Qantas Provides Vital Market Update on Travel Conditions
- Qanats shares slightly higher on market update.
- The trans-Tasman bubble represents a significant first step in international reopening.
- Sydney and Melbourne will be opened after one year closed.
Qantas (ASX: QAN) has today released a market update to the ASX following significant developments in recent weeks for domestic and international travel. Qantas CEO Alan Joyce also held a press conference addressing the company's future direction while the global COVID-19 recovery gathers pace. Qantas headline their recent announcement by revealing how Domestic Capacity had reached 90 per cent of pre-COVID-19 levels. Jetstar is also likely to exceed 100 per cent due to such strong domestic demand.
Recently Qantas has benefited from Australia’s incredible management of the COVID-19 crisis and continued Government support. The company has placed a target on international travel resumption for late October based on vaccine distribution and Australia's own performance. Preparations are underway for the reopening of international borders with a October target date; however, Qantas cited their own flexibility to adjust to conditions. Mr. Joyce did warn of the current volatility in international travel conditions.
The trans-Tasman buddle already poses a significant opportunity for the company with an 80-fold increase in the use of frequent flier points within the first four hours of bookings. To facilitate this resumption of travel, Qantas announced the opening of two international travel lounges in Sydney and Melbourne, lounges that have now been closed for more than a year. Beginning on the 19th of April, the bubble is expected to be a significant first step in the re-emergence of international travel. Over half a million New Zealanders live in Australia. New Zealand Prime Minister Jacinda Ardern has warned however, that the bubble will be actively managed with the threat of COVID-19 outbursts potentially affecting travel conditions.
Qantas CEO Alan Joyce has commented how "the two-way bubble with New Zealand is great news for... the tourism sector as a whole... bridging parts of the business out of hibernation." Mr Joyce also warned, however, that the impact of the pandemic on the company's balance sheet will continue to accelerate until international travel recovers. Snap lockdowns remain the biggest threat to the industry, as their potential continuously looms over domestic or international travel. Recent lockdowns during the Christmas period has an estimated $400 million impact on earnings, and the Brisbane Easter lockdown an estimated $29 million.
Moving Forward, the current environment continues to recover while Qanats remains focused on maintaining its strategic and competitive position by adding new routes, increasing frequency, and improving their general service. Qantas shares opened slightly higher today following a slow and consistent uptrend from March 2020. The company shares are currently trading at $5.23, still 43 per cent from their all-time highs.