News: QAN UPDATE 1-Qantas boosts domestic capacity outlook as travel demand improves

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April 15 (Reuters) - Qantas Airways Ltd (QAN) on Thursday boosted its capacity outlook for the domestic market, forecasting it would reach 90% of pre-pandemic levels during the current quarter and even more in the next financial year as travel demand improves.

"We're now seeing really positive signs of sustained recovery," Qantas Chief Executive Alan Joyce said in a statement.

"This is the longest run of relative stability we've had with domestic borders for over a year and it's reflected in the strong travel demand we saw over Easter and the forward bookings that are flowing in each week from all parts of the market."

Rival Virgin Australia said earlier that 10 leased Boeing Co BA.N 737 planes would return to its fleet as part of plans that would see it reach more than 80% of pre-pandemic domestic capacity by mid-June.

Qantas had previously forecast it would reach 80% of pre-pandemic levels in the quarter ending June 30, allowing it to stop burning cash.

The airline said its short-term strategy remained generating positive cashflow rather than returning to pre-COVID profit margins, which meant it was offering low fares to stimulate demand. The positive impact on earnings in the financial year ending June 30 will be relatively small as a result, it said.

Growth in domestic capacity is expected to continue into fiscal 2022, with low-cost brand Jetstar to reach 120% of pre-COVID levels and Qantas to be at 107%, the airline added.

The resumption of international flying, with the exception of New Zealand, is slated for Oct. 31, though Qantas said that could be pushed back or staggered due to Australia's slower-than-expected vaccination rollout.

"While there have clearly been some speedbumps with the vaccine rollout, we are still planning for international flights to resume in late October," Joyce said. "We remain in regular dialogue with the Government."