Mega aircraft order positions Qantas for life after Alan Joyce

Qantas says it has seen a ‘strong, sustained’ recovery in travel demand as the country ends onerous Covid-19 restrictions.

The Airbus A350-1000 test aircraft that was the star attraction at the Qantas announcement concerning Project Sunrise flights starting in late 2025. Picture: Getty Images

Qantas says it has seen a “strong, sustained” recovery in travel demand as the country ends onerous Covid-19 restrictions.

In a trading update covering the three months to March 31, the airline said revenue growth had led to a rapid reduction in debt – from $5.5bn at the end of December to $4.5bn in April – below pre-pandemic levels.

Qantas, said it still expected to record a “significant” underlying earnings loss for the financial year – which included the Delta and Omicron outbreaks. But the business was on track for underlying earnings of between $450m and $550m, it added on Monday.

“After a few false starts, we’re finally seeing a sustained recovery in travel demand,” said Alan Joyce, the company’s chief executive.

“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

“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.”

Mr Joyce added the airline was now at about 85 per cent of its pre-pandemic domestic corporate travel levels.

“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,” he said.

Qantas chief executive Alan Joyce says there has been a sustained recovery in air travel demand, with business travel recovering faster than expected. Picture: AFP

Qantas also announced a significant upgrade to its aircraft, with 134 narrow body jets to replace its ageing domestic fleet.

Mr Joyce has also ordered a dozen A350-1000s to put any world city within a single flight of Australia. Mr Joyce said the order was only possible because of the airline’s “strong balance sheet”, with surging demand for air travel helping to accelerate the Covid-19 recovery.

The rapid reduction in debt compares to a peak of around $6.4bn at the height of the pandemic, when state border closures made it difficult to fly at all.

Net debt is projected to reach the bottom of the company’s target range by the end of the financial year, it said.

“We are one of the few airlines in the world that could make a decision like this now and we thought the time was absolutely right,” Mr Joyce said. “We needed to make those calls for our long term future and we need to have aircraft coming into replace our domestic fleet, and having the balance sheet and the financial strength to do it, all made sense.”

The first of the new aircraft including 20 A321XLRs and 20 A220-300s, would start to arrive in late 2023, to take the place of Boeing 737s and 717s.

Mr Joyce confirmed his plan to vacate the role of CEO at the end of next year. Qantas shares finished the day up 16c at $5.76.