The Qantas Airways Limited (ASX: QAN) share price is on watch today after CEO Alan Joyce warned that employees could be stood down if lockdowns are extended.
In morning trading, the Qantas share price was up 1.55% to $4.60 and the S&P/ASX 200 Index (ASX: XJO) was up 0.84%.
The Australian is reporting that Joyce sent a company-wide email warning stand downs remain a real possibility if the Sydney and Melbourne COVID lockdowns drag on for longer than anticipated.
Let's take a closer look.
Qantas facing strong headwinds
Motley Fool Australia has previously reported on the devastating effects that lockdowns and border restrictions have had on the Qantas share price.
When the New South Wales Government extended the Sydney lockdown beyond the initial 2 weeks, travel shares fell while the market as a whole was up.
Similarly, when Victoria went into lockdown travel shares fell on the news.
In today's report, Joyce warns that while the company is holding up well for now, an extension of lockdowns would be a financial disaster.
Joyce is quoted as saying:
"We're not at the point of requiring stand-downs in our domestic operations at this stage. But to be honest, we can't rule it out if multiple states keep their borders closed for extended periods."
The CEO, however, was positive in his email to staff.
"…unlike last winter there's now a Covid vaccine rolling out.
That means this cycle of restrictions and lockdowns will break. In other words, there is an end point to all of this and it's not far away."
Unlike last winter, however, Qantas will not receive any JobKeeper payments from the federal government. The program ended in March this year and Prime Minister Scott Morrison has repeatedly refused to bring it back.
Qantas share price snapshot
Over the past 12 months, the Qantas share price has increased 25.34%.
On the first trading day in 2020, before the coronavirus hit, Qantas shares were selling for $7.19.
The current 52-week high for the company is $5.79.
Therefore, on its best day over the past year, the Qantas share price is still 19.47% below where it was pre-pandemic.
Qantas has a market capitalisation of about $8.5 billion.
