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Qantas Airways (ASX: QAN) has reported an underlying loss of $1.03 billion in just the first half of FY21 on the back of a major dive in revenue.
Travel restrictions saw Qantas miss out on $6.9 billion in revenue in the half, down 75 per cent on 1H FY20.
However, the company remains in a strong liquidity position with $4.2 billion in cash on hand, and is optimistic that international travel will resume by the end of October this year.
"These figures are stark but not surprising," Qantas CEO Alan Joyce said.
"During the half we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began. Virtually all of our international flying and 70 per cent of domestic flying stopped, and with it went three-quarters of our revenue.
"Despite these huge challenges, these results show the group's underlying strength."
Joyce said the airline generated positive cash flow when domestic travel operational during the half, thanks to pent up demand.
As such, the group's domestic operations generated positive underlying cashflow despite a 70 per cent decline in both revenue and capacity.
Underlying earnings for Qantas domestic was $71 million, with depreciation and amortisation resulting in an EBIT loss of $407 million.
During the half, the group's domestic market share grew to around 70 per cent, helped by the addition of more than 20 large corporate accounts.
With international borders closed, Qantas' overseas operations remained largely grounded throughout the half, resulting in an underlying EBITDA loss of $86 million.
The international travel that did occur repatriation services represented just 8 per cent of Qantas' pre-COVID flying.
With the COVID-19 vaccine being rolled out globally, Qantas is estimating international travel will resume by the end of October this year, with the exception of an increase in trans-Tasman flying scheduled for July 2021.
"Our priorities remain the safety of everyone who travels with us, getting as many of our people back to work as possible and generating positive cash flow to repair our balance sheet," Joyce said.
"The COVID vaccine rollout in Australia will take time, but the fact it's underway gives us more certainty. More certainty that domestic borders can stay open because frontline and quarantine workers will be vaccinated in a number of weeks. And more certainty that international borders can open when the nationwide rollout is effectively complete by the end of October."
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