Qantas points to improving outlook after Omicron delays recovery plans

The reopening of Australia's internal and external borders has significantly boosted the outlook for Qantas, although the Omicron COVID-19 outbreak has set back its business recovery plans by around six months. Qantas on Thursday posted a A$1.28b ($925.57m) H1 underlying loss before tax in the six months ended Dec. 31, steeper than the A$1.03b loss a year earlier. The airline also flagged a A$650m earnings hit from Omicron in the second half. Preparing for a surge in demand as the earlier Delta variant wave receded, Qantas had by early December recalled about 11,000 staff who had been idled without pay during the pandemic. But the surprise arrival of the Omicron variant, which pushed Australian COVID cases to record levels, dented demand and forced the airline to cut domestic and international capacity plans for the current quarter by around one third. "The impact of Omicron has pushed everything out by around six months from where we thought we would be," Chief Executive Alan Joyce told reporters, adding the earlier-than-needed ramp up of staff and equipment would add A$180m to costs in the second half. Qantas is also facing inflationary pressures from suppliers and rising fuel prices, though 90% of its fuel cost is hedged in the second half and its cost-cutting programme is on track, CFO Vanessa Hudson said. Qantas shares were around 2% lower in early trading, in line with the broader market (.AXJO), with broker Jefferies saying the result was solid given the difficult period. The airline said it would run 68% of its pre-COVID domestic capacity in the Q3, rising to 90% to 100% in the fourth quarter. International capacity would be around 22% of pre-COVID levels in Q3, doubling to 44% in Q4. Australia on Monday opened its international border to fully vaccinated travellers from all countries, the last step in a staged border opening that began in November. Internally, Western Australia will be the final state to open on March 3. <br/>