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Earnings season: What to expect from the Qantas FY 2020 result

Earlier today I looked at what was expected from Telstra Corporation Ltd (ASX: TLS) when it releases its full year results later this month. You can read about that here.

Another highly anticipated full year result that investors will be watching out for comes from Qantas Airways Limited (ASX: QAN).

The airline operator is scheduled to release its full year result on 20 August.

What is expected from the Qantas FY 2020 result?

According to a note out of Goldman Sachs, its analysts expect Qantas to report an operating EBITDAR of $2,220 million. This will be a 37% decline on FY 2019’s $3,521 million.

On the bottom line, the broker is expecting the airline to post a modest $48 million profit before tax and an underlying net profit after tax of $25 million. This compares to a profit before tax of $1,326 million and a profit after tax of $912 million in FY 2019.

Unsurprisingly, Goldman doesn’t expect Qantas to pay shareholders a final dividend.

What else should investors look out for?

Commentary around the coronavirus pandemic is something which the broker will be interested in.

It explained: “The key focus of investors will be the impact of the coronavirus outbreak on international and domestic passenger volumes, scheduled services, load factors and ultimately operating margins in 2H20. Look for any colour on what measures management is taking to minimise the cost impact from the ongoing coronavirus outbreak, and how long these might be in place.”

The same goes for recent border restrictions and the company’s previous plan to increase capacity over the coming months.

Goldman said: “Amid concerns over secondary waves of infection in eastern states, border restrictions remain dynamic. How is QAN planning to increase capacity into this outlook?”

And finally, investors will no doubt be keen to know how much cash Qantas is burning through and how long it can continue with its current liquidity.

Goldman notes that Qantas expects to have a cash burn rate of $40 million per week from July. But it fears this could have changed given the border closures since this guidance was given.

In respect to its liquidity, Qantas has indicated that it would have $5.1 billion pro-forma liquidity, with a ~$1 billion restructuring outlay in FY 2021. Goldman is curious about how long it expects this to last if conditions remain stagnant, and whether it will need to raise fresh equity in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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