Qantas CEO Alan Joyce announces full yearly results for 2022

Qantas CEO Alan Joyce has shut down calls for him to resign saying he was asked to continue in his role to help the airline through ‘this crisis’.

Qantas has faced troubling times in the last six months as flights return to pre-pandemic levels — from staff shortages, increased flight cancellations and baggage mishandling.

As Qantas CEO Alan Joyce announced the airline’s full yearly results for 2022, he said it has been an “extremely challenging” time for the Group.

Mr Joyce announced Qantas Group had an underlying loss before tax of almost $1.9 billion, and a statutory loss before tax of just under $1.2 billion.

“That brings our total losses since the start of the pandemic to more than $7 billion and takes lost revenue to more than $25 billion,” he said.

“To put that in perspective, on a statutory basis, Covid cost us more money in the past three years than we made in the five years before that.

“These figures are staggering and getting through to the other side has obviously been tough.

“The past year has been challenging for everyone. The fact we’ve been able to steer through this is remarkable.”

He said the Group has roughly halved its loss last financial year and is expected to get back to pre-Covid levels of profitability this year.

Joyce hits back at calls to quit

During the media conference on Thursday, Mr Joyce also addressed The Transport Workers Union (TWU) calls for him to resign following the airline’s $50 “apology voucher”

The credit voucher comes amid consumer anger over months of flight cancellations, delayed and lost luggage.

“I think the unions were lining up for my blood in 2011 and 2013,” Mr Joyce told reporters.

“I think I’ve have more resignation requests than any other CEO and probably any other public figure out there.

“The unions typically do this at different times (call for the CEO to resign), so that’s not unusual. It’s part of the job.

“I think (former CEO) Geoff Dixon had that before I had the job, and I’m sure the next CEO will have to save the same team to be able to manage or work with.”

Mr Joyce said the airline has been apologising for the mistakes it has made, “for not delivering for what the customers expect from us”.

“We’re the only airline I can say that’s regularly been doing that and that’s the right thing to do, and we’ll keep on doing it.”

Mr Joyce said the Board asked him to continue in his role as CEO to get it “through this crisis” and he is confident Qantas will come out stronger.

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Qantas CEO Alan Joyce announces $25 billion in lost revenue since the beginning of the pandemic. Picture: Lisa Maree Williams/Getty Images

Third consecutive loss and rebound

Mr Joyce said things are now “improving even faster than we expected” for the Group as people are keen to get back to travel.

“Twelve months ago, almost all of Australia’s borders were closed. Most of us were stuck at home. International travel felt like a very distant prospect,” Mr Joyce said.

“Now, our flights are full, and we can’t bring aircraft out of storage fast enough.

“The numbers we’re reporting today put the full impact of the Delta and Omicron lockdowns on the Group in stark financial terms. But they also show how quickly – and how strongly – the recovery is now happening.”

“Revenue intakes for leisure travel are around 125 per cent of pre-Covid levels.

“For business travel, it’s 90 per cent – and that’s despite the fact many people are still working from home during the current Covid and flu spike.”

Qantas brand has taken a ‘hit’

Mr Joyce was asked about the brand’s reputation and whether or not it’s been damaged. He said it has been but it will be fixed quickly.

“I think this time it’s different. The brand has taken a hit. MPS has taken a hit, which is what we measure, and you’d expect that given the poor performance we’ve had,” he told reporters on Thursday.

“But what’s different this time is every other airline is in the same boat. All airlines are giving bad service at the moment, and I’ve no doubt we’re fixing this, our investment in new aircraft, new lounges, Frequent Flyer points, with the continued investment in new destinations, we’ll recover the brand very rapidly.”

Qantas shares jumped after the company also announced a $400 million share buyback is in its sights alongside today’s loss.

For the full 2022 financial year, the Group experienced an underlying loss before tax of $1.86 billion and a statutory loss before tax of $1.19 billion. Picture: NCA NewsWire / Dan Peled

‘Weren’t ready’

Mr Joyce addressed that strong travel demand “also brought on some difficulties” for the airline.

“We knew the recovery was coming and we were ready for the restart. What we weren’t ready for – after 18 months of Covid being suppressed – was such high levels of community transmission and the sick leave that followed,” he said.

Mr Joyce said the rebound in travel demand also coincided with a massive labour shortage.

“Of course, that shortage has been more acute in aviation because of how many people left the industry during two very uncertain years,” he said.

“It’s the same story at airlines and airports around the world.

“All of this resulted in well-publicised problems: long queues, delayed flights and misplaced bags.”

He explained it was “incredibly tough” for staff and “deeply frustrating” for passengers.

“It simply wasn’t good enough, and for that, we have apologised,” he said.

On Sunday, Mr Joyce apologised to customers for the inconvenience caused by the airline’s unideal service — issuing frequent flyer members with a $50 “apology voucher”.

“We know the return to flying hasn’t gone smoothly. Over the past few months too many of you have had flights delayed, flights cancelled or bags misplaced,” Mr Joyce said in a video on Sunday.

“There are good reasons why, but when it comes to what you expect from Qantas, it’s not good enough.”

Flight cancellation and baggage mishandling problems

While the airline has rehired close to 2000 staff after letting about 1700 ground handlers go during the pandemic, it has struggled to stay on top of baggage, flight delays and cancellations.

Staffing shortages due to Covid-19 and flu cases created challenges for the airline, leading to a request from the airline to ask senior executives and managers to step down from their usual roles to assist ground staff.

“Since April, we’ve hired more than 1,500 people and will add more in the next few months,” Mr Joyce said on Thursday.

“Our partners – including ground handlers and airports – are recruiting as well.”

He said Qantas’ mishandled bag rate reached 11 in every one thousand in July but it’s now down to six in one thousand.

Qantas announced contact centre wait times, cancellation rates and mishandled bag rates are trending back towards pre-Covid standards during August 2022. Picture: NCA NewsWire / Dan Peled

“That’s almost back to pre-Covid levels and will be at pre-Covid levels in September.”

He added that cancellations reached 7.5 per cent in July but fell below 5 per cent in August and will be back to pre-Covid levels in September.

“On time performance was 52 per cent and is now 66 per cent. That’s still not good enough and we expect it in the mid-70s, or higher, in September – on its way back to pre-Covid levels of 80.”

He said this depends on factors “out of our control”.

“Like extreme weather events or air traffic control – but the operation will be a lot more robust overall,” he said.

Changes to domestic flying

Mr Joyce announced the airline will reduce its domestic flying – in part – to give it more of a “buffer”.

“We are rostering more crew across fewer flights, which means we can better cover sick leave that is averaging almost 50 per cent above normal,” Mr Joyce said.

It also comes as the airline struggles to cope with the high cost of fuel with ticket prices expected to rise.

“For this year we are forecasting we will be 60 per cent higher in fuel costs than back in 2019 before Covid — $1 billion more in fuel bill compared to 2019,” Mr Joyce said.

“We have to pass that (cost) on because we can’t digest it after $7 billion of losses.”

Mr Joyce said the Group will invest more in technology, including an upgrade to our airport kiosks and bag drop facilities, as well as new scanners at boarding gates.

Mr Joyce also announced Qantas will start flying from Auckland to New York with its 787 Dreamliner, starting from June next year.

More to come