long time.

“Recovery will take time and it will be choppy. We’ve already had setbacks with borders opening and then closing again. But we know that travel is at the top of people’s wish lists and that demand will return as soon as restrictions lift. That means we can get more of our people back to work.

“COVID is reshaping the competitive landscape and that presents a mix of challenges and opportunities for us. Most airlines will come through this crisis a lot leaner, which means we have to reinvent how we run parts of our business to succeed in a changed market.”

Mr Joyce said the FY20 result showed how the COVID crisis had derailed what would have been a strong financial performance.

“We were on track for another profit above $1 billion when this crisis struck. The fact that we still delivered a full year underlying profit shows how quickly we adjusted when revenue collapsed.

“Qantas Loyalty’s profit was down less than 10 per cent and member satisfaction increased in the fourth quarter, which shows the strength of that business. Qantas Freight has been a major beneficiary of the shift to people shopping online and our charter flying for resources companies is strong.

“COVID will continue to have a huge impact on our business and we’re expecting a significant underlying loss in FY21.

“Looking further ahead, we’re in a good position to ride out this storm and make the most of the recovery. Our market position is set to strengthen as the only Australian airline with a full service and low fares domestic offering as well as long haul international services,” added Mr Joyce.

 

GROUP DOMESTIC

A very strong performance by Group Domestic in the first half more than offset the 50 per cent drop in revenue in the second half caused by COVID-related restrictions.

Qantas Domestic achieved EBIT of $173 million while Jetstar’s domestic flying achieved EBIT of $112 million, including absorbing a $33 million impact of industrial action over the peak summer period.

Both Qantas and Jetstar demonstrated high levels of adaptability in responding to cascading domestic border restrictions – cutting costs and maximising limited revenue opportunities. This included launching new Qantas routes such as Sydney to Ballina and Orange, and redeploying A320s to meet resources sector demand in Western Australia.

A three-day Jetstar sale in June saw some 150,000 fares sold, reaching a record rate of 220 bookings per minute – demonstrating the latent demand for travel when borders do re-open.

As a result of the Group’s main domestic competitor significantly reducing its fleet and closing its low-cost carrier, the Group expects its market share to naturally grow from around 60 per cent to up to 70 per cent as the market recovers.

 

GROUP INTERNATIONAL

Qantas International made a $56 million profit for the year, driven largely by a record performance by Qantas Freight and a huge increase in e-commerce.

The Group’s regular scheduled international flights effectively ceased in April, replaced by over 100 services operated by Qantas on behalf of the Federal Government to cities including Hong Kong, London, Los Angles, Lima, Buenos Aires and Mumbai.

Jetstar’s international businesses moved into losses driven by border closures. Domestic flying in New Zealand was planning a return to near-full capacity by end-August but remains flexible given changing restrictions.

Jetstar Asia in Singapore is reducing its fleet and workforce by more than 25 per cent. Jetstar Japan was impacted by local lockdowns but resumed all domestic routes in July and is planning to operate 75 per cent of pre-COVID capacity in August.

In June, the Group announced its plans to exit Jetstar Pacific in Vietnam, of which it is a 30 per cent shareholder.

 

QANTAS LOYALTY

Qantas Loyalty achieved an underlying EBIT of $341 million – the largest single positive contribution to the Group’s FY20 profit and only 9 per cent lower than its result last year. The main reasons for this decline were lower earnings from travel-related products and a softening in consumer spending on credit cards.

Total Frequent Flyer membership increased by 4 per cent and membership of the Qantas Business Rewards program (aimed at small enterprises) increased by 20 per cent.

Despite limited opportunities to redeem points for travel, Frequent Flyer member satisfaction set a quarterly record in Q4. This is supported by engagement initiatives including automatic extension of tier status for 12 months; more opportunities to earn points on the ground, including with BP fuel (with more than 500,000 signing up for this part of the program) and Afterpay (with 55,000 members signing up to earn in the first four weeks); and a significant increase in reward seats on domestic flights.

Other new businesses, including retail, health insurance and car insurance, continued to diversify Loyalty’s earnings.

 

GOVERNMENT SUPPORT

The Group acknowledges the significant industry assistance provided by the Federal Government in response to COVID, reflecting the importance of aviation to the broader economy.

As one of the most heavily impacted companies, the Qantas Group collected $267 million in JobKeeper payments, the majority of which was paid directly to employees on stand down and the rest used to subsidise wages of those still working.

