Qantas Grounded with Coronavirus, Share Price Down (ASX:QAN)

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The Qantas share price has taken a hammering with the onset of the coronavirus. The virus has been impacting the world’s major airlines heavily. And now with the cut of international travel and grounding of their fleet the Qantas share price is at $2.53, at time of writing.

Qantas has taken the extraordinary measure of temporarily grounding more than 150 aircraft, suspending all international routes and 60% of domestic flights, this includes its subsidiary Jetstar.

ASX QAN - Qantas share price chart 1

Source: Optuma

The efforts to contain the spread of the coronavirus has led to a huge drop in travel demand, the likes of which we have never seen before. This is having a devastating impact on all airlines.

‘“We’re in a strong financial position right now, but our wages bill is more than $4 billion a year. With the huge drop in revenue we’re facing, we have to make difficult decisions to guarantee the future of the national carrier.

“The reality is we’ll have 150 aircraft on the ground and sadly there’s no work for most of our people. Rather than lose these highly skilled employees who we’ll need when this crisis passes, we are instead standing down two-thirds of our 30,000 employees until at least the end of May,” noted Group Chief executive officer Alan Joyce.

What does this mean for the Qantas share price?

With the pandemic now truly taking hold of the globe, Qantas has taken a beating. From the high in December 2019 of $7.46, it has fallen over 66% to $2.53, at time of writing.

Qantas Share Price Chart 2 - ASX QAN

Source: Optuma

Where to from here for Qantas?

Qantas is experiencing a significant fall with its share price closing below the historical support level of $2.65. With the announcements of grounding the international fleet, Qantas may fall even more with the next level of support being $1.85, this would represent a fall of over 75% should it continue to this level.

ASX QAN stock price chart

Source: Optuma

Alan Joyce also noted in his announcement that ‘No airline in the world is immune to this, with the world’s leading carriers making deep cuts to flying schedules and jobs. Our strong balance sheet means we’ve entered this crisis in better shape than most, and we’re taking action to make sure we can ride this out’.

Whist the short-term outlook for Qantas isn’t pretty, that may well change when the dust settles and normality resumes.

Carl Wittkopp

for Money Morning

PS: In this free report, Money Morning analyst Lachlann Tierney reveals two assets set to benefit as the ‘corona crisis’ worsens. Click here to claim your copy today.

About Carl Wittkopp

Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

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