Why is the Qantas share price rebounding?
Shares in the national carrier have tumbled nearly 18% over the past month alone, but are climbing today.
Shares in Australia's biggest airline Qantas (ASX: QAN) are among the most traded stocks on the ASX on Wednesday.
The stock has been under pressure over the last few weeks, but was trading nearly 5% higher at $4.45 at the time of writing.
What is boosting the QAN stock price today?
Qantas, one of the companies most impacted by the coronavirus pandemic, on Wednesday said it was scrapping the requirement for all international passengers to be vaccinated against COVID-19 from 19 July.
The airline clarified that some countries may still require passengers to be vaccinated in order to enter or transit through their airports and said passengers would still have to conform to those rules.
"Some countries require passengers to be fully vaccinated before travel. Check the government requirements for all countries that you're travelling to or transiting through to ensure you meet their vaccination requirements," it said on its website.
The move puts the national carrier in line with the Australian government's decision earlier this month to drop the requirement for all non-resident travellers to either be vaccinated or seek an exemption to enter the country.
Most other airlines have previously dropped this requirement, making Qantas one of the last remaining airlines to insist on vaccinations.
It also means a likely increase in international bookings for the airline as travel picks up rapidly around the world due to huge pent up demand after more than 2 years of COVID lockdowns and restrictions.
Qantas said in June that travel demand remains strong across all categories. While it recently cut domestic capacity by 15% amid sustained high fuel prices and shortage of staff, there have been no changes to its international capacity plans.
Australia's largest airline still expects international capacity to increase to 70% of pre-COVID levels by the end of the September quarter and reach 90% of pre-COVID levels by the fourth quarter of FY23. The latest move is expected to boost the likelihood of hitting those milestones.
Investors are also counting on it to help repair the company's finances, especially at a time when high fuel prices are weighing heavily on the entire airline sector.
Qantas reported a $1.28 billion loss in the first 6 months of FY22. The company has previously guided for underlying earnings of between $450 million to $550 million for the 6 months ended 30 June, but will still post a full-year loss.
However, it remains on track to return an underlying profit for financial year 2023.
Its encouraging outlook is underpinned by recent announcements to grow both its international and domestic fleets, as well as the addition of at least 8 new international routes since Australia's borders reopened late last year.
Headwinds facing the airline
The airline's plans to cut costs are having an impact on travel times and the business's core service.
A combination of staff shortages and pent up demand from travellers is seeing the airline struggle to keep up with demand. While this might sound like a good problem to have, flight cancellations are soaring.
In a statement to the ASX, Qantas acknowledged its issues while saying it is looking to increase its staff to offset future problems.
“The Qantas Group sincerely thanks customers for their patience and understanding while the airline works through what has been a challenging restart for the industry globally,” the company said last month.
It also points out that it has hired more than 1,000 operational team members and hundreds of additional contact centre staff have slashed average call wait times, over the last 3 months.
Qantas says it will have 20% more team members on standby to minimise any impact of sick leave.
Adding to its issues, as part of its cost cutting, Qantas outsourced baggage handler jobs. According to The Guardian this is seeing as many as 1 in 10 bags go missing.
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