Welcome Back Qantas: Increased Flights and Growth Plans

Summary

• With easing travel restrictions and medical experts’ stance of low risk of contracting coronavirus on an aircraft, airlines are gearing up for additional flying.
• Qantas and Jetstar have announced fresh plans regarding additional flights for the months of June and July 2020.
• Qantas looks forward to returning to 40 per cent of its pre-crisis domestic capacity by end-July, by gradually increasing the number of flights starting from the current month.
• Flights have been increased for several locations including fresh flights from Sydney to Byron Bay that were postponed due to COVID-19.

In latest development from the Australian aviation sector, Australia’s largest carrier, Qantas Airways Limited (ASX:QAN), and its wholly owned subsidiary in Australia and New Zealand, Jetstar Airways, look forward to increasing their domestic as well as regional services for the current month of June and the next month.

Additional Flight Details

Owing to additional flights, capacity would increase to 15 per cent by end-June from 5 per cent of pre-COVID-19 levels, translating to over 300 more return flights per week.

With the ability to increase to up to 40 per cent of the Group’s pre-COVID-19 domestic capacity by end-July, additional flights are anticipated to operate during July; however, subject to travel demand and additional relaxation of state border restrictions.

• Increased services on capital city routes, especially Melbourne-Sydney and numerous routes to-and-from Canberra
• More intra-state flights for Queensland, South Australia, New South Wales and Western Australia, and a significant boost in weekly flights for Broome, Cairns and Rockhampton
• Flights are expected to resume on eight routes that are not currently being operated
• Flights from Sydney to Byron Bay (Ballina) are anticipated to begin after the postponed route roll out due to COVID-19

Safety First as Qantas Increases Flights

A range of measures has been planned that would be instilled from 12 June 2020 by Qantas and Jetstar, under the Company’s ‘Fly Well’ program to provide a safe environment at airports and onboard aircraft while offering extra peace of mind to customers. Some of these measures would include providing masks and sanitising wipes to all customers, enhanced cleaning as well as contactless check-in.

The Fly Well program was announced during May to prepare for easing travel restrictions, by bringing together several temporary measures to ensure a safe travel environment, owing to fresh challenges like managing risk of coronavirus so people can fly with confidence.

The Company has gained experience in creating a safe cabin environment for passengers and crew while operating rescue flights into Wuhan and bringing Australians back from the US as well as Europe. However, cooperation of passengers would be equally important for everyone’s benefit during such challenging times.

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Increasing Customers’ Booking

Now that the Company has sought to increase the number of flights, this silently calls for a greater number of employees at work to smoothly operate and facilitate the services. As the business of Qantas and Jetstar continues to remain notably below the pre-COVID-19 levels, employment terms for a major number of employees of Qantas would remain at the terms of ‘standing down’.

Qantas is witnessing a huge increase in customers’ booking and believes that there is a lot of pent up demand for air travel. Consequently, the Group is planning flights in the coming weeks and months, by gradually increasing the number of flights in June with growing levels of demand.

Although the Company generally plan its capacity months in advance, the current climate of high uncertainty demands flexibility in order to respond to changing restrictions and demand levels.

There are around 1 million people who work in the tourism sector in Australia and have been severely impacted over the last few months due to lockdown restrictions and grounded overall tourism sector operations.

CEO of Qantas Group, Alan Joyce believes that in order to help get more people out into communities that are dependent on tourism and provide a critical boost to domestic enterprises, these additional flights are an imperative initial step.

Must Read: Australian Tourism Business Changes, Impact and Opportunities

He further stated- in addition to getting access to masks and sanitising wipes, customers using services will notice several differences such as information being provided before their flight, ensuring they have the idea of exactly what to expect, thus giving them some extra peace of mind.

Qantas’ Increasing Resilience

Along with being the largest domestic and international airline of Australia, Qantas is also one of the leading airlines globally and has completed its 100 years of operations in the year 2020.

Meanwhile, Qantas has been actively engaged in solidifying its ability to counter the short-term as well as likely long-term impacts of the COVID-19 catastrophe. Recently, Qantas secured

• $550 million in funding against three of its wholly owned Boeing 787-9 aircraft
• $1.05 billion in March against seven 787-9 aircraft

Net debt of the Company, at $5.8 billion, now lies within the limits of the target range, and there are no financial covenants on any present or fresh debt facilities. In addition to this, there are no substantial debt maturities until June 2021, and QAN has adequate liquidity to respond to a range of recovery scenarios.

One of the concerning scenarios predicted is the one where the present trading circumstances are expected to remain until at least the end of next year. However, the Company can raise funds against its unencumbered aircraft assets worth $2.7 billion, if necessary.

From the very beginning of the crisis, Qantas took control of its cash-burning through a pause on virtually all capital and operating expenditure, revised agreements with crucial suppliers and stand-downs of employees. Moreover, its cash burn rate was expected to reach $40 million per week by the end of June 2020, following the implementation of these measures.

Commenting on Qantas’s resilience, CEO of Qantas Group, Alan Joyce said:

The QAN stock settled at a price of $ 4.630 on 5 June 2020, up by 3.118%, with a market capitalisation of $ 6.69 billion.

(Note: Currency denoted in AUD unless otherwise specified)

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