Australian companies say border closures affect businesses badly

Several major Australian businesses urged a swift reopening of state borders on Thursday, even as authorities warned against complacency as new cases of the virus appear to be trending lower.

Many Australian internal borders have been closed to contain the spread of the virus, with Victoria and New South Wales accounting for almost all new cases, and most states and territories have vowed to keep them shut for months to come.

Qantas Airways said on Thursday the closures were severely hampering a recovery in the domestic aviation market, which, alongside a lack of international flying, would lead to a significant loss this financial year.

The airline was running only 20% of its usual domestic schedule in August due to states closing borders, which CEO Alan Joyce said “doesn’t seem to make any medical sense”.

Retail conglomerate Wesfarmers also called for a quick reopening of state borders, with chief executive Rob Scott saying the restrictions were causing “enormous hardship”.

Qantas on Thursday posted a full-year net loss of A$1.964 billion ($1.41 billion) for the 12 months that ended June 30, one of its largest ever, driven by impairment charges and restructuring costs meant to help it weather the coronavirus pandemic. Alan Joyce said that trading conditions were the worst in the airline’s 100-year history and that a national framework on when states could open borders was needed to boost domestic flying.

He said it made sense to lock down in Victoria, which has the nation’s highest case count, but not to ban travel between places like Western Australia and South Australia, which are reporting no community tranmission of COVID-19.

“We’re not saying, ‘open the borders’ blankly,” Joyce said. “We’re saying, ‘Let’s have the rules to say what would you have to see in order for those borders to be open.’”

The airline is running only 20% of its usual domestic schedule in August, but he said that could increase to more than 75% if all state borders reopened before international ones.

Most international flying is unlikely to resume until a vaccine is widely distributed, which might occur in mid- to late 2021, Joyce said.

Qantas took about A$2.8 billion worth of one-off charges alongside its results, which included a write-down of A$1.4 billion on its Airbus SE A380 fleet, which is parked in the Mojave desert.

Its biggest-ever net loss was A$2.84 billion in 2014, which prompted major cost cuts and led to strong annual profits of about A$900 million for four years before the pandemic.

“We were on track for another profit above A$1 billion when this crisis struck,” Joyce said.

The carrier’s A$124 million underlying pre-tax profit in the 12 months ended June 30, its most-watched financial figure, was well above the A$6.5 million average profit expected by 11 analysts polled by Refinitiv. That was due mostly to a strong first half before the pandemic hit.

The airline in June raised more than A$1.4 billion from institutional and retail shareholders to help it weather the pandemic, announced plans to cut at least 20% of its staff, equating to 6,000 jobs.

Australian, Prime Minister Scott Morrison, who has previously expressed frustration at the economic impact of the closures, has written to state leaders about the problem they have caused for farmers, Federal Health Minister Greg Hunt said.

The complaints came as Australia’s second-most populous state of Victoria, the country’s COVID-19 hot spot, reported a small increase in new daily infections to 240 cases over the past 24 hours.

The figure will buoy optimism that a hard lockdown of the state capital Melbourne is containing the spread of the virus, with new cases down from more than 700 in late July.

“There are still 240 today. So those numbers are still too high. But they are coming down, they’re going in the right direction,” Allen Cheng, Victoria’s Deputy Chief Health Officer told reporters.

New South Wales recorded just five cases, although Premier Gladys Berejiklian there was still concern over the number of unknown cases.

“It’s important that the community continues to embrace those COVID-safe behaviours, such as social distancing and wearing a mask,” she said.

Australia has signed a deal with British pharma-maker AstraZeneca to produce and distribute enough doses of a potential coronavirus vaccine for its population of 25 million, Scott Morrison said. AstraZeneca last month said good data was coming in so far on its vaccine for COVID-19, already in large-scale human trials and widely seen as the front-runner in the race for a shot against the novel coronavirus.

Reuters