Qantas and Jetstar operated a series of domestic, regional and international flights on behalf of the Federal Government, as well as some freight services, to maintain critical links that had been made commercially unviable by travel restrictions. These flights were operated on a fee-for-service basis, with fare revenue offsetting the cost to the taxpayer.

To 30 June 2020, the total gross benefit of Government support was $515 million and the net benefit (after costs for flights operated) was $15 million.

The nature of ongoing industry assistance means the level of support received in FY21 will depend on the amount of flying activity.

 

SUPPORTING OUR CUSTOMERS

A number of customer initiatives were introduced during the year, including:

  • Launched the Fly Well program with range of measures (including masks, hand sanitising stations, changes to inflight service) to ensure a safe travel environment and give extra peace of mind.
  • Offered customers with new bookings the option to move flights with no change or cancellation fees.
  • Significantly increased flexibility for travel credits as well as providing refunds.

 

SUPPORTING OUR PEOPLE

In recognition of the significant impact of the COVID crisis on its people, the Group has put a variety of support mechanisms in place, including:

  • Working with other companies to connect people on stand down with secondary employment opportunities.
  • Offering a suite of support mechanisms, including financial counselling and psychological support.
  • Running weekly virtual town hall meetings to give updates and answer live questions.
  • Offering voluntary (rather than compulsory) redundancy wherever possible and providing large severance payouts for long-serving employees in particular.

 

FINANCIAL FRAMEWORK

The Group’s available liquidity was $4.5 billion at 30 June 2020, including $1 billion of undrawn facilities.

The Group successfully raised more than $1.4 billion through a fully underwritten institutional placement and retail Share Purchase Plan.

As at 30 June 2020, net debt was $4.7 billion and remains at the lower end of the target range. The Group has no major debt maturities until June 2021 and no financial covenants on debt.

Planned net capital expenditure was reduced by $400 million in the second half for a total of $1.6 billion for FY20. Significant further reductions are forecast in FY21 with the deferral of 787-9 and A321neo deliveries to meet the Group’s requirements.

 

FUEL HEDGING

The Group’s fuel consumption was fully hedged for the second half of FY20 and 90 per cent hedged for the first half of FY21 with significant participation to falling prices. Given the significant decline in flying activity from April 2020 and the anticipated decline in fuel consumption in FY21, the Group has recognised $571 million of de-designated hedge losses in the FY20 statutory result.

 

UPDATE ON RECOVERY PLAN

Implementation of the three-year recovery plan, announced in June 2020, is well underway. The plan will create a stronger platform for future profitability, long-term shareholder value and preserve as many jobs as possible.

Several key parts of the plan are complete or in progress, including:

  • Around 4,000 of at least 6,000 redundancies expected to be finalised by end-September 2020, with continued union consultation.
  • Ongoing stand down of around 20,000 employees, enabling retention of core skills until work returns.
  • Early retirement of the Boeing 747 fleet and more than 100 aircraft now in storage (in a state that significantly reduces the need for ongoing maintenance).
  • Raised $1.4 billion in equity in addition to the $1.75 billion of long term debt funding secured during the second half of FY20.

The plan targets $15 billion in benefits over three years from reduced activity, with $1 billion per annum in ongoing cost savings from FY23 through efficiency gains across the Group.

Recent developments in Victoria and the reimposition of some border restrictions in other parts of Australia are not expected to have a material impact on the delivery of the three-year plan.

 

OUTLOOK

The Group’s recovery plan allows for a high level of flexibility given uncertainty on border restrictions and travel demand, while also acknowledging the critical nature of air transport to the Australian economy. Key assumptions and indicators at this stage include:

Group Domestic

  • Given current border restrictions, 20 per cent of pre-COVID Group Domestic capacity is scheduled for August.
  • Recent sales activity shows high levels of latent travel demand when restrictions are eased.

Group International

  • International network unlikely to restart before July 2021; possibly earlier for Trans Tasman.

Loyalty

  • Expected to continue strong cash flow contribution in FY21.
  • Recovery in domestic travel an opportunity to increase reward seats and maintain member engagement.
  • Actively growing opportunity to earn points on the ground, but this is linked to broader consumer confidence levels.

Qantas Freight

  • Domestic demand expected to remain strong due to growth in e-commerce.
  • Strong international freight demand expected to continue but not at peak levels seen in 4Q20.

