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Flight Centre recovery closer but still bleeding; Qantas posts huge loss

Qantas and Flight Centre continue to post massive losses but they claim a recovery in tourism and travel is underway.

Qantas posted a $1.19 billion pre-tax loss and a $886 million bottom line loss for the June 30 year.

Total revenue losses from COVID have reached $25 billion, which chief executive Alan Joyce said was “staggering”.

Flight Centre’s bottom line loss was $286 million, compared with a $433 million loss for the previous year, a difference of $146 million.

Qantas was hit by nine months of the financial year impacted by border closures and “waves of uncertainty” related to COVID variants.

Like Flight Centre, Qantas’s fourth quarter was where the recovery took hold and a “huge increase in forward travel demand”.

“We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional,” Mr Joyce said.

Qantas said “the existential crisis posed by the pandemic [was] now over” and the on-time performance of the airline and baggage handling issues were improving. On-time performance was expected to reach 75 per cent in September, and baggage handling was anticipated to be back to pre-COVID levels about the same time.

“This result takes the statutory net loss before tax impact of COVID on the Qantas Group to nearly $7 billion and our total revenue losses to $25 billion. These figures are staggering and getting through to the other side has obviously been tough,” Mr Joyce said.

Flight Centre also reported strong momentum emerging late in the financial year. Its fourth quarter total transaction value (the amount spent through its channels) exceeded the TTV for all of 2021 and its global corporate and leisure businesses, other than Asia and ‘other’ segments, reported a positive underlying EBITDA.

Total revenue for the company topped $1 billion and Flight Centre said there was still considerable pent-up demand for travel that was yet to flow through.

Australian outbound travel was tracking at only 35 per cent of pre-COVID levels and holidaymakers were only starting to return to travel.

A full market recovery was not expected in 2023 but the strong momentum of the 2022 fourth quarter was providing momentum.

The recovery was hampered by a slower return of airline capacity. The absence of Chinese carriers and a reduced presence from Virgin Australia were among key issues.

“[The] added complexity, cancellations and delays, challenges in securing seats again reinforces travel’s resilience and are helping fuel a renaissance if the expert travel advisor across both leisure and corporate,” the company said.

“While supply constraints and macro-economic changes are being monitored they are not currently, noticeably impacting demand.”

Flight Centre backed away from providing specific guidance for 2023 because the rebound in travel was ”still in its infancy”, while China remains closed to travel and airline was capacity was yet to stabilise.

“Profit and TTV recovery are unlikely to be linear and again expected to be heavily second-half weighted,” it said.

Managing director Graham Turner said there was a much brighter outlook.

“Travel demand has recovered rapidly since most governments globally removed or relaxed border restrictions and we have started the new fiscal year with strong momentum,” Mr Turner said.

“In the leisure sector we are generally gaining market share in our core markets, increasing productivity and capturing more sales and securing a strong pipeline of account wins to drive future growth.”

  • This story first appeared in InQueensland and is republished here with permission
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