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Qantas profit plunges 91% as 6,000 jobs go

SYDNEY, AUSTRALIA - JULY 22: A Qantas Boeing 747-400, registration VH-OEJ takes off at Sydney Airport for the last time as it retires from service on July 22, 2020 in Sydney, Australia. Flight QF7474 took off in the early afternoon to begin the fleet's early retirement from Qantas' services, which was originally scheduled in six months' time but was changed due to the devastating effects of COVID-19 on global travel. Thousands of spectators lined the airport perimeter to watch the "Queen of the Skies" take off for retirement as she left for Los Angeles. (Photo by James D. Morgan/Getty Images)
Qantas has announced its full year results. (Photo by James D. Morgan/Getty Images)

Qantas has etched a statutory loss before tax of $2.7 billion, and an underlying profit of $124 million - a fall of 91 per cent, in one of the Flying Kangaroo’s darkest days.

The $2.7 billion statutory loss is largely made up of Qantas’ (QAN.AX) asset write down, including its A380 fleet, and more than $600 million in redundancies.

“That’s the sad reality of what the pandemic means for airlines – far fewer employees, at least for a while. Some carriers are shrinking their workforce by 30, 40 per cent. Some may not survive at all,” Qantas CEO Alan Joyce said.

“For the Qantas Group, the job loss figure we’ve already announced is around 20 per cent overall and about 25 per cent at the management level.”

Qantas recorded a statutory loss after tax of $1.97 billion and a $4 billion revenue plunge due to Covid-19, with Joyce naming the pandemic creating “the worst trading conditions in our 100-year history”.

Joyce said the company’s recovery plan should save the troubled airline $15 billion over three years due to stand downs and job losses. It expects 4,000 of at least 6,000 redundancies will be finalised by the end of September, while another 20,000 will remain stood down.

The company will also lower maintenance costs by having its fleet in hibernation and fuel costs will also naturally be lower.

He said the company is hopeful for the future and plans to pick up where it left off with its Sydney-London and Sydney-New York direct flights through Project Sunrise, and said there are also significant opportunities.

“Our message is simply this: the Flying Kangaroo’s wings are clipped for now, but it’s still got plenty of ambition. And we plan to deliver on it.”

Joyce takes aim at border closures

Thanking the Government for its support for the aviation industry, Joyce said the Government was quick to recognise the impact of the international travel restrictions.

The Government announced a $715 million package for airlines in March.

However, the Qantas CEO added that domestic border closures have presented challenges.

“Recovery will take time and it will be choppy. We’ve already had setbacks with borders opening and then closing again,” he said.

“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.”

Responding to questions on Thursday, Joyce said Australia needs a “clear set of rules” around border closures to help them understand why borders are closed and when they will reopen.

He said Qantas receives dates which differ from state to state.

“There seems to be no reference to the level of cases that we see. Surely, that should be the driver. Surely that should be what is determining this and the medical advice should be that determinant,” Joyce said.

While Qantas understands the need to keep Victoria’s borders and international borders closed, Joyce said the case isn’t as clear domestically.

“We still don't understand why states with zero cases for a long time have borders closed to states with zero cases. That doesn't seem to make any medical sense or any advice that we have seen.”

When will Qantas take to skies again?

Qantas predicts its international network won’t restart before July 2021, although it could be earlier for the Trans Tasman. And 20 per cent of pre-Covid domestic capacity has been scheduled for August, with high levels of travel demand for when restrictions are eased.

Tourism Minister Simon Birmingham in June warned Australia’s borders may not reopen until 2021, although New Zealand could score earlier access.

"In terms of other countries and how we look at shorter-term visitation, that becomes much more challenging once you move beyond New Zealand," Birmingham said.

"We will progressively and carefully step through what we can do to reopen. That's what talks with New Zealand are about, and I hope we can see that advance."

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