Qantas held its Annual General Meeting today and gave us a glimpse into how Qantas has weathered the global pandemic, and their plans for the future.
State of the Domestic Market and New International Routes
The domestic market is operating at below 30% of pre-covid levels. They had expected to be operating at 60% by now, but border closures in July (and ongoing restrictions in WA) have seen slower than expected recovery.
Qantas predicts that if QLD opens its border to NSW in November, then they can be back to 50% by Christmas.
They also predict that their share of the domestic market will be positively affected by Virgin's new strategy, and go from 60% to 70%.
Qantas Group Chairman, Richard Goyder, said that they were looking forward to new international destinations next year, and that Korea and Taiwan could top the list.
"Both Qantas and Jetstar are keeping a close eye on new markets that might open up as a result of these bubbles – including places that weren’t part of our pre-COVID network."
"By early next year, we may find that Korea, Taiwan and various islands in the Pacific are top Qantas destinations while we wait for our core international markets like the US and UK to re-open."
He acknowledged there had been painful decisions around staffing.
"As already announced, more than 6,000 people will leave the business, with a review of another 2,000-plus roles in ground handling underway."
"Around 18,000 of our people remain stood down." he added.
He also spoke about his frustration with the border closures.
"But even as numbers in Victoria come under control and New South Wales shows how small clusters can be managed, there is some frustrating inertia around the Queensland and Western Australian borders."
"This inertia that doesn’t seem to be based on the actual health risk. And that seems to ignore the broader economic and social risk involved with staying shut – especially as Federal income support winds down."
Cost Savings, Now and in the Future
They have stopped spending on sponsorships, as well as negotiating better terms on sales contracts with travel agents. As previously reported, they are reviewing their ground handling operations and hope to save 100 million a year.
For the future, Qantas has identified 15 billion in cost savings over the next 3 years. However, this is mostly by flying less so it comes with a reduction in revenue as well.
They have also set a target of 1 billion in cost improvements by July 2023, 600 million of this should be achieved by the end of this financial year.
Qantas is also rightsizing their leased properties and openly asking state governments to provide incentives for them to move.
Garth Adams
Garth's favourite travel experience was driving USA coast to coast in a 70s station wagon.
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