 

QANTAS Group announces major changes

QANTAS Group has made this announcement:

  • Three year strategy to guide recovery and return to growth in changed market.
  • Costs reduced by $15 billion during three year period of lower activity; $1 billion in ongoing cost savings per annum from FY23.
  • Around 100 aircraft to be grounded for up to 12 months; some for longer.
  • Job losses and extended stand downs to manage long period of reduced flying (especially internationally).
  • Equity raising of up to $1.9 billion to accelerate recovery and position for new opportunities.
    • Approximately $1.4 billion fully underwritten institutional Placement and up to $500 million non-underwritten Share Purchase Plan[1].
    • Issue price for new shares under the Placement of $3.65.
    • Pro forma liquidity of $4.6 billion following completion of the underwritten Placement and before the SPP proceeds, with $3.6 billion of cash and $1.0 billion of undrawn facilities.

 

The Qantas Group has announced a three year plan to accelerate its recovery from the COVID-19 crisis and create a stronger platform for future profitability, long-term shareholder value and to preserve as many jobs as possible.

The immediate focus of the plan is to:

  • Rightsize the Group’s workforce, fleet and other costs according to demand projections, with the ability to scale up as flying returns.
  • Restructure to deliver ongoing cost savings and efficiencies across the Group’s operations in a changed market.
  • Recapitalise through an equity raising to strengthen the Group’s financial resilience for recovery and the opportunities it presents.

Subsequent phases of the plan focus on the increasing ramp up of flying and pursuing new opportunities – including the airline’s ambition for more non-stop international flights.

The plan is designed to account for the uncertainty associated with the crisis, preserving as many key assets and skills as the Group can reasonably carry to support the eventual recovery. COVID represents the biggest challenge ever faced by global aviation and the Group’s response to the crisis is scaled accordingly. This unfortunately means a large number of job losses across Qantas and Jetstar.

The plan targets benefits of $15 billion over three years, in line with reduced flying activity including fuel consumption savings, and delivering $1 billion per annum in ongoing cost savings from FY23 through productivity improvements across the Group. Key actions of the plan include:

  • Reducing the Group’s pre-crisis workforce by at least 6,000 roles across all parts of the business.
  • Continuing the stand down for 15,000 employees, particularly those associated with international operations, until flying returns.
  • Retiring Qantas’ six remaining 747s immediately, six months ahead of schedule.
  • Grounding up to 100 aircraft for up to 12 months (some for longer), including most of the international fleet. The majority are expected to ultimately go back in to service but some leased aircraft may be returned as they fall due.
  • A321neo and 787-9 fleet deliveries have been deferred to meet the Group’s requirements.

The cost of implementing the plan is estimated at $1 billion, with most of this realised during FY21.

CEO COMMENTARY

Announcing the plan Qantas Group CEO Alan Joyce said: “The Qantas Group entered this crisis in a better position than most airlines and we have some of the best prospects for recovery, especially in the domestic market, but it will take years before international flying returns to what it was.

“We have to position ourselves for several years where revenue will be much lower. And that means becoming a smaller airline in the short term.

“Most airlines will have to restructure in order to survive, which also means they’ll come through this leaner and more competitive. For all these reasons, we have to take action now.

“Adapting to this new reality means some very painful decisions. The job losses we’re announcing today are confronting. So is the fact thousands more of our people on stand down will face a long interruption to their airline careers until this work returns.

“What makes this even harder is that right before this crisis hit, we were actively recruiting pilots, cabin crew and ground staff. We’re now facing a sudden reversal of fortune that is no one’s fault, but is very hard to accept.

“This crisis has left us no choice but we’re committed to providing those affected with as much support as we can. That includes preserving as many jobs as possible through stand downs, offering voluntary rather than compulsory redundancies where possible, and providing large severance payouts for long serving employees in particular.

“As we’ve done throughout this crisis, our decisions are based on the facts we have now and the road we see in front of us. Our plan gives us flexibility under a range of scenarios, including a faster rebound or a slower recovery.

“Despite the hard choices we’re making today, we’re fundamentally optimistic about the future. Almost two-thirds of our pre-crisis earnings came from the domestic market, which is likely to recover fastest – particularly as state borders prepare to open. We have the leading full service and low fares airlines in Australia, where distance makes air travel essential, and diversified earnings through Qantas Loyalty.

