Originally Posted by
Green.Dot
Yep agreed- a sh!t tin of revenue during the most lucrative time of the year has been lost. The domestic cash cow has not delivered this time round and management were banking on it.
Not necessarily. In May last year after this had just started, with Domestic capacity at 5% and International effectively at 0% guidance was released showing cash reserves with flying at that level could last until December 2021:
Qantas Group Market Update
Now since then we’ve had some increase in domestic travel, not as much as hoped but still more than 5%. I’ll hazard a guess a lot of those tickets bought were full fare as well. We’ve had a strong FIFO market offering additional income. We’ve had government funded IFAM and repatriation flying. Some large corporate customers have switched from VA to QF. Loyalty remains cash flow positive. And we’ve had Jobkeeper extended beyond it’s initial end date. It sounds tough but outsourcing of some jobs will have a positive effect on cashflow too. The saving grace has really been stand down clauses.
Share price is around $5.00 after both the current NSW and Victorian outbreaks, still above the $4.20 it was at the start of November, and the highest at anytime since March. The company still has an investment grade credit rating.
Probably the only large cash burn currently is redundancy payouts, and they’ll mostly be all paid out over the next few months. Something tells me they wouldn’t have paid out all those redundancies unless they were sure cash reserves could lasted far into the future until a vaccine arrives.
So I’d guess the cash burn is now at a position where reserves could last well into 2022. Add to that the reopening today of booking availability for most international services from July 2021. I guess that can’t have been made on a whim, it would have had to have a deeper knowledge of the vaccine rollout plan than what’s being told to the general public as management certainly would know how cautious Australian governments are about outbreaks. And they wouldn’t be looking at re-opening bookings for most international services if they didn’t expect most domestic services to be operating as well.