The Qantas Airways Limited (ASX: QAN) share price is pushing higher on Friday morning.
At the time of writing, the airline operator's shares are up 1.5% to $4.59.
Why is the Qantas share price taking off?
Investors have been bidding the Qantas share price higher today following the release of a market update.
According to the release, continued strong travel demand across both domestic and international has driven a further reduction in the company's net debt.
Management expects Qantas' net debt to be well below pre-COVID levels at $4 billion at the end of June. This is an improvement of approximately $1.5 billion since the end of December.
And while Qantas still expects to report a significant full year underlying loss in FY 2022, it remains on track to deliver second-half underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $450 million to $550 million.
Importantly, management highlights that the company is also on track to return to underlying profit in FY 2023.
This is despite the airline adjusting its domestic capacity levels for much of FY 2023 to assist with the recovery of sustained high fuel prices.
Capacity reductions
For July and August, an additional 5 percentage points of capacity will be removed on top of the 10% announced in May.
This total 15% cut will also be applied to September and a cut of 10 percentage points will be applied to schedules from October through to the end of March 2023.
This brings the company's planned domestic flying down to 106% of pre-COVID levels for the second quarter of FY 2023 and 110% for the third quarter.
Management notes that these reductions, combined with robust international and domestic travel demand, are expected to help Qantas substantially recover the elevated cost of fuel indicated by forward oil prices. In addition, they will assist with the near-term resourcing pressures currently being felt across aviation and the broader economy.
There are no changes to the company's international capacity plans. Flying will steadily increase from around 50% of pre-COVID levels currently to around 70% by the end of the first quarter of FY 2023 to help meet demand.
Anything else?
In other news, Jetstar's CEO Gareth Evans has made the decision to step down from his current role in December. An internal recruitment process for the role is now underway.
Finally, Qantas revealed that up to 19,000 EBA-covered employees across the company will be offered a $5,000 boost as the national carrier shares the benefits of its recovery. This follows a two-year wage freeze.