“We still have big ambitions for long haul international flights, which will have even more potential on the other side of this.

“As a business, recapitalising means we can get ready sooner for new opportunities, returning to profit and building long term shareholder value. As the national carrier, we remain committed to supporting tourism, connecting regional communities and safely flying millions of people every year.”

EQUITY RAISING

The Board has today announced that the Group will seek to raise up to $1.9 billion, comprising of a fully underwritten institutional Placement to raise approximately $1,360 million and a non-underwritten Share Purchase Plan for eligible existing shareholders to participate of up to $500 million[1].

Proceeds from the Equity Raising will be used to accelerate the Group’s recovery, strengthen its balance sheet and position it to capitalise on opportunities aligned with its strategy.

The Placement issue price of $3.65 per share represents a 12.9% discount to the last traded price of $4.19 on 24 June 2020.

The approximately 372.7 million new fully paid ordinary shares issued under the Placement represents a 25% increase to total shares on issue – which itself has decreased by more than a third through share buybacks in recent years.

IMPACT ON OUR PEOPLE

Of the Group’s 29,000 people, around 8,000 are expected to have returned to work by the end of July this year. It’s anticipated that this will increase to around 15,000 by the end of calendar year 2020 in line with the opening up of domestic flying, and increase further during calendar 2021 and 2022 as the international network returns, reaching 21,000 active employees by June 2022.

Redundancies are proposed to manage a surplus of around 6,000 roles, with the temporary surplus of around 15,000 managed through a mix of stand down, annual leave and leave without pay.

Stand-ups will increase as travel restrictions lift and flying returns. This allows the Group to preserve as many jobs as possible for the longer term and respond faster if recovery timelines improve.

In line with its obligations, the Group will consult with relevant unions on the proposed job losses announced today. These span the following areas of Qantas and Jetstar:

  • Non-operational – at least 1,450 job losses, mainly in corporate roles, due to less flying activity.
  • Ground operations – at least 1,500 job losses across airports, baggage handling, fleet presentation and ramp operations due to less flying activity.
  • Cabin crew – at least 1,050 job losses due to early retirement of the 747s and less flying activity. A further 6,900 cabin crew will be on stand down from July 2020 onwards.
  • Engineering – at least 630 job losses due to 747 retirement, less flying activity (particularly of the wide-body fleet) and redistribution of work from Jetstar’s Newcastle base to make better use of existing maintenance capacity in Melbourne.
  • Pilots – at least 220 job losses mostly due to early retirement of the 747s. A further 2,900 pilots will be on stand down from July 2020 onward.

Additional reduction in total roles will result from contractors, particularly in corporate areas such as IT, not returning.

ASSET IMPAIRMENTS

While most of the Group’s long-haul aircraft are expected to steadily return to service over time, there is significant uncertainty as to when flying levels will support its 12 Airbus A380s.  These assets will be idle for the foreseeable future, which represents a significant percentage of their remaining useful life. As a result, the carrying value of the A380 fleet, spare engines and spare parts will be written down to their fair value, resulting in an estimated non-cash impairment charge in the FY20 statutory result. This represents the majority of the asset impairment charge of $1.25–$1.4 billion, outlined in the table below. As a consequence of the writedown, future depreciation expenses will reduce.

FUEL HEDGING

The Group’s fuel was fully hedged for the second half of FY20, and 90% hedged for the first half of FY21.  With the significant decline in flying activity, the Group’s overall capacity flown has resulted in a substantial reduction in fuel consumption from April 2020 and the anticipated decline in consumption to June 2021 will lead to the non-cash recognition of hedge ineffectiveness of $550–$600 million in the FY20 statutory result.

FY20 FINANCIAL PERFORMANCE

After reporting a strong Underlying Profit Before Tax of $771 million in the first half of FY20, the Group saw a significant reduction in revenue during the second half. By taking swift action to reduce its cash burn as travel demand evaporated, the Group expects to report a full year result between breakeven and a small Underlying Profit Before Tax.

Qantas Loyalty is expected to make the largest positive contribution to this result, with only a 5%–10% reduction in earnings compared to FY19 as a result of the impact of COVID on travel related products and credit card spend. The program continues to see strong levels of engagement, with a range of initiatives planned over the next six months to maintain and improve its value to members and partners.

Qantas Freight performed strongly, driven by major increases in ecommerce that are also expected to continue.

