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bakestar
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QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:28 pm

https://www.theage.com.au/business/comp ... 575ig.html

Bit of a case of 2 steps forward, 1 (large) step back. Not surprising, and defo not a unique story.

Given AJ suggests international flights will return soon, here's hoping Project Sunrise has been spared any further delays.
Last edited by qf789 on Thu Feb 25, 2021 12:54 am, edited 1 time in total.
Reason: Flamebait title
fly'nhi
 
TropicalSky
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:35 pm

not surprising as every major airline small & large have experience huge losses.... just hope he's ready to LEAD them forward and back to profitability
 
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lightsaber
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:48 pm

QF is in a tough situation. Until international travel has a good partial rebound, they will lose money.
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LAXintl
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:52 pm

Hardly a shock.

They pushed international flying back further till October 31st now.

Also will not take delivery of 3 built 787s. Will stick with current fleet of 11 787s until "there’s sufficient demand"
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jbs2886
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:52 pm

lightsaber wrote:
QF is in a tough situation. Until international travel has a good partial rebound, they will lose money.


What is interesting, however, is domestic was actually cash positive. That isn't really the full context as there are a lot of one-time charges and other book expenses (depreciation/amortization) that change financial headline number. Again, things aren't good, but there are some glimmers of hope?

https://investor.qantas.com/DownloadFil ... 346121.pdf
 
smi0006
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 10:57 pm

This is QF style - if we are going to make a loss it’s going to be a big loss! Burn the house down and start again!! Tough times but they will use this as an exercise to cut away all the fat. They are going to come out the other side lean and agile!!
 
bakestar
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:00 pm

Have they sold/removed their remaining A380s from service already?
fly'nhi
 
MIflyer12
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:08 pm

smi0006 wrote:
This is QF style - if we are going to make a loss it’s going to be a big loss! Burn the house down and start again!!


Most of that group loss was operating losses, not impairment charges which may lead to lower structural costs farther out. Only $71 million was A380 impairment, for example.
 
Kent350787
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:37 pm

bakestar wrote:
Have they sold/removed their remaining A380s from service already?


All QF A380 are stored, and the most recent advice was no return to service until 2023 at least. Half have been upgraded to the "latest" product, and there are suggestions the others won't return.

QF has also taken a big hit on domestic, with short notice border shutdowns throwing summer holiday schedules in particular into chaos. It's only now with Victoria halfway to local Covid elimination (eliminated in all other states and territories) that the domestic market may again grow "normally". Many people are wary of crossing state borders in case they are stranded by border closures.
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RyanairGuru
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:43 pm

bakestar wrote:
Given AJ suggests international flights will return soon, here's hoping Project Sunrise has been spared any further delays.


Given that 2 months ago they announced July, and now October, I have to give credit to Qantas PR for managing to put a positive spin on “we are deferring for another 3 months”.

As it is, October is also unlikely to happen. As the Australian Government curtly stated six weeks ago, they get to decide when the border opens, not Qantas.
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RyanairGuru
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:48 pm

lightsaber wrote:
QF is in a tough situation. Until international travel has a good partial rebound, they will lose money.


Given that long haul flying was traditionally loss making, and only marginally profitable as late as 2019, that isn’t necessarily true.

The biggest benefit to Qantas (and Virgin Australia) would be domestic borders fully opening and then remaining open. However, given recent restrictions following outbreaks in Brisbane, Perth and Melbourne, and the enduring risk posed by international arrivals in quarantine, the reality is that you would not bet against further domestic border restrictions.
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Kent350787
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Re: Ouch! QF posts $1.1b half-year loss.

Wed Feb 24, 2021 11:59 pm

RyanairGuru wrote:
lightsaber wrote:
QF is in a tough situation. Until international travel has a good partial rebound, they will lose money.


Given that long haul flying was traditionally loss making, and only marginally profitable as late as 2019, that isn’t necessarily true.

The biggest benefit to Qantas (and Virgin Australia) would be domestic borders fully opening and then remaining open. However, given recent restrictions following outbreaks in Brisbane, Perth and Melbourne, and the enduring risk posed by international arrivals in quarantine, the reality is that you would not bet against further domestic border restrictions.


Although it is less chaotic, with even Queensland saying earlier in the week that further border closures were unlikely given the vaccine rollout. But traveller confidence has taken a beating with the kneejerk closures.
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moa999
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Re: Ouch! QF posts $1.1b half-year loss.

Thu Feb 25, 2021 12:14 am

Agreed traveller confidence is low.
And domestic yields (with Rex starting up) are also very low.
 
tullamarine
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Re: Ouch! QF posts $1.1b half-year loss.

Thu Feb 25, 2021 12:18 am

A few comments on QF profits:

As Ryanair Guru rightly points out, this is pretty much a loss without much in the way of significant structural write-downs. Most of this was done in the June results last year though it is possible the JQ 788 fleet may have to be written down at some point given there is no market for them to be sold into if it is decided not to restart their operations with JQ.

