Qantas shares are up with international borders set to reopen sooner.
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Qantas shares are currently up 0.8%, it is worth noting that the ASX 200 is actually down 1.8% at the time of writing.
International border to reopen?
According to reporting by various news media outlets, including the Australian Financial Review, Australia may be getting closer to seeing international travel again.
The Prime Minister Scott Morrison is expected to announce later today that international borders could open as early as next month, helping people who are stranded overseas, or those wanting to leave the country.
All restrictions on vaccinated Australians will be lifted for inbound and outbound passengers once the 80% double dosed vaccinated rate has been reached.
The travel bans will be lifted on a state by state basis as each region passes the 80% mark. Some states, such as New South Wales, are further ahead with the vaccine progress than others.
Ultimately, the international borders are expected to open before Christmas. This could lead to home quarantine for arrivals, rather than using the current hotel system. Both NSW and South Australia are doing tests for this potential system.
The closed borders have seemingly impacted the Qantas share price since the onset of COVID-19 because of its limited ability to generate earnings from international flights.
However, Queensland Premier Annastacia Palaszczuk has said she hasn’t agreed to the plan yet. The Guardian quoted Ms Palaszczuk from her news conference today:
I’m not going to agree to anything when I haven’t seen any formal paperwork. It would be irresponsible and I think that Queenslanders would expect me to see some paperwork, to understand the issues before an announcement is made. So it’s a bit disappointing that we haven’t been given that due courtesy before National Cabinet.
What I’ve said clearly and Dr Young has said this and the Health Minister has said this. We need to be in a situation where every eligible person, so every eligible person in that cohort is offered a vaccine.
What could this mean for the Qantas share price?
Qantas predominately makes profit when flights are in the air, not when planes are stuck on the ground.
International borders opening up sooner may mean that Qantas can start generating international flight profit sooner.
Qantas said in its FY21 full year result that it suffered a $12 billion revenue impact from the COVID-19 crisis in FY21. It led to an underlying loss before tax of $1.83 billion and a statutory loss before tax of $2.35 billion.
The airline was already planning that from mid-December 2021, flights would start from Australia to COVID-safe destinations, which were/are (according to Qantas) likely to include Singapore, the US, Japan, the UK and Canada, as well as Fiji.
However, Qantas did say that a record performance by Qantas Freight was mostly offsetting the cost of idling international operations. It was still seeing “strong cash generation” and growth in members with its Qantas Loyalty business.
The post Qantas share price rises as border opening set to be brought forward appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.