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Date : 03/08/2021

Qantas Share Price Dropped On ASX Following New Announcement

Shares of Australia’s national carrier, Qantas have not performed well in 2021. QAN share price has lagged and failed to continue building on the momentum it set in late 2020 on the back of news stating the arrival of vaccines and Qantas unveling thier plan to mitigate the impacts of the pandemic by reducing costs.

Why is Qantas Share Price trading low today?

In light of the border closures across Australia, Qantas announced this morning that around 2,500 frontline Qantas and Jetstar employees will be stood down for an estimated two months in response to ongoing COVID outbreaks. The stand down is a temporary measure to deal with a significant drop in flying caused by COVID restrictions in Greater Sydney in particular and the knock-on border closures in all other states and territories. Qantas added that no job losses are expected.

Qantas’ decision will directly impact domestic pilots, cabin crew and airport workers, mostly in New South Wales but also in other states given the nature of airline networks. Employees will be given two weeks’ notice before the stand down takes effect, with pay continuing until mid-August.

Qantas Group CEO Alan Joyce said the difficult decision to trigger stand downs reflected the reality confronting many businesses operating in New South Wales.“This is clearly the last thing we want to do, but we’re now faced with an extended period of reduced flying

and that means no work for a number of our people. We’ve absorbed a significant amount of cost since these recent lockdowns started and continued paying our people their full rosters despite thousands of cancelled flights.Qantas and Jetstar have gone from operating almost 100 per cent of their usual domestic flying in May to less than 40 per cent in July because of lockdowns in three states. Hopefully, once other states open back up to South Australia and Victoria in the next week or so, and the current outbreak in Brisbane is brought under control, our domestic flying will come back to around 50 to 60 percent of normal levels. Based on current case numbers, it’s reasonable to assume that Sydney’s borders will be closed for at least another two months. We know it will take a few weeks once the outbreak is under control before other states open to New South Wales and normal travel can resume.”

The Delta variant’s impacts are going to be hard felt for several companies during these lockdowns. As we know it already, the airline industry is one of the worst affected and QAN shares therefore have been on the decline prior to today’s news. QAN share price dropped marginally this morning due to the announcement. QAN shares closed at $4.52 a share today. It looks like the bullish sentiment we saw surrounding QAN shares at the back end of 2020, when news of a vaccine broke out has not carried through as we approach earnings season. In 2021, QAN shares have dipped 6.8% and over 3.5% in the past week alone.

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