Why is the Qantas (QAN) share price flying low today?
Shares in the national carrier have tumbled over 20% since April.
Shares in Australia’s biggest airline Qantas (ASX: QAN) have continued their downward spiral and are back at the levels last seen in November 2020. At the time of writing, the stock was down 3.3% to $4.35 and it has now lost over 20% since early April.
What is impacting the Qantas share price?
The national carrier announced late on Wednesday that it would push back the planned resumption of its international passenger flights from October-end to December-end.
The decision was triggered by the federal government’s statement in Tuesday’s Budget that expects Australia’s vaccine rollout to be completed by the end of 2021, under the revised timeline. It had previously estimated this would happen by October-end.
As a result, international borders are not expected to open until mid-2022, the government now says.
“We remain optimistic that additional bubbles will open once Australia’s vaccine rollout is complete to countries who, by then, are in a similar position, but it’s difficult to predict which ones at this stage,” Qantas said in a statement.
The airline is now having to provide refunds or credits for the relatively few bookings it had started taking for international flights starting 31 October.
Qantas has been one of the hardest hit by the COVID-19 pandemic, and posted a half-year loss of $1.47 billion and had been banking on a swift vaccine rollout to resume overseas flying.
Focus on domestic operations
The delay in international flights means it will have to rely on boosting domestic operations to aid its financial recovery.
That might be easier said than done, given the penchant for many states to shut down domestic borders at the first signs of COVID-19 infections in the community.
Qantas is also facing pressure in the domestic sector, with upstart rival Rex (ASX: REX) this month launching $30 tickets on the Sydney-Melbourne sector, Qantas’ most profitable route.
Brokerage Jefferies on Thursday said Qantas will incur significant losses in 2021 as it focuses on stimulating a return of travel. It still expects the airline’s operations to be cash flow positive in the current half, and says it is well-positioned to benefit from a cost-cutting program whenever international travel resumes.
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