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Domestic Air Travel Capacity In Australia To Soon Surpass Pre-Pandemic Levels: Qantas

Domestic Air Travel Capacity In Australia To Soon Surpass Pre-Pandemic Levels: Qantas
While raising its forecast for the current quarter on the back of strong demand in Australia which is almost free of Covid-19, Qantas Airways Ltd expects domestic travel in the country to surpass the pre-pandemic levels next financial year, the company said.
The Chief Executive of the company Alan Joyce said on Thursday that the company will be able to report positive cashflow and start getting its balance sheet better that has been burdened by the additional debt that it had taken on to get it through the pandemic because of the expectations of the company to return to 90 per cent of the pre-pandemic domestic capacity in the fourth quarter ending June 30.
At the beginning of the health crisis with a balance sheet that was one of the strongest in the industry even though its largest domestic rival, Virgin Australia, gained from the bankruptcy restructuring that gave the company the opportunity to reduce its fixed costs more than what was possible for Qantas.
Joyce said that current Qantas is primarily focused on generating cash from offering low Joyce said to spruce up demand and get employees back in the air instead of being concerned about making a quick return to profitability factoring in interest and depreciation.
"We may not be making a full statutory profit before tax with a lot of this flying," he told reporters. "We don't have to. We are here to reactivate and start things up again but we will be covering cash costs and we will be improving our balance sheet and they are the important things for us in this phase of the recovery."
For the bulk of its profits, Qantas depended on its domestic business and loyalty division prior to the pandemic. Except for air travel to New Zealand, the airline’s international business will be grounded till October 31 and potentially also longer which will be dependent on the pace of vaccination rollout in Australia.
The international arm was burning through about A$5 million ($3.86 million) of cash a week, Joyce said.
The airline said that it expects its domestic capacity growth to be strong well into 2022 with its low-cost brand Jetstar expected to reach 120 per cent capacity levels of pre-pandemic numbers while Qantas is projected to be around 107 per cent of the pre pandemic capacity.   
The company was not prepared to predict whether Qantas would return o profitability in the fiscal year 2022 even when it is predicting strong domestic capacity, Joyce said.
"A lot depends obviously on whether the domestic borders stay open, a lot depends on when international starts, if New Zealand stays open a lot," he said.
Frequent state border closings because of small outbreaks resulted in near tanking of traffic on major domestic routes such as Sydney-Melbourne and Sydney-Brisbane has been plaguing the airline during the pandemic.
Virgin Australia has also benefitted by the recent rebound in demand with the state borders opening up, and the airline said.

Christopher J. Mitchell

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