Insights

Will the Qantas (ASX:QAN) share price go higher with reopened borders?

With the vaccine going live in the UK and reopening domestic borders, could the Qantas Airways (ASX: QAN) share price continue to recover?
The post Will the Qantas (ASX:QAN) share price go higher with reopened borders? appeared first on The Motley Fool Australia. –

asx share price rise represented by red paper plane flying away from other white paper planes

The first shipments of a COVID-19 vaccine have been delivered to the United Kingdom in super-cold containers, two days before a much anticipated public immunisation program. 

Back at home, restrictions continue to ease as the new COVID-normal sets in. ASX travel shares have been propped higher in recent weeks on the back of reopening borders. Could this see the Qantas Airways Limited (ASX: QAN) share price make a further recovery? 

December market update 

Qantas expects to start repairing its balance sheet during the second half of FY21 as domestic borders reopen, cost reduction programs kick in and loyalty and freight divisions continue to help move the company into recovery mode. 

Group domestic capacity is expected to increase to 68% of pre-COVID levels for December, rising to nearly 80% in the third quarter of FY21. This compares with the 20% capacity in the first quarter and around 40% in the second quarter of of FY21. 

Trading conditions have also vastly improved to match the airline’s rising domestic capacity. Over 200,000 fares were sold for flights to Queensland in the 72 hours after the border openings with Sydney and Victoria were announced. 

The airline believes that changes in the broader domestic market have seen a number of large corporate customers move to Qantas this year, a trend that has accelerated in the past few months. Qantas expects to see its domestic market share of above 70% to be maintained. 

Overall, the company will post a substantial statutory loss for FY21 but expects to be close to break even at the underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) level for the first half and net free cash flow positive in the second half. This assumes no material domestic border closures and no material international travel until at least the end of June 2021 beyond an increase in trans-Tasman flying to New Zealand. 

Qantas freight and loyalty 

Qantas freight continues to perform due to the spike in e-commerce volumes across its domestic freighter network and high yields on the international freighter network. To add some perspective, in the company’s FY20 results, net passenger revenue stood at $12.18 billion while net freight revenue was at $1.045 billion. Qantas freight is also doing preliminary work on logistics for transporting COVID-19 vaccines at cold temperatures. 

Qantas loyalty has been the group’s most profitable segment with $1.224 billion in revenue and $341 million in EBIT in FY20. Financial services and retail partners have been the two main earnings drivers, followed by loyalty’s own ventures. 

Cautiously optimistic 

A recovery is taking place for the beaten up travel and tourism industry, but Qantas Group CEO Alan Joyce remains cautious given the various unknowns. He highlights the uncertainty around the domestic economy, particularly once broader government support winds back, the dependency on a vaccine rollout and the standstill for international travel. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Lina Lim 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.

The post Will the Qantas (ASX:QAN) share price go higher with reopened borders? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!