Qantas on-time performance hits 90pc as pre-Covid capacity restored

A relaxed Qantas CEO Vanessa Hudson has talked up the airline’s turnaround at an investor conference, saying on-time performance has hit 90 per cent and capacity is back to pre-Covid-19 levels.

Qantas CEO Vanessa Hudson is upbeat about the Qantas outlook. Picture: Gaye Gerard/NCA Newswire

Qantas chief executive Vanessa Hudson said the airline has been reaching 90 per cent on time performance levels in the past few weeks and that the nation’s biggest carrier is now back to pre-Covid-19 capacity.

Speaking at the Macquarie Australia Conference, Ms Hudson appeared relaxed and comfortable with investors, just days after she put to bed a long-standing fight with the competition regulator over selling so-called ghost flights.

Qantas will pay $120m, including compensating customers after selling tickets for flights that had already been cancelled.

Ms Hudson said it was critical for the Qantas branded airline to get its planes away on time if it wanted to continue charging higher prices than competitors.

“In the last couple of weeks, particularly in the fine weather days, we’ve been over 90 per cent for Qantas,” said Ms Hudson. “When your network is operating to schedule, you get efficiency. When we are operating at that level, the customer satisfaction comes back really quickly. We charge a premium above other carriers, and we have a disparate share of the corporate market, and it’s fundamental in delivering and maintaining premium that we deliver on that promise to customers and get away on time.”

The airline is managing this improved performance while seat loads remain high.

Ms Hudson said the airline is seeing demand remain strong even as Australians struggle with the cost of living crisis, high inflation and the challenges of dealing with the most dramatic increase in interest rates in the Reserve Bank of Australia’s history.

“High interest rates and high inflation does create challenges,” said Ms Hudson. “But consumers are still saying ‘I want to go on that holiday’ … We are seeing growth in that for Jetstar.”

Qantas on-time performance has hit 90 per cent in recent weeks. Picture: David Swift/NCA NewsWire

While the airline group is seeing Jetstar customers look for “more value-based decisions” the demand for the premium Qantas-branded airline also remains strong.

Ms Hudson believes her Qantas customers may include a higher proportion of older people who have already paid off mortgages and therefore are not exposed to sticky high interest rates, and also want to travel in the premium cabins, which are sold at significantly higher margins.

“We are still seeing demand really strong. We have a disproportionate share of customers that are homeowners and are probably not exposed to high interest rates,” said Ms Hudson. “And the propensity of those customers to travel in premium classes is stronger than ever.”

Ms Hudson said Premium Economy is the most profitable cabin in the world and that the airline’s International capacity is growing and “back at 100 per cent pre-Covid capacity this month.”

While demand remains strong, the airline is spending more to try and repair the brand damage done during the final years of former CEO Alan Joyce’s reign post-Covid-19 and the need to increase its spend on fleet renewal.

Macquarie has predicted Qantas’s capital expenditure on aircraft needs to rise several basis points to 13 to 16 per cent of sales.

Ms Hudson said that while the airline did face a significant aircraft renewal program, the new aircraft are more profitable to the airline.

“They have better engines, with 20 per cent better fuel efficiency. The payload (power) enables them to fly further, which creates network growth. These aircraft also have a better interior. They have a higher seat count, so they will produce more revenue,” Ms Hudson said.

Qantas shares were 1.3 per cent higher at $6.24 in a flat market on Wednesday afternoon.

Originally published as Qantas on-time performance hits 90pc as pre-Covid capacity restored