Qantas Hit Hard by Weaker Earnings, What’s Next for the Share Price?

Australia’s national airline has been savaged by COVID-19. The global lockdown is hitting the travel industry like nothing we have seen before.

At the time of writing, the Qantas Airways Ltd [ASX:QAN] share price is trading at $3.78 — a 49.40% drop from the high in December 2019…but will it fall further?

ASX QAN Share Price Chart 1 - Qantas Shares

Source: Optuma

 

What is happening at Qantas?

Qantas holds a top 10 position in the ranks of global airlines, sitting at number eight.

In short, its business is flying people all over the world. Right now, the world is at a standstill.

As a result, so is Qantas — and this is reflected in the company’s recent earnings announcement:

  • Underlying profit before tax: $124 million (down 91%)
  • Statutory loss before tax: $2.7 billion (majority of which is non-cash, including aircraft write-downs)
  • $4 billion revenue impact from COVID crisis in 2H20
  • Operating cash flow: $1.1 billion

Qantas Group CEO Alan Joyce said:

The impact of COVID on all airlines is clear. It’s devastating and it will be a question of survival for many. What makes Qantas different is that we entered this crisis with a strong balance sheet and we moved fast to put ourselves in a good position to wait for the recovery.

The struggle in the industry isn’t isolated to Qantas.

The likes of Sydney Airport Holdings Pty Ltd [ASX:SYD], Webjet Ltd [ASX:WEB] and Flight Centre Travel Group Ltd [ASX:FLT] are all fighting an uphill battle right now, along with the wider travel sector.

Where to from here for the Qantas share price?

Right now, it’s hard to say, as Qantas — like the rest of us — is at the mercy of COVID-19. We don’t know when it’s all going to end or when life may start to look normal again.

ASX Qantas Share Price Chart 2

Source: Optuma

 

With a strong balance sheet, Qantas is managing its way through this crisis as best as it can.

At the time of writing, the Qantas share price is trading at $3.78 — just above the support level of $3.57.

If it happens to go up, the levels of $4.16 and $4.94 may provide future resistance.

On the downside, if the price declines, the levels of $3.13 and $2.66 may provide future support.

There’s a lot of earnings announcements coming out this week. And with the All Ords still moving sideways, it will be interesting to see which way Qantas goes over the coming weeks.

Regards,

Carl Wittkopp,
For Money Morning

PS: Four Well-Positioned Small-Cap Stocks — These innovative Aussie companies are well placed to capitalise on post-lockdown megatrends. Click here to learn more.

 


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

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