Qantas revenue rebounds as plans for ultra-long routes revived

Qantas revenue rebounds as plans for ultra-long routes revived

After a busy holiday period for Qantas (ASX: QAN), the airline is continuing to ramp up its fleet and flight routes it aims to be back in the black by 2023.  

In an ASX announcement today, Qantas reported an uptick in revenue for the March quarter – driven by a surge in domestic travel during Easter – has led to debt falling below pre-COVID levels at $4.5 billion.

While the group still anticipates a loss for FY22, it is on track to earn between $450 million to $550 million in the second half of the financial year.

“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 CEO Alan Joyce said.

“The recovery in business traffic has been faster than we expected. Once mask mandates were removed and people went back to the office, there was a clear uptick in demand. We’re now at around 85 per cent of pre-COVID levels for domestic corporate travel and more than 100 per cent for small businesses.

“As expected, international flying is slower to recover because several markets remain closed or heavily restricted. But key routes like London, Los Angeles and Johannesburg are performing above pre-COVID levels and early signs on our newest direct routes to India, Europe and Korea are very positive."

The airline's domestic operations are expected to be revenue positive in the fourth quarter of FY22, with international flights also “on a clear pathway to full recovery.”

“Combined with benefits from the company-wide one-billion-dollar transformation program, this trajectory supports the group returning to profitability in FY23,” Qantas said.

It also noted the removal of Australia’s pre-flight testing requirements and the early opening of New Zealand’s borders provided tailwinds in April.

Qantas reported bookings for destinations such as London, Los Angeles, South Africa and Bali are all above pre-COVID levels, with Jetstar restarting more than 60 per cent of its overseas flights.

Joyce says an influx of hiring is underway as the airliner seeks to fill more than 2,500 roles over the next year. Within the past two months, the company has already received above 20,000 job applications.

Project Sunrise on the horizon

Qantas has revived its plans to operate the longest passenger flights in the world, offering travellers direct flights from Sydney to London and New York from 2025.

The airline has placed an order for a dozen Boeing Airbus A350-1000s to fly the routes as part of 'Project Sunrise', with one plane able to carry 238 passengers across four classes.

More than 40 per cent of the cabin is dedicated to premium seating – which Qantas said had been configured for “improved comfort on long flights.”

Boeing Airbus A350-1000
Boeing Airbus A350-1000 (Provided)

 

“Throughout our history, the aircraft we’ve flown have defined the era we’re in. The 707 introduced the jet age, the 747 democratised travel and the A380 brought a completely new level of comfort,” Joyce said.

“The A350 and Project Sunrise will make any city just one flight away from Australia.

“It’s the last frontier and the final fix for the tyranny of distance. As you’d expect, the cabin is being specially designed for maximum comfort in all classes for long-haul flying.”

The group will also upgrade its domestic fleet, confirming it has made orders for 40 more Airbus planes.

Known as “Project Winton,” the airline expects the new fleet will create more than 1,000 jobs as it brings the planes into service over the next five years.

Shares in QAN are up 2.32 per cent to $5.7 per share at 11:43am AEST.

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