The table below reflects the Group’s current expectations of significant items it expects to recognise outside of its Underlying FY20 result.

Items outside of Underlying FY20 1H20 Impact
(previously reported)
Estimated FY20 impact (subject to review and audit processes)
Transformation costs and discretionary bonuses to non-executive employees awarded in prior years $123 million ~$200 million
Recovery plan restructuring costs including redundancies NIL $600-700 million
Asset impairments including the A380 fleet (non-cash) NIL $1,250-1,400 million
Hedge ineffectiveness[2] (non-cash) NIL $550-600 million[3]
Total $123 million ~$2.8 billion

 

CURRENT FINANCIAL POSITION

Following completion of the underwritten Placement, the Group’s available liquidity is expected to be $4.6 billion excluding the SPP proceeds, including a $1 billion undrawn facility. As at 31 May 2020, pro forma net debt is expected to be $4.7 billion with no major debt maturities until June 2021 and no financial covenants on its debt.

CEO TENURE

At the Board’s request, Alan Joyce has agreed to remain Qantas Group CEO as the recovery plan is implemented and through to at least the end of FY23. This will provide the leadership, experience and stability required as the Group navigates this incredibly challenging period.

REVOCATION OF INTERIM DIVIDEND

On 19 March 2020, the Group announced the deferral of its interim dividend due to uncertainty caused by the unfolding coronavirus crisis.

This uncertainty has now crystallised into a significant detrimental impact on the Group’s earnings and cash position. Further, the fully franked nature of the interim dividend was based on franking credits expected from taxable profits in the second half, which will now not materialise.

Accordingly, the Board has decided to revoke the interim dividend, avoiding the outflow of $201 million of cash and helping to maintain strong liquidity in the face of this unprecedented crisis. Decisions on future dividends will continue to be made in-line with the Group’s financial framework.

EQUITY RAISING – TRANSACTION SUMMARY

Placement

The approximately $1,360 million Placement is fully underwritten and will be offered to institutional investors at $3.65 per share (Placement Price), representing a 12.9% discount to the last traded price of $4.19 on Wednesday 24 June 2020. The Placement will result in the issue of 372.7 million new shares (Placement Shares), representing approximately 25.0% of Qantas’ existing shares on issue.

The Placement is being conducted today, Thursday, 25 June 2020, and Qantas’ shares will remain in a trading halt pending completion of the Placement.

The Placement is within Qantas’ placement capacity under the Temporary Extra Placement Capacity Class Waiver Decision (as amended) effective from 23 April 2020, and accordingly no shareholder approval is required in connection with the Placement.

It is intended that eligible existing institutional shareholders who bid for up to their ‘pro-rata’ share of new shares under the Placement will be allocated their full bid, on a best endeavours basis.  For the remaining shares under the Placement, Qantas will seek to prioritise allocations to existing shareholders and then introduce new shareholders, in each case based on factors including likelihood of long term support for the Group, the nature of the investor, support to date and existing holdings (if applicable) and the size and timeliness of bids into the book.

Share Purchase Plan (SPP)

Eligible shareholders in Australia and New Zealand will have the opportunity to apply for up to $30,000 of new fully paid ordinary shares (SPP Shares) free of any brokerage, commission and transaction costs.

The price paid by eligible shareholders for SPP Shares will be the lesser of:

  • the Placement Price; and
  • a 2.5% discount (rounded down to the nearest cent) to the 5-day VWAP of Qantas shares up to, and including, the closing date of the SPP (expected to be 22 July 2020).

Qantas considers that the SPP will cater for the vast majority of its non-institutional shareholders, enabling them to participate and potentially increase their relative percentage holdings in Qantas.

The Qantas Board has determined to cap the size of the SPP at $500 million, in aggregate.

As the SPP is not underwritten, the SPP may raise more or less than this amount. If the SPP raises more than $500 million, Qantas may decide in its absolute discretion to accept applications (in whole or in part) that result in the SPP raising more than $500 million. If Qantas decides to conduct any scale back of applications, for example because the aggregate amount applied for under the SPP exceeds Qantas’ requirements, the scale back will be applied on a pro rata basis to shareholdings of participating eligible shareholders at the record date of the SPP.

Further details of the SPP will be provided to eligible shareholders in due course. A SPP booklet will be sent to eligible shareholders on 2 July 2020. The closing date for applications by eligible shareholders is 22 July 2020.

