“The Qantas of 2021 and 2022 will not be the Qantas of 2019,” he said following a market update on the company’s pandemic response. “We’re looking at the scope and scale of our businesses going forward.”
Mr Joyce said there would be some pent-up demand from customers who want to visit family or go on holiday when domestic travel restrictions lift, but Qantas would also look to stimulate demand with cheap airfares.
Melbourne to Sydney fares on its budget arm Jetstar could fall to $39 or even $19, he said. “We’ll make sure we get as many people travelling as possible,” he added.
Qantas on Tuesday said it expected to burn through $40 million a week from late June until travel demand returns. That is after standing down 25,000 of its 30,000 employees without pay and reducing other spending.
Mr Joyce said the company could sustain that cash burn until the end of 2021, and the airline’s liquidity had been boosted by $550 million in fresh debt, secured against three Boeing 787 Dreamliners. On top of $1 billion raised in March and secured against seven Dreamliners, the company’s net debt sits at $5.8 billion.
Mr Joyce ruled out speculation Qantas might have to resort to an equity raising to last through the COVID-19 pandemic, pointing to another $2.7 billion in unencumbered aircraft assets it could use to access further loans.
Ratings agency Moody’s said Qantas’ debt raising and reduced cash burn showed it had the ‘”flexibility to deal with the current environment” despite the “unprecedented circumstances in the industry”.
Though the international and domestic travel markets will be smaller, Mr Joyce said Qantas could use its relative financial strength to grow its share against weaker competitors at the end of the pandemic.
COVID-19 has devastated airlines around the world, including Qantas’ domestic competitor Virgin Australia, which went into voluntary administration a fortnight ago owing almost $7 billion. Administrators are looking for new owners.
“Qantas is well positioned to pick up [market] share domestically and internationally and our intent would be to have a bigger share,” Mr Joyce said.
“We think we’re well positioned as one of the strongest airlines in the world and to take advantage of our strength.”
He said it was not clear what Virgin would look like under new owners but that it would be a competitor that presented “challenges and opportunities” for Qantas.
“We will adapt to whatever comes out of administration and I think do exceptionally well,” Mr Joyce said.
Mr Joyce confirmed reports that the airline was talking to Vietnam Airlines about selling out of its 30 per cent stake in their Vietnamese joint venture Jetstar Pacific, but reaffirmed Qantas’ commitment to its other Jetstar franchises in Singapore and Japan.
Qantas is currently flying the equivalent of about 5 per cent of its pre-pandemic domestic capacity and 1 per cent of its international capacity. The company said on Monday it was extending domestic and trans-Tasman flight cancellations through to the end of June and other international fights through to the end of July, but could quickly return to capacity if required.
Qantas shares closed 1.7 per cent higher at $3.62. The company’s shares, which like most airline stocks were hammered by the COVID-19 outbreak, traded at $6.67 on February 20.
Business reporter at The Age and Sydney Morning Herald.