Qantas reboot finally takes flight from virus

QANTAS has come back from its public beating with a monster profit upgrade as the airline captured the lion’s share of the pent-up demand for travel out of the Covid-19 recovery.

The air carrier will confidently return to profit within two months, as it draws a line under billions of dollars of pandemic-linked losses.

This is a major moment for Qantas, which only 12 months ago still had thousands of staff stood down; had no international flights; had been sitting with high levels of debt; and was navigating a patchwork of state border closures and Covid-19 entry restrictions.

After the back-end rebuilding under chief executive Alan Joyce through the Covid-19 years, the upgrade shows a new leaner airline taking flight.

Mr Joyce is now tipping an underlying pre-tax profit of between $1.2bn and $1.3bn for the December half.

To put this in perspective, market analysts were forecasting Qantas would deliver a $1.5bn underlying profit for the entire financial 2023 year. A 12 per cent Qantas share price jump early Thursday in the midst of a downbeat market showed how investors had been caught by surprise.

At the same time, Qantas is on track to shave more than $1.3bn off its debt pile, a move that repairs its balance sheet as borrowing costs are rising. Remarkably, this repayment has put debt levels below the airlines long-term average.

The sheer size and the pace of the recovery meant that Qantas couldn’t wait until its annual meeting early next month which is the traditional forum for a first-quarter update, issuing the upgrade just weeks after releasing its annual accounts.

But the profit upgrade continues the parallel story for Qantas. The first is one of a tarnished public perception of lost luggage, delays and cancellations as it restarted operations. The other story is one of a model financial recovery for an airline that was in serious trouble due to an unprecedented external shock.

The wave of cash flowing back to Qantas will reinforce perceptions among customers and staff that shareholders are being the net beneficiaries of a recovering industry and this is the challenge that Mr Joyce now faces. It is also about walking a straight line with staff, with Qantas keen to secure support for a new wages deal for 20,000 employees in the face of the tightest jobs market for years.

Qantas had already set itself the September school holidays season as a key test to get back to a normal operating rhythm.