Why is the Qantas share price flying higher?

Posted: 23 August 2021 12:29 pm

Shares in the national carrier are up 9% over the last 12 months.

Shares in Australia’s biggest airline Qantas (ASX: QAN) are among the most traded stocks on the ASX on Monday. At the time of writing, its shares were up 1.2% to $4.30 each.

What is helping the QAN stock price?

Qantas has been one of the most-impacted companies by the coronavirus pandemic and the national carrier on Monday launched a reward campaign to encourage people to get vaccinated.

Investors are seeing this as a positive sign of the company preparing for a scenario where Australia’s rapidly progressing COVID-19 vaccine rollout will ease the restrictions on domestic and international travel.

Qantas said its Australian frequent flyers aged 18 and over who are fully vaccinated would be eligible to enter a "mega prize draw", with 10 people to win a year's worth of flights to 60 destinations, free accommodation and free fuel.

Qantas chief executive Alan Joyce said the vaccine rollout would help break the cycle of lockdowns and allow people to get back to work. "For us, getting the vaccine rate up to 70 and 80 per cent means thousands of people can go back to work," he said.

Australia’s biggest state New South Wales is forecast to reach the 70% fully vaccinated level around the middle of November, with most of the country set to hit this rate by Christmas.

Full year earnings

The announcement comes just days ahead of Qantas’ full year earnings where the airline is expected to report a multi-billion dollar loss. Qantas had posted a half-year loss of $1.47 billion.

Earlier this month, the airline stood down around 2,500 employees for at least 2 months, as fresh COVID-19 lockdowns across Australia’s major cities kept a lid on domestic flights. An already 8-week long COVID lockdown of Australia’s most populous city, Sydney, has played havoc on Qantas’ domestic operations given that many of its key routes originate from Sydney.

The bad news on the domestic front comes at a time when international travel is continuing to weigh on the travel sector’s finances as borders remain shut. The federal government expects to complete Australia’s vaccine rollout by the end of 2021, because of which international borders are now not expected to open until mid-2022.

But with the vaccine rollout racing ahead, at least domestic travel is expected to lift the fortunes of Australia’s biggest airline. Despite the overall gloom, Qantas shares have managed to climb nearly 9% over the last 12 months.

Think QAN shares could be a buy?

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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