QANTAS 1H2022 Earnings Preview: Where next for QAN stock?

Few industries were as devastated by the impact of the Covid-19 as the airline industry. Australia's successful containment of the virus provided welcome relief during the first half of 2021. It fostered a domestic travel boom before being cut short by the Delta outbreak in June and then the Omicron outbreak over Christmas.

Rubbing salt into the wound, the rampant spread of Omicron prompted countries including the U.S. and European Union to slap a “do not travel” to Australian warning even though tourists are not yet allowed in until February 21^st.

Supporting the recovery of the local travel industry, all states and territories apart from WA have stuck to their plans of re-opening despite the spread of Omicron, signaling the end of snap lockdowns domestically. This is a big win for Qantas because although its an international carrier, its domestic business comprises around 80% of EBIT. 

Since the onset of the pandemic, the Qantas Group has taken several actions to mitigate the financial impact resulting from the COVID-19 crisis and associated travel restrictions.

A three-year recovery plan to remove $1 billion in costs annually is on track – with $650 million in benefits already achieved, meaning Qantas needs to sell fewer seats to make a profit compared to industry rivals

The Qantas Group reported an Underlying Loss Before Tax of $1.8 billion for FY21 and a Statutory Loss Before Tax of $2.4 billion. Analysts expect a loss of (NPAT) of $765 million for 1HY22. Whether the company can return to profitability during the H2 or 2022 remains to be seen.

QANTAS Share Price Chart

After falling from a high of $7.46 pre COVID to a low of $2.03 in March 2020, the share price of Qantas has continued its recovery in 2022.

Not far above the current price of $5.34 is trendline resistance coming in at around $5.70 from the $7.46 high, where the rally should stall at least initially. Beyond here, the next upside target is the $5.97 high from October 2021.

On the downside, dips back towards $4.50/$4.20 have been well supported, and where buyers will again look to top up Qantas holdings.

Source Tradingview. The figures stated areas of February 16th 2021. 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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