The travel industry has been decimated by the COVID-19 pandemic as leisure and corporate travel ground to a halt. The crisis forced Qantas into a significant restructuring program including the grounding of aircraft and 8,500 job losses.
The recent return to domestic travel has seen the number of full-time equivalent roles stood up, increase from around 9,000 in October 2020 to 11,500 in December 2020; this is expected to increase to around 14,000 in quarter three. Currently, approximately 13,500 roles remain stood down.
The group's international business remains largely grounded apart from repatriation services and a limited number of flights to New Zealand under a one-way bubble arrangement (allows only for New Zealanders to visit Australia). Broader international travel is unlikely to resume until 2022 and is expected to take some years to fully recover.
As of 30 November 2020, Qantas had $3.6 billion in available liquidity, including $2.6 billion in cash and $1billion in an undrawn credit facility. In an update in December, Qantas said it hoped to be close to breakeven at the underlying EBITDA level for the first half and net free cash flow positive (excluding redundancies) in the second half.
Since then domestic borders have opened and shut in response to local clusters including the “Avalon” cluster in Sydney over Christmas. More recently the “Holiday Inn” cluster in Victoria has resulted in border closures during the Australian Open tennis tournament.
Analysts are forecasting an operating loss of $65 million for the half. This is down from an operating profit of $1,896 million a year earlier. No interim dividend is expected to be declared.
The price action from the March 2020 $2.03 low has formed an ascending trend channel and is currently providing support $4.50/$4.40 area, just below the current price. Providing this support holds on a closing basis, the preference is for the Qantas share price to retest the November 2020, $5.79 high, with scope towards $6.50.
Keeping in mind, a sustained break and close below the $4.50/$4.40 support region would warn of a retest of the July $3.12 low.
Source Tradingview. The figures stated areas of the 15th of February 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.