Australian earnings preview – Qantas

Australia

Full Year:

Qantas Airways Limited (QAN) is the flag carrier of Australia and its largest airline by fleet size, international flights, and international destinations. It is the third oldest airline in the world, after KLM and Avianca. It reports its full-year numbers on the 20th of August.

The travel industry has been decimated by the COVID-19 pandemic as leisure and corporate travel ground to a halt as borders closed around the world. Qantas has grounded 100 of its aircraft for at least a year, slashed 6,000 jobs. It has raised A$1.9bn in equity and as a part of a three-year plan more than a fifth of its workforce will be made redundant and furlough a further 15,000 employees.

Rating agency Moody’s downgraded Qantas’s rating to Baa2 with a negative outlook but said the recent equity raising would strengthen Qantas’s balance sheet and improve its financial flexibility. It added that Qantas was better placed than most airlines, as Australia’s domestic aviation market was one of the most profitable in the world per capita.

Ahead of the full-year result, Qantas has managed expectations by guiding the market to a small underlying profit of approximately $25million for the full year, a sharp drop from the $912 million the year before. It would come as a surprise if Qantas were to announce a final dividend.

Technically, the decline from the all-time high share price of $7.46 in December last year to the March $2.03 low demonstrates impulsive characteristics. Following this sell-off dips have been well supported ahead of $3.00. Providing this support level holds the correction can continue higher, towards trend channel resistance and the May high $4.80. More so on a break of downtrend resistance at $3.90/00 from the February $6.83 high.

Conversely, should the share price fall below $3.00 a retest of the March $2.03 low is possible.

Australian earnings preview – Qantas

Source Tradingview. The figures stated areas of the 13th of August 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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