Markets see bright side despite losses
QANTAS, Flight Centre and Ardent Leisure shares got a boost on Thursday despite the tourism-related companies all posting hefty losses.
Investors took confidence in the news that Qantas was preparing to resume international flights to North America, the UK and parts of Asia from December. That was on the expectation Australia’s vaccination rate will allow borders to reopen by then.
Qantas posted a pre-tax loss of $2.35bn for the 2021 financial year, after a $2.7bn loss the previous year.
The airline’s shares rallied 3.5 per cent to $5.04 despite the benchmark ASX 200 retreating 0.5 per cent to 7491.2 points.
The grim Qantas result was attributed to a $16bn loss in revenue, due to the lack of international flying for the full 12-months and extensive disruption to domestic travel.
Qantas CEO Alan Joyce said trading conditions had “frankly been diabolical” and things remained tough.
“By the end of this calendar year, it’s likely Covid will cost us more than $20bn in revenue,” said Mr Joyce.
Large-scale restructuring delivered $650m in savings, at considerable cost to workers with 9400 jobs now gone, or a third of the pre-pandemic workforce
Federal government assistance to the airline totalled $1bn, with $600m of wage support paid to employees and $400m funding 320 international repatriation flights, and hundreds of freight-only services.
“We’ve had to make a lot of big and difficult structural changes to deal with this crisis and that phase is mostly behind us,” Mr Joyce said.
“As a result we’re geared to recover quickly, in line with a national vaccine rollout that is speeding up.”
Flight Centre shares jumped 4.04 per cent to $17.01 as its net loss improved to $602m in the 2021 year, from a loss of $848.6m a year earlier.
Flight Centre’s recovery is gaining momentum as global markets open up, but the travel agency’s performance in Australia and New Zealand is being hampered by ongoing lockdowns and state border closures.
Flight Centre said its sales revenue, led by corporate travel, jumped 48 per cent or $76m for the second half compared to the first half of the 2021 financial year.
Flight Centre chief executive Graham Turner believes “signs of sanity are coming into Australian politics” and we could start returning to international travel from early November striking deals with countries such as Singapore and the United Kingdom when we have achieved similar high rates of vaccinations.
He said when lockdowns lift and borders reopen, a strong recovery is expected, as had been seen already in key locations like the US, Canada and Europe. “Although we can’t predict the future, given the current governmentenforced restrictions, we are targeting a return to monthly profitability later in the 2022 financial year and a return to pre-Covid total transaction volumes by June 2024, but with significantly reduced ongoing operating costs,” Mr Turner said.
Theme park operator Ardent Leisure shares surged 21.6 per cent to $1.26 after it announced it was banking on the vaccine roll out and new attractions including the Steel Taipan rollercoaster at its flagship Dreamworld property to boost its post Covid-19 recovery. Ardent reported a net loss of $86.9m in the year to June 30, compared to $136.1m, as its theme parks continued to be hit by border closures and lockdowns.
Revenue dropped 1.9 per cent to $390.7m.