Jump to content

Qantas FY22 earnings: why is Qantas struggling post-pandemic?


MongiIG

Recommended Posts

Qantas’ EPS is expected to stay in the red as the carrier struggles to bring its profitability back on track due to capacity constraints and soaring fuel prices.

1661326951594.pngSource: Bloomberg
Hebe Chen | Market Analyst, Melbourne | Publication date: Wednesday 24 August 2022 

Qantas earnings date

Qantas Airways Limited (ASX: QAN) will announce its annual report on Thursday, 25 August 2022.

Qantas earnings expectation

Qantas’ EPS for FY22 is expected to stay in the red zone and slide even then in 2021 (-0.69 vs. -0.45). As the carrier struggles to bring its profitability back on track due to capacity constraints and mile-high fuel prices, the NPAT is anticipated to be approximately AUD -$855.8 million.

Qantas earnings key watch

  • Capacity levels

The process of returning to a pre-pandemic normal has not been easy nor smooth for Qantas. The airline is experiencing pre-COVID levels of demand while underlying productivity issues such as labour shortages and operational challenges persist at record highs.

Recent guidance from Qantas suggests these issues will likely persist and until a sound solution is found and in turn may need to limit its capacity levels after recent reductions, and thus slow its timeline to profitability.

  • Demand and cost

While travel demand may provide a strong tailwind for the airline industry, flight and passenger capacity remains below the pandemic level.

International flights, an area which often brought high profitability margins, have fallen behind the trend and can not be found at only 50%. Moreover, for the foreseeable future, travel demand may cool as ongoing surging fares and airport chaos works as a deterrent and impact traveller's experience.

  • Management and brand

Qantas CEO Alan Joyce has recently found himself in trouble again after the union called for his resignation following his apology to Qantas customers. While it’s unlikely that Mr Joyce will leave over this, the dispute shows that the business does need to repair its reputation and trust with customers after a two-year gap, something that stockholders are keen to see.

Qantas technical analysis

Despite the recovery in risk sentiments over the past month, the Qantas share price remains ten percent lower year-to-date with little change from the last year.

Near term, the previous ascending pattern will be the critical challenge with resistance set around $4.7 to -$4.82.

Longer-term, the big gap between $4.9 and 5.2 is a massive hurdle if the price attempts to return to the level from earlier this year. On the flip side, the share price is currently retesting the 100-day moving average, which is in line with the key 50% Fibonacci retracement level near $4.51. Breaching it could draw further downside to navigate below $4.5.

Qantas daily chart

1661326951618.JPGSource: IG
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      22,107
    • Total Posts
      92,972
    • Total Members
      42,495
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    nonemo
    Joined 03/06/23 15:54
  • Posts

    • I don't know but it looks like a really awesome service Because I have come across all sorts of mixers in my work  
    • Charting the Markets: 2 June Indices rally as US agrees debt ceiling bill. EUR/USD, GBP/USD rally while EUR/GBP stabilises as US debt ceiling bill is passed. And WTI recoups recent losses while gold, silver on track for first weekly advance. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 02 June 2023               This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • It was a blockbuster number yesterday for the ADP private payrolls, showing 278,000 jobs opened in May, while forecasts had been for 170,000.  Jeremy Naylor | Analyst, London | Publication date: Friday 02 June 2023 IGTV’s Jeremy Naylor suggests a similar upside surprise could see almost 300,000 jobs created under the non-farm payroll count with estimates for 190,000 job creations. The unemployment rate is seen rising one notch to 3.5%. (Video Transcript) NPFs: what to expect Could yesterday's strong private payrolls number from the ADP reading give us an insight into the potential upside risk to today's non-farm payrolls? That report from ADP yesterday showed 278,000 jobs opened in May - forecasts had been for 170,000. Now the NFP expectations, 190,000 job creations are forecast for the month of May proportionately using that ADP surprise. That would mean an upside reading for NFPs close to 300,000. Why the increase? Now, the unemployment rate is seen rising one notch to 3.5%. Why is that rising? When you've got that rise in the number of job creations, the unemployment rate is not taking the same data that the jobs numbers themselves are being produced from average hourly earnings. We're looking there for that to go up 0.3% month-on-month, 4.4% year-on-year, still below the rate of inflation. Now, this chart shows the unemployment rate back to pre-Covid-19 levels. It's clear that jobs have been created at an appreciable rate and this alongside a relatively strong GDP number and inflation coming down, there may yet be a soft landing for the US economy. But if the Federal Reserve (Fed) does continue to raise rates, things may get a little bit more sticky for the economy and a little bit more difficult to predict. This is a comparison of fed funds rates and US consumer price inflation (CPI) since January 2021. So you can see here the rate at which the US central bank has been piling the pressure on the monetary markets with that rise to five and a quarter percent. And at the same time, the CPI number is coming down, which is a good thing, but it's still not down to the 2% level, 4.9% is a long way away still from the 2% target. So the Fed is entitled still to have an excuse to raise interest rates. US dollar basket Let's take a look at what's been happening with the US dollar basket. Yesterday, we saw a pullback coming through as we saw money going into risk assets because of that rubber stamping from the Senate or the vote in the Senate to approve the budget that's now gone for the presidential seal. EUR/USD And we've seen a second day in a row of losses or the euro for the dollar basket as far as the euro/dollar is concerned, bouncing away from that 76.4% retracement. And I think now, you will have been stopped out if you were short on this, you would have been stopped out on this and hopefully you would have got some profits on the way down. So that's where things are ahead of non-farm payrolls out today at 13:30 UK time. And we will be live on the IG platform at 13:25 today.
×
×
  • Create New...