Qantas has suffered a $100 million hit to its first quarter earnings after several states closed their borders in July in response to Victoria's coronavirus outbreak.
Chief executive Alan Joyce on Friday said the states' decisions had delayed Qantas' recovery.
He had expected domestic services to be operating at 60 per cent of pre-COVID levels.
Yet the border closures, which include Queensland and Western Australia, mean domestic services are operating below 30 per cent of previous levels.
Mr Joyce told shareholders at Qantas' annual general meeting that if Queensland opened to NSW soon, he expected domestic capacity to improve to up to 50 per cent.
"We're expecting to see a boom in domestic tourism once more borders open up," he said.
The airline aims to save $600 million this financial year to stay viable. It's cut 6000 workers, is likely to cut 2000 ground handling crew and has stood down 18,000 staff.
Chair Richard Goyder took a swipe at Queensland and Western Australia's governments, which are yet to open their borders and allow visitors.
These decisions did not seem based on health risk, he said, and ignored the economic and social risk of keeping borders shut.
He identified some Asian countries Qantas may be able to fly to early next year.
Korea, Taiwan and some Pacific islands may accept overseas visitors.
Mr Joyce said he hoped travel arrangements allowing New Zealanders ito Australia would soon be reciprocated.
Overseas travel would take more time, Mr Joyce said.
Flying to popular destinations such as the US would require a vaccine due to the virus' prevalence, he said.
Mr Goyder was asked by a shareholder whether Qantas will pay a dividend this year.
Mr Goyder said the company wanted to repair its balance sheet first and then look at rewarding shareholders.
The airline will reduce its board by two people, from 10 to eight directors, to further reduce costs.
The national carrier last month said it would also consider relocating and downsizing its Australian offices and aviation facilities.
The annual general meeting will require shareholders to vote on board appointments and executive pay, including whether to approve Mr Joyce's salary at $2.17 million, plus incentives.
He and other executives took a pay cut last financial year due to the impact of the pandemic.
Shares in the airline were up by 2.26 per cent to $4.53 at 1155 AEDT.