Eligible shareholders wishing to acquire new shares under the SPP will need to apply in accordance with the instructions in the SPP booklet.

The Placement Shares and SPP shares will rank equally in all respects with Qantas’ existing ordinary shares from the date of allotment.

A timetable in respect to the Placement and SPP is provided at Appendix A.

Under ASX listing rules, Qantas Directors are not entitled to participate in the Placement, but can (and intend to) participate fully in the SPP if they are Australian/New Zealand residents.

QANTAS to sell its minority share of Jetstar Pacific which will become Pacific Airlines

QANTAS Group has confirmed it will sell its 30 percent minority share of Jetstar Pacific Airlines of Vietnam to co-owner Vietnam Airlines

QANTAS wants to focus on its other airlines.

Jetstar Pacific made this announcement:

Vietnam Airlines and QANTAS Group (Australia) have agreed to promote changes to Jetstar Pacific to improve business production and profitability of this low-cost airline, while promoting scale and the brand power of Vietnam Airlines in the domestic market.

Jetstar Pacific will conduct the procedures needed to change the brand name to Pacific Airlines, with a new logo and brand recognition set inspired by Vietnam Airlines’s main color. The time Jetstar Pacific officially operates under new name Pacific Airlines will be based on authorities decision.


Pacific Airlines will also convert booking system from Navitaire to Sabre – Vietnam Airlines system in operation – to synchronize the flight, booking procedures and features for customers with Vietnam Airlines.

After changing the brand name, Vietnam Airlines and Pacific Airlines will continue to create a product series that not only meets the diverse needs of customers from low-to high-end cost segment, but also increases value, benefits for both customers and businesses.

Jetstar Pacific Airlines became the first low-cost airline in Vietnam when it was launched in May 2008. The carrier flies to 16 domestic and international destinations with its fleet of 10 Airbus A320 aircraft.

Jetstar Pacific is owned by two major shareholders. Vietnam Airlines holds 70 percent, and the QANTAS Group holds 30 percent.

Jetstar Pacific Airlines aircraft photo gallery:

QANTAS Airways announces “Fly Well” program

QANTAS Airways has made this announcement:

  • Range of measures introduced to ensure a safe travel environment and give extra peace of mind.
  • Masks on board, hand sanitising stations and enhanced aircraft cleaning among the improvements.
  • More flexibility added to bookings so people can plan with confidence.

Qantas and Jetstar will roll out a series of wellbeing improvements to give peace-of-mind in preparation for domestic travel restrictions easing.

The ‘Fly Well’ program brings together a number of temporary measures already in use by the Qantas Group, including on repatriation flights from virus hot-spots, and represents a combination of best-practice medical advice and feedback from customers.

Rolling out from 12 June, the key measures at each point of the journey will be:


Pre-flight

  • Information sent to all customers before they fly, so they know what to expect.
  • Contactless check-in (via online/app) and self-serve bag drop strongly encouraged, including use of Q Bag Tags.
  • Hand sanitising stations at departure gates.
  • Temporary changes to Qantas Lounges, including increased physical distancing, hand sanitising stations, enhanced disinfection of surfaces and adjustments to food and drink service.
  • Working with airports on other safeguards in the terminal, including regular disinfection of security screening points and installing hygiene screens at airline customer service desks, wherever practical.


On board

  • Masks provided to all passengers on each flight – while not mandatory from a safety point of view, they are recommended to be worn in the interests of everyone’s peace-of-mind.
  • Enhanced cleaning of aircraft with a disinfectant effective against Coronaviruses, with a focus on high contact areas – seats, seatbelts, overhead lockers, air vents and toilets.
  • Sanitising wipes given to all passengers to wipe down seat belts, trays and armrests themselves, if preferred.
  • Simplified service and catering to minimise touchpoints for crew and passengers.
  • Passengers asked to limit movement around cabin, once seated.
  • Sequenced boarding and disembarkation to minimise crowding.

In addition, the air conditioning systems of all Qantas and Jetstar aircraft are already fitted with hospital-grade HEPA filters, which remove 99.9% of all particles including viruses. Air inside the cabin is refreshed on average every five minutes during flight.

All airline employees are required to follow strict personal hygiene protocols, for the benefit of themselves and others.

All passengers are encouraged to download the Australian Government’s COVIDSafe app as part of improving the ability of health authorities to contain the spread of Coronavirus. In-line with public health advice, anyone with cold and flu like symptoms should stay at home.


