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Qantas Group Reports First Half Statutory Loss of $1.5 Billion on 75 Percent Decline in Revenue

Qantas reported a HY21 underlying loss before taxes of $1.0 billion and a statutory loss of $1.5 billion on a 75 percent year-over-year revenue decline. The carrier ended the first half of their financial year with a total of $4.2 billion in liquidity.

Qantas Group Reports First Half FY 2021 Financial Results - Courtesy Qantas

On Thursday (February 25, 2021), Qantas reported their first half results for the financial year 2021. The airline reported a HY21 underlying loss of $1.0 billion before taxes and a statutory loss of $1.5 billion on a year-over year revenue decline of $6.9 billion, down 75 percent versus HY20. The company ended the half with $4.2 billion in liquidity, providing sufficient resources for restructuring and to buffer against continued uncertainty. The Group’s domestic airlines generated and underlying positive cash flow during the half, while Qantas International losses were partially offset by Qantas Freight performance. The carrier’s restructuring program is on track to deliver $600 million in cost benefits for FY21 and Qantas Loyalty continues strong cash generation.

Qantas Group's HY21 Financial Results by the Numbers - Infographic Courtesy Qantas

In Thursday’s announcement, Qantas Group’s CEO, Alan Joyce, said,

“These figures are stark but not surprising. During the half we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began. Virtually all of our international flying and 70 per cent of domestic flying stopped, and with it went three-quarters of our revenue. Despite the huge challenges, these results show the Group’s underlying strength. When we had the opportunity to fly domestically, we saw significant pent up travel demand and generated positive cash flow. Qantas Loyalty still had significant income because the program has evolved to the stage where the vast majority of points are earned from activity on the ground. Qantas Freight had a record result and has been a natural hedge to the lack of international passenger flying, which has created a shortage of cargo space globally.

“These factors couldn’t overcome the massive impact of this crisis, but they have softened it. We’ve maintained a high level of liquidity because we were quick to cut costs and because we’ve been able to raise debt and equity. This gives us the breathing room to deal with the levels of uncertainty we’re still facing, and funding for the restructuring that will ultimately speed up our recovery. Our priorities remain the safety of everyone who travels with us, getting as many of our people back to work as possible and generating positive cash flow to repair our balance sheet.

“The COVID vaccine rollout in Australia will take time, but the fact it’s underway gives us more certainty. More certainty that domestic borders can stay open because frontline and quarantine workers will be vaccinated in a matter of weeks. And more certainty that international borders can open when the nationwide rollout is effectively complete by the end of October.”

The Group’s HY21 statutory loss of $1.47 billion before taxes included further redundancy and restructuring costs of $284 million and a $71 million writedown of the airline’s Airbus A380 fleet, inline with its Australian dollar market value. Despite a 70 percent decline in capacity and revenue, Group domestic operations across Qantas, QantasLink and Jetstar delivered a positive underlying first half positive cash flow. Group domestic delivered an underlying positive EBITDA of $71 million, with amortization and depreciation taking this to ($407) million.

The Qantas International fleet was largely grounded during the first half, resulting in an underlying EBITDA loss of $86 million, increasing to a loss of $549 million after amortization and depreciation. Qantas Freight benefitted from a surge in e-commerce shipments at a time when global passenger aircraft belly hold capacity was in short supply. In October, Qantas Freight took delivery of their first of three Airbus A321 freighters, bringing their operational fleet to 19 aircraft. Additionally, some of the Group’s A330s and 787s are being used for cargo-only flights. Despite limitations on travel redemptions and a 10 percent decline in spending on Qantas Points Earning Credit Cards, Qantas Loyalty contributed $454 million in cash to the Group during the period.

The Qantas Group is one of only eight airlines in the world which has retained an investment-grade credit rating since the onset of the global COVID-19 pandemic. At December 31, 2020, the Group had $2.6 billion in cash, undrawn credit facilities of $1.6 billion and unencumbered assets valued at over $2.5 billion. The Group ended the half with net debt of $6.05 billion. CAPEX for HY21 totaled $514 million, largely attributable to fleet maintenance costs. The company has implemented approximately 8,500 redundancies and currently a total of 14,500 FTEs are stood up, while around 11,000 FTEs are stood down, mostly associated with international flying.

Source: Qantas Group

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