Investors stay grounded as Qantas faces $500m hit from Iran crisis
The market shrugged off the nation’s carrier’s move to decrease domestic capacity and axe routes, but it may still pay the price for the ongoing spike in fuel costs.
Australian flag carrier Qantas’ could be facing an earnings hit of up to $500 million as a result of the Iran crisis, raising the prospect of price hikes or further reductions in flights.
Investors largely shrugged off the airline’s announcement on Tuesday that it would cut back on domestic flights, and even axe some lower frequency routes that have become unprofitable, to preserve fuel for international travel.
The carrier also said its second half fuel costs were now expected to be in the range of $3.1 billion and $3.3 billion, higher than the $2.5 billion it flagged earlier this year. Qantas shares closed just 0.3% lower, but the stock is down about 15% so far this year.
VanEck Associates deputy head of investments and capital markets Jamie Hannah told Capital Brief “it’s not a shock” that the formerly state-owned airline is “doing what they can to protect their margins”.
