The Qantas Airways Ltd (ASX: QAN) share price has spent the last three months range-bound, struggling to break above $5 while finding buying support around $4.50.
Why the Qantas share price remains grounded
According to an article featured on Livewire, Montgomery Investment Management chief investment officer Roger Montgomery isn't too optimistic about the near-term prospects of the travel industry.
"Victorian and New South Wales lockdowns, and the spread of the virus through other states, has resulted in less enthusiasm for forward booking travel," he said on the blog.
"While leading indicators from Similarweb and Google trends remained strong into May, both trended lower into June, and are likely to have fallen further in July following the lockdowns of Australia's two most populous states."
In stark contrast to Montgomery's observations, Qantas previously forecast domestic capacity to reach 95 per cent of its pre-COVID levels in the fourth quarter of FY21.
It also believed that "Qantas and Jetstar expect to average 107 and 120 per cent respectively of their pre-COVID domestic capacity in FY22".
This announcement was made back on 20 May, where the Qantas share price rallied 3.54% to $4.68.
Expectations vs. reality
Qantas' optimistic forecasts have been hit by a rapidly evolving COVID-19 situation across Australia.
This week, the ABC revealed an email sent to Qantas staff. The broadcaster reported:
… the airline said it was running around 90 per cent of pre-COVID capacity before Sydney's lockdown took that to around 60 per cent.
Now, adding in the Victorian and South Australian lockdowns, the Qantas boss said the airline had reduced domestic capacity to less than 40 per cent of what it was pre-COVID.
Qantas chief executive Alan Joyce was hopeful that lockdowns might end soon, "allowing the airline to get back up to 60 per cent of pre-COVID domestic capacity by August and 80 to 90 per cent by spring".
Why the Qantas share price is higher this week
The Qantas share price is up 3.3% this week to $4.69 but remains around November 2020 levels.
NSW reported an additional 172 locally acquired cases on Tuesday, the highest daily figure since the beginning of the Sydney outbreak.
Despite the grim figures from NSW, there is a glimpse of hope for other major cities.
Victorian Premier Daniel Andrews announced that the state is officially out of lockdown from 11:59 pm on Tuesday, with some restrictions still in place.
