Angus Hewitt: It's been a pretty rough time for Qantas, and I think this illustrates the two main ESG risks that face an airline. The first is more obvious – greenhouse gas emissions. They're implicit in flying jets, burn jet fuel. And so, one part of Qantas' headaches at the moment are the sharply higher fuel prices. High cost of flying through the higher fuel price necessitates a higher revenue generated from the flight in order for it to be more profitable. We're also seeing more flight cancellations. And many of these flights that had been cancelled, I suspect would have been unprofitable flights. So, I think that's a direct result of the higher fuel prices as well.

The second part of the equation here, which is also an ESG risk, is human capital. Labor typically makes up about as much as Qantas' cost base as fuel, and as we're seeing now, it's no less controversial. Qantas' employees, so that's mechanics, pilots, cabin crew, ground staff, they're all highly unionized. And given the pandemic-induced cost cuts, so job losses from stand downs to stem cash burn, the risk of labor unrest really has been elevated for a couple of years. We saw, sort of, in the last year or so Qantas' outsourcing of 2,000 baggage handlers in November 2020 was found unlawful by a federal court. So, this is also stemming – brewing under the surface.

Qantas is struggling at the moment with poor service levels and any further disputes between corporate and employees could lead to further industry action, including strikes, potentially weighing on everyday operations and inflicting further reputational damage. But we do expect these labor pressures to abate as the industry reaches some kind of equilibrium. So, a lot of the near-term issues are from a rapid resumption in air travel. And that's sort of following easing borders, particularly the international border, and that's coincided with higher levels of absenteeism as restrictions ease and staff get COVID or even the flu.

Financially, we think the worst is now behind Qantas, and we're expecting a return to profitability in fiscal 2023. This is driven by a resumption of the momentum in domestic travel, lifting domestic capacity above pre-COVID levels and continued recovery in international flying now the Australian border is open for the entire year.