Qantas Group has taken a huge financial hit from the COVID-19 pandemic, revealing a net loss of $1.9 billion in FY20.
The statutory loss was a big swing away from the $891 million profit Qantas posted a year earlier, while the group reported a $124 million underlying profit before tax for the 12 months to 30 June 2020 – down 91 per cent on the prior year.
Overall revenue dropped 21 per cent to $14.2 billion, with a $4 billion revenue fall occurring in the second half of FY20 due to the COVID-19 crisis and associated border restrictions.
Qantas Group’s loyalty business suffered the biggest decline in revenue – down 26 per cent – while Jetstar’s revenue fell by 24 per cent, Qantas’ domestic revenue fell by 23 per cent, and Qantas’ international and freight division saw an 18 per cent slide in revenue.
Alan Joyce, CEO of Qantas Group, 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,” he said.
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.”
Joyce said the FY20 result showed how the COVID crisis had derailed what would have been a strong financial performance for Qantas.
“We were on track for another profit above $1 billion when this crisis struck,” he said.
“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.”
Joyce said COVID-19 will continue to have a huge impact on the company, and expects 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,” he said.
“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.”
Qantas noted that its international network was “unlikely” to restart before July 2021, but there is a “possibility” of trans-Tasman flights being revived earlier.
Featured image source: iStock/Katharina13
