Our international operations are returning to pre-Covid capacity

Qantas CEO Alan Joyce says he expects the airline to see a full return to pre-Covid capacity by 2024.

“We are confident that we will recover … 100% of our pre-Covid international capacity and well over 100% for our domestic capacity,” Joyce forecast for the 2024 financial year.

“(There’s) really strong demand in leisure, in business … in corporate,” he told CNBC, adding that pent-up demand will continue for some time.

Qantas reported record half-year profits for the six months ending December 2022, but shares still closed 6.8% lower on Thursday.

The flagship carrier posted an underlying pre-tax profit of A$1.43 billion ($975.2 million) in the half year ended December 31. That marks a turnaround from a $1.27 billion loss in the same period a year earlier.

Qantas Airways Airbus A330-200 prepares to take off at Los Angeles International Airport on July 30, 2022 in Los Angeles, California.

Aaronp/bauer-griffin | Gc images | Getty Images

In its results releasethe airline reported that the main drivers of the results were consistently robust travel demand, higher yields and cost improvements from the group’s US$1 billion recovery programme, which is nearing completion.

The road to 100% pre-Covid capacity will not be without turbulence, the CEO said.

The biggest roadblock for Qantas is the supply chain associated with aircraft, Joyce said.

“We’re getting three new 787s coming in the next few months, they’re two years late,” he said. This is in addition to the time it takes to reactivate their A380 fleet, which he said requires a lot of maintenance.

“Every maintenance facility around the world is very full because all the airlines are trying to get their planes back up and running.”

In China

The CEO said Qantas will benefit from this return of Chinese travelersas Beijing moves away from its zero-Covid policy.

“China is very important to Australia in general because the biggest international visitors to Australia were Chinese,” Mr Joyce said.

“We think it will be good for our finances here, which has a knock-on effect on Qantas.”

According to JPMorganChina accounted for 15.3% of Australia’s inbound tourism in 2019 — before the pandemic.

Total number of Chinese arrivals into Australia totaled 1.43 million in 2019, with Chinese tourists racking up a total spend of A$12.4 billion, official data showed.

Qantas is currently re-establishing its operations in Hong Kong, but limited ground handling capacity means the carrier cannot expand as quickly as it would like, the CEO said.