Unless domestic recovers without major ongoing disruptions and public confidence in border status grows, you wouldn't expect the June half results to be a whole lot better.

There is a significant difference between Underlying EBITDA (+$86M) and underlying EBIT (-$888M). This is largely a reflection of the effect of the new accounting standard where all leases are capitalised. Previously operating lease payments were shown above the line.

Always bemused as to what is included in underlying and what isn't For example redundancies are excluded from underlying profits. I would have thought the reverse of this was JobKeeper receipts $458m so they should be excluded also but are not. There is also an argument that the government waiving or refunding other ordinary charges $66M should probably be removed from underlying profits.

Fleet replacement has largely been put back by at least 2-4 years. (Refer slide 28 of investor presentation) They now talk of a 24-26 year lifespan which was previously nominally 20 years. I take this to mean the 738 replacement program won't really see deliveries of whatever is chosen until 2026 at the earliest.

Jobkeeper receipts of $458m have majority been passed onto employees according to Slide 51. This is strange wording.

International resumption has now been put back to the end of October. This is not entirely impossible but probably remains a best-case scenario assuming vaccination programs are largely completed here and in other major markets and there are no further setbacks with new resistant strains etc.
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ContinentalEWR
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Re: Ouch! QF posts $1.1b half-year loss.

Thu Feb 25, 2021 1:20 am

bakestar wrote:
Have they sold/removed their remaining A380s from service already?


No, all 12 are in storage until 2023 for now.
 
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calstanford
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Re: QF posts $1.1b half-year loss.

Thu Feb 25, 2021 5:22 am

This is a prime sign that you can't always split international and domestic as if it were two damn airlines.
The mantra "Qantas Intl is loss making, domestic is the cash machine" is a too easy description. How much of domestic traffic was because of international travel (either a direct connection say HKG-SYD-MEL) or an international tourist traveling around Australia (MEL-SYD, SYD-OOL, etc)
 
EBT
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Re: QF posts $1.1b half-year loss.

Thu Feb 25, 2021 5:30 am

calstanford wrote:
This is a prime sign that you can't always split international and domestic as if it were two damn airlines.
The mantra "Qantas Intl is loss making, domestic is the cash machine" is a too easy description. How much of domestic traffic was because of international travel (either a direct connection say HKG-SYD-MEL) or an international tourist traveling around Australia (MEL-SYD, SYD-OOL, etc)


I think the bulk of Domestic flying was corporate traffic, a portion of which would have been international connecting for sure, but by and large there was a pretty big domestic travel market within Australia anyway pre-COVID. I expect that will be the first market to recover, and international will be much more piecemeal, even if only due to the Australian Government's moves on borders. Domestic will be Qantas's core business for the next little while, and they will make good money doing it.
 
Kent350787
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Re: QF posts $1.1b half-year loss.

Thu Feb 25, 2021 5:40 am

calstanford wrote:
This is a prime sign that you can't always split international and domestic as if it were two damn airlines.
The mantra "Qantas Intl is loss making, domestic is the cash machine" is a too easy description. How much of domestic traffic was because of international travel (either a direct connection say HKG-SYD-MEL) or an international tourist traveling around Australia (MEL-SYD, SYD-OOL, etc)


International onwards would be a contributor, but SYD-MEL wasn't the 4th largest route by passenger numbers in the world because of tourists. Yes the description is "too easy", but it's not hugely out of the ballpark.

Getting a functional domestic market back is key to QF revenue (and VA for that matter). SYD-MEL has been barely functional for half the year, first with Victoria closing its borders to NSW, then NSW to Victoria (for 4 months), then Victoria to NSW etc.
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IndianicWorld
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Re: Ouch! QF posts $1.1b half-year loss.

Thu Feb 25, 2021 11:33 am

RyanairGuru wrote:
lightsaber wrote:
QF is in a tough situation. Until international travel has a good partial rebound, they will lose money.


Given that long haul flying was traditionally loss making, and only marginally profitable as late as 2019, that isn’t necessarily true.

The biggest benefit to Qantas (and Virgin Australia) would be domestic borders fully opening and then remaining open. However, given recent restrictions following outbreaks in Brisbane, Perth and Melbourne, and the enduring risk posed by international arrivals in quarantine, the reality is that you would not bet against further domestic border restrictions.


The most significant outbreak over the past couple months was the one in Sydney, which saw borders close to NSW for a significant period with cases appearing for many weeks.

As nearly every major city in the country has been affected by some kind of lockdown and subsequent border restrictions, It’s unlikely to end any time soon. Vaccinations are only at the early stages and it’s highly likely there will be another outbreak somewhere given the risks of quarantine and associated travel And trade going on.

Business is demanding stability in a time that nothing can be predicted, and state govt responses will always tend to focus on the most risk conscious approach. It will be a rollercoaster for some time to come unfortunately.

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