Qantas concerns crush travel stocks

Qantas job losses coupled with uncertainty about domestic and international borders reopening sent travel stocks spiralling.

Flight Centre managing director Graham Turner. Picture: Liam Kidston.

The Qantas announcement of 6000 job losses coupled with uncertainty about domestic and international borders reopening sent travel stocks spiralling on Thursday, with Webjet closing more than 8.6 per cent lower at $3.39.

Corporate Travel Management fell 8 per cent to $9.66, while Helloworld fell almost 7.3 per cent to $2.42, down 19c on the day.

Most senior travel executives expect the share price volatility to continue.

Helloworld chief executive Andrew Burnes said Qantas’s announcement of job cuts and plane groundings was a very realistic assessment of the state of the nation’s travel sector.

“There is not really any argument about Qantas’s position and particularly the comments about international travel not resuming until the middle of next year. They are reasonable assessments by Qantas chief executive Alan Joyce,” Mr Burnes said.

“The other comment Alan Joyce made is very pertinent around domestic travel and other borders.

“A significant amount of profit comes from Qantas’s domestic network and loyalty program, and for a lot of leisure travel and for corporate travel the domestic and trans-Tasman markets are extremely important.

“You can’t get away from the fact that there were 11 million outbound trips and 10 million inbound trips to the country each year before this crisis, and that a very sizeable proportion of expenditure on both outbound and inbound travel is not coming back any time soon.

“Travel stocks have been up and down and all over the place. There was a 10 per cent adjustment today on different pieces of news. They have gone up and down and I think they will continue to do so because there is still uncertainty around the speed of the recovery, the opening of borders and the opening of international borders.

“There is a lot of uncertainty around these issues.”

Mr Burnes said that Dr Anthony Fauci, who oversaw the US government’s response to the coronavirus pandemic, had advised the American government that the virus would control the timetable for recovery.

“I think we are experiencing that in Australia. We had some timetables set. We hoped the Queensland government would open the borders and the other states would lift other restrictions, but that is all subject to the current outbreak in Victoria which is changing a lot of people’s thoughts around what those timetables might end up being.”

Helloworld shares had dropped to 70c on March 23 before recovering to $3.24 in early June. They have now fallen back to $2.42.

Meanwhile, Flight Centre closed almost 10.8 per cent down on Thursday at $11.49. Managing director Graham Turner said the drop was due to the Qantas announcement of job losses and Alan Joyce foreshadowing that it would be three years before travel returned to 2019 levels.

“If we get back in 2023 to last year’s levels I would be reasonably happy,” Mr Turner told The Australian last night.

“It’s going to be a bit tough but we are at one-third of our costs now. There will be a few international destinations like New Zealand and perhaps Vietnam where maybe a couple of arrangements can be made before Christmas and (new destinations) will start flowing a lot more during calendar year 2021. By the end of 2021 it will be reasonably open.

“The COVID-19 virus will be around for two years. You can’t eradicate it. You have to live with it and as long as you can control it and the airlines like Qantas and Etihad have very good systems it will be hard to catch the virus on a plane.

“I am hoping to be allowed to go to London on business at the end of July and am reasonably confident I will be able to come back without quarantine. We are operating in 24 countries and we have to keep our business going.”

Webjet declined to comment.