Qantas flies away from reputational hit, forecasting profits of $1.3 billion and record loyalty earnings

Qantas believes the worst of its troubles have passed, saying flight cancellations and baggage mishandling rates are tumbling after a torrid quarter of grounded services and business customer complaints.

The embattled airline revealed a new market update on Thursday, forecasting underlying profits of between $1.2 billion and $1.3 billion before tax in the first half of FY23, recovering from the underlying loss of $1.86 billion it posted for FY22.

Qantas said its functional performance is also on the up, with on-time performance currently at 75%, below the airline’s pre-COVID target of 80% but up 23% from its gloomy June low.

Cancellation rates have fallen from a high of 7.5% in June to 1.7% so far in October, while misplaced baggage numbers have halved from June to six per 1000 passengers.

Operational service will improve in the months to come, the airline claimed, with the Qantas group keeping 20% of its aircraft on standby for use at times of extreme demand.

It will also spend a further $200 million on rostering additional staff, training new employees, and overtime for customer service centre staff, the airline added.

Conditions have been “really challenging” for the airline, CEO Alan Joyce said, “but today’s announcement shows how far we’ve come”.

Those challenges have included a spike in sick leave requests which depleted staff numbers during this winter’s COVID-19 wave; soaring fuel prices; extreme weather events hampering scheduled services; and staffing shortages at air traffic control centres nationwide.

Other internal factors have contributed to Qantas’ recent struggles, the Transport Workers Union says.

The TWU, which says the airline has faltered since outsourcing key elements of its workforce, believes the latest market update adds up to little more than a PR “stunt”.

“Workers have been forced to bear the brunt of Qantas’ mismanagement and tactics to illegally sack, threaten and squeeze pay and conditions,” TWU national secretary Michael Kaine said.

“Qantas management under Joyce has treated its own workforce as its nemesis — workers have been villainised, victimised and are now being used as pawns in Qantas’ latest PR stunt.”

Despite complaints, Qantas says Frequent Flyer business is booming

Flight cancellations, delays, and bungled baggage deliveries led to an intense spate of customer complaints, with the Australian Competition and Consumer Commission last month opening an investigation into that barrage of customer criticism.

Among the detractors were some of Qantas’ elite business travelers, several of whom have vented their frustration at the carrier online.

Beyond the pure financial impact of its recent woes, brand experts have suggested the airline’s reputation, largely enforced by a loyal cadre of frequent business travellers, will be harder to repair.

But even among its Frequent Flyers customers, whose elite ranks received a personal apology from Joyce in August, Qantas claims it is turning things around.

Qantas Loyalty — which includes its Frequent Flyers and Business Rewards program — is expected to draw in record earnings in the first half of the financial year, and is tracking towards its EBIT goal of $425–$450 million.

SmartCompany has contacted Qantas for comment.