The Qantas Airways Limited (ASX: QAN) share price will be in focus today as travel between Australia and New Zealand is reportedly going to restart.
What’s happening with borders?
According to reporting by News.com.au, quarantine-free travel from New Zealand’s South Island will restart next week.
Chief medical officer Paul Kelly said travel can restart because there have been no locally-acquired COVID cases since last year.
However, travel from the North Island won’t happen until the end of the month.
Both NSW and Victoria have agreed to this plan, though it remains to be seen what will happen with the other states.
News.com.au quoted Mr Kelly:
There is very good work being done to stop people from the North Island going to the South Island, so that is not a risk.
We hope to allow anyone who’s been in the South Island of New Zealand, whether they’re Australians, New Zealanders or other nationalities, to come in quarantine-free.
There are some Australians who have been stuck in the South Island New Zealand for quite some time and we’d welcome them home.
How easy will it be for passengers to get into Australia?
It was reported that, according to the Department of Health, people travelling from New Zealand will need to take a pre-departure PCR test within 72 hours of their flight and show evidence they are fully vaccinated.
Those potential passengers will also need to declare that they hadn’t been in New Zealand’s North Island for the prior two weeks.
It was also announce that Singapore and Australia are in talks to open quarantine-free travel. It is in “rapid development”.
What could this mean for the Qantas share price?
The Qantas profit has been impacted heavily by the limited number of passengers it has been able to transport since the beginning of the COVID-19 pandemic. But it’s expecting a recovery.
In just FY21 it saw an underlying loss before tax of $1.83 billion and a statutory loss before tax of $2.35 billion. Qantas said at the time that it had suffered a $12 billion revenue impact from COVID-19 in FY21.
Despite all of those impacts, it saw statutory net free cashflow of $267 million in the second half of FY21. It also said that its restructuring program was ahead of target, delivering $650 million in year one.
Around 95% of domestic flying was cash positive and a record performance by Qantas Freight “mostly” offset the cost of idling international operations.
Talking about FY22, Qantas said that it was expecting group domestic capacity to reach 110% of pre-COVID capacity in the second half of FY22. As Australia’s international borders open, it was expecting capacity to reach 30% to 40% in the third quarter and 50% to 70% in the fourth quarter.
Its recovery plan is expected to deliver an additional $200 million of cost benefits. Qantas was also expecting a continuing strong cash contribution from its Qantas loyalty division, with plans to offer more ways to earn points and status credits on the ground.
Domestic freight demand is expected to remain strong. However, international freight ‘belly space’ is expected to be constrained until international capacity stabilises.
After the recent sale of land, Qantas CEO Alan Joyce said that it would use those $802 million of funds to pay down debt. He also said:
The restart date for international travel has been brought forward and the thresholds for domestic borders opening in most states should be reached in the next two months. We know there is a lot of pent-up demand that we’re ready to capitalise on, with some strong signs already.