COMMENTS

Qantas Group CEO Alan Joyce said: “Safety is absolutely core to how we operate and that applies to new challenges like managing the risk of coronavirus so people can fly with confidence.

“From the early rescue flights we operated right into Wuhan and then more recently bringing Australians back from places like the US and Europe, we have a lot of experience at creating a safe cabin environment for passengers and crew.

“We’re relying on the cooperation of passengers to help make these changes work for everyone’s benefit, and we thank them in advance for that. Given the great job Australians have done at flattening the curve, we’re confident they’ll respond positively to these temporary changes to how we fly.

“We’ll continue to work with government and monitor the rollout of these measures closely, which are designed  with safety in mind and help people feel comfortable given the new norms that have emerged in response to the Coronavirus crisis,” added Mr Joyce.

Qantas Group Medical Director, Dr Ian Hosegood, said: “The data shows that actual risk of catching Coronavirus on an aircraft is already extremely low. That’s due to a combination of factors, including the cabin air filtration system, the fact people don’t sit face-to-face and the high backs of aircraft seats acting as a physical barrier. As far as the virus goes, an aircraft cabin is a very different environment to other forms of public transport.”

“Social distancing on an aircraft isn’t practical the way it is on the ground, and given the low transmission risk on board, we don’t believe it’s necessary in order to be safe. The extra measures we’re putting place will reduce the risk even further,” added Dr Hosegood.

The Fly Well program will be reviewed after its first month of operation and shaped by customer feedback and medical advice.


IMPROVED FLEXIBILITY FOR CUSTOMERS

Customer research shows 98 per cent of frequent flyers are planning their next trip once restrictions lift. To help improve flexibility as travel restrictions are steadily adjusted, Qantas and Jetstar are introducing more flexibility from today.

  • Domestic : Customers can book any Qantas or Jetstar Australian domestic flight between 21 May and 30 June 2020, for travel between 12 June and 31 October 2020, and we will waive the change fee one time if you decide to change the date of your travel. Customers will have to cover any fare increase (if relevant) for the new booking.
  • International flight credit extension: Further flexibility has been introduced for international bookings (excluding Trans-Tasman). Customers with an existing Qantas or Jetstar international flight booking, for travel between 1 August and 31 October 2020, who wish to change their plans, can cancel their booking and retain the full value as a flight credit. Flight credits must be requested by 30 June 2020 and are valid for booking and travel across domestic and international services by 31 December 2021. Jetstar credit vouchers allow up to two years to travel from issue date. Customers will have to cover any fare increase (if relevant) for the new booking.

If a flight is cancelled by us, customers will be rebooked on the next available flight at no additional cost. Alternatively, customers can choose a flight credit or a refund.

QANTAS Airways aircraft photo gallery:

QANTAS Group secures $1.05 billion in additional funding, secured by seven Dreamliners

QANTAS Group has made this announcement:

The QANTAS Group has completed a new round of debt funding, securing $1.05 billion in additional liquidity to strengthen its position as it manages through the Coronavirus outbreak.

This debt has been secured against part of the Group’s fleet of unencumbered aircraft[1], which were bought with cash in recent years. The loan has a tenure of up to 10 years at an interest rate of 2.75 percent.

David Gray /Getty Images for Qantas

This funding increases the Group’s available cash balance to $2.95 billion with an additional $1 billion undrawn facility remaining available.

The Group’s net debt position remains at the low end of its target range, at $5.1 billion, with no major debt maturities until June 2021. In line with the rest of the QANTAS debt book, the new funding contains no financial covenants.

With a further $3.5 billion in unencumbered assets, the QANTAS Group retains flexibility to increase its cash balance as a prudent measure in the current climate. As previously announced, various steps have been taken to significantly reduce activity levels and costs given the dramatic revenue impact of the Coronavirus pandemic and the related travel restrictions on Jetstar and Qantas passenger services.

QANTAS Group CEO Alan Joyce said: “Over the past few years we’ve significantly strengthened our balance sheet and we’re now able to draw on that strength under what are exceptional circumstances. Everything we’re doing at the moment is focused on guaranteeing the long term future of the national carrier, including making sure our people have jobs to return to when we have work for them again.”

[1] Seven of the Group’s 11 wholly-owned Boeing 787-9s have been securitised against this funding.

QANTAS Airways aircraft photo gallery: