The Qantas Airways Limited (ASX: QAN) share price has given back its early morning gains to be down 0.5% at time of writing.
That’s right in line with the broader S&P/ASX 200 Index (ASX: XJO), also down 0.5% at this time.
That’s the action today.
Now let’s take both a step back and have a glance ahead at the bigger picture for Qantas shareholders.
COVID-19 and the Qantas share price
Qantas, like most every ASX travel share, was absolutely hammered following the onset of COVID-19.
And that’s no exaggeration.
From 27 December 2019, when the Qantas share price was at $7.34, through to 20 March 2020, Qantas shares plummeted 68%.
Since then, the airline has recovered strongly. It’s now up 136% from its 20 March 2020 lows.
Yet the Qantas share price remains down 24% from its post-Christmas levels in 2019. (Remember, when a company loses 50% in value, it needs to gain 100% to get back to even.)
Now, with Australia poised to begin reopening in earnest, investors are increasingly wondering if the flying kangaroo will march back to its pre-pandemic levels. Or perhaps even exceed them.
Can Qantas pull a Ryanair?
Even with the rapid rollout of the vaccines Down Under, it will likely be sometime after Christmas before all the Australian states fully reopen to international travels. Even interstate travel will likely see some restrictions remain initially.
That, for now, looks to be keeping a lid on the Qantas share price.
But the light is certainly beckoning at the end of the lockdown tunnel. And Australians may soon join their British and American neighbours in being able to hop on an airplane and take that much missed vacation.
In fact, in the United States, according to Josh Gilbert, market analyst at global online trading platform eToro, “The US airline Delta [Delta Air Lines, Inc. (NYSE: DAL)] expects to see domestic travel bookings in 2022 exceed the numbers set back in 2019.”
Among the biggest winners, Gilbert told The Motley Fool is Ryanair Holdings plc (LON: RYA).
Low-cost carriers are seemingly winning the battle of industry market share, with Ryanair’s share price recently climbing above pre-pandemic levels to around 17 euros per share. Compared to larger airlines in Europe, Ryanair expects more passengers to fly in the European autumn season, citing strong optimism moving into 2022.
Indeed, taking the same 27 December 2019 date we used for the Qantas share price moves above, shares in Ryanair are now up 16% since then. A feat Qantas shareholders are certainly hoping the Aussie airline can replicate.
How has Ryanair been tracking?
According to Gilbert:
Ryanair announced its traffic numbers hit 10.6 million passengers in September 2021, which more than doubled from the same period in 2020 of 5.2 million passengers. The company’s CEO, Michael O’Leary, has also confirmed that he expects that the company will keep flying around 10 million passengers a month until 2022, which will ultimately benefit Ryanair’s share price moving forward.
Ryanair has been successful so far in attracting customers and filling planes by keeping fares low, which has also resulted in the company retaining a strong balance sheet. In its recent FYQ1 report in July, Ryanair announced its revenues increased by 196% year-over-year, net debt dropped by 27%, and cash balance grew to 4 billion euros.
As for the outlook for Aussie travel shares, Gilbert told The Motley Fool, “Local airlines such as Qantas and Virgin will also benefit, especially when it comes to Aussies travelling out of the country.”
Keep an eye on these risks
Investors hoping to see the Qantas share price leap above its pre-pandemic levels should remember that “the possibility of new restrictions and lockdowns is a constant risk,” Gilbert said. Adding that, “Travel stocks aren’t going to be a quick flip and investors need to understand that this will be a long-term play.”
Atop that, Gilbert noted:
Travellers in Europe still have to complete PCR tests and require vaccine passports in order to travel, and this will likely be the same across different countries, including Australia.
Nevertheless, for investors with a long-term outlook, the travel industry is an attractive sector that is providing some impressive returns and an interesting outlook for the future.