Qantas Airways Ltd says air-travel demand shows no sign of waning even as living costs climb, as the airline bounces back to record half-year profit and showers shareholders with another stock buyback. Demand for flights will “remain strong” into the second half of 2023 and fares will stay significantly above pre-pandemic levels, according to Qantas.
The airline added nine more Airbus SE A220s to its list of confirmed aircraft orders to help meet appetite for travel within Australia. “While interest rates and inflation are expected to hit discretionary spending at some point, we’re yet to see any signs of that in our bookings,” chief executive officer Alan Joyce said. “We’re seeing no relenting of the strong demand. That’s why we’re keen to get capacity back in the air.” The Australian carrier’s bumper earnings underscore the pace and intensity of aviation’s recovery from the pandemic as travel demand surges. From Ryanair Holdings Plc in Europe to American Airlines Group Inc, carriers around the world are cashing in on the rebound.
With appetite for flights often outstripping available seats, there’s little to hold fares and profits back. Net income at Qantas in the six months ended Dec 31 was A$1bil (US$681mil or RM3bil), compared with a loss of A$456mil (RM1.4bil) a year earlier, when coronavirus restrictions destroyed income. Qantas also announced a stock buyback of as much as A$500mil (RM1.5bil), adding to last year’s A$400mil (RM1.2bil) programme. Like Qantas, many airlines are also reaping the rewards from cost-cutting programmes or reorganisations implemented during the pandemic. “When we restructured the business at the start of Covid, it was to make sure we could bounce back quickly when travel returned,” Joyce said.
“That’s effectively what’s happened, but it’s the strength of the demand that has driven such a strong result.” Analysts also expect Qantas to post record earnings for the full fiscal year. Joyce said the supply-chain blockages that have held up everything from new jets to replacement windshields are now easing. This will allow the airline to bring in more aircraft and ease some of the pressure that has driven up fares. The Qantas group, which includes low-cost division Jetstar, expects to receive an average of one new plane every three weeks for the next three years. The company is renewing its domestic fleet and will launch ultra-long, non-stop services from Australia’s east coast to New York and London in late 2025. Still, aircraft aren’t coming fast enough to restore seat volumes on overseas flights. International capacity will increase from just 60% of pre-Covid levels to 81% in the first six months of 2023, Qantas said. Carriers worldwide have suffered losses approaching US$200bil (RM888bil) over the past three years. With travel restrictions now mostly dismantled, the International Civil Aviation Organisation expects passenger demand to recover to pre-Covid levels on most routes this quarter, and then to about 3% higher than 2019 levels by year-end.