Qantas shares rise despite hefty $1b loss

Qantas CEO Alan Joyce says the company's latest results are
Qantas CEO Alan Joyce says the company's latest results are "stark but not surprising".

Shares in Qantas rose almost three per cent despite Australia's flagship airline suffering a billion dollar-plus loss in profits, dogged by both domestic and international travel restrictions due to the coronavirus pandemic.

The airline endured an underlying loss before tax of $1.03 billion and a $6.9 billion drop in revenue.

"During the half we saw the second wave in Victoria and the strictest domestic travel restrictions since the pandemic began," Qantas Group CEO Alan Joyce said, releasing the results on Thursday.

"Virtually all of our international flying and 70 per cent of domestic flying stopped, and with it went three-quarters of our revenue."

But global credit agency Moody's Investors Service expects the airline to emerge from the pandemic in a strong position and with an increased domestic market share "given its excellent business profile".

"The airline's first-half results were unsurprisingly weak given ongoing international border closures and unpredictable, intermittent domestic border shutdowns," Moody's vice president Ian Chitterer said.

The group's statutory loss before tax was $1.47 billion, which included further redundancy and restructuring costs of $284 million, coming on top of the $642 million provided in its 2020 full year results.

It also included a further $71 million writedown of the A380 fleet, in line with its Australian dollar market value.

Mr Joyce said despite these huge challenges, he believes the 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," he said.

He said the Qantas Loyalty program still generated a strong cash contribution of $454 million as the vast majority of points are earned from activity on the ground, while Qantas Freight had a record result because a lack of international passenger flying created a shortage of cargo space globally.

"These factors couldn't overcome the massive impact of the crisis, but they have softened it," Mr Joyce said.

Recent domestic border closures have delayed the group's recovery by an estimated three months.

Based on a variety of factors, the working assumption for international travel has moved to the end of October 2021, but with a material increase in trans-Tasman flying scheduled for July 2021.

"The COVID vaccine rollout in Australia will take time, but the fact it's under way gives us more certainty," Mr Joyce said.

"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."

Qantas said federal government assistance, such as JobKeeper, has helped the airline through the profound impact of the travel restrictions, as have support for regional, domestic and some international flights that helped to keep key transport links active.

Qantas shares were trading 13.5 cents or 2.7 per cent higher at $5.145 in late trading on Thursday.

Australian Associated Press