Qantas (ASX:QAN) share price climbs as overseas travel ban lifts

Qantas shares are taking off as the overseas travel ban lifts.

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Brokers favorite ASX share COVID reopening trade buyA woman standing on a tarmac celebrates a plane lifting off, indicating rising share price in ASX travel companies

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The Qantas Airways Limited (ASX: QAN) share price rose to $5.60 in morning trading as the federal government confirmed the latest change to international travel.

According to reporting by various media, including Seven West Media Ltd (ASX: SWM), Australian citizens will be able to travel overseas again on 1 November 2021.

However, this only relates to Australians who are doubled vaccinated, according to Prime Minister Scott Morrison. Whilst anyone can leave Australia without an exemption, at this stage only citizens, permanent residents and their immediate families can enter the country.

Seven reported that it was Australia’s high level of vaccination that gave the federal government the confidence to allow overseas travel again. Just over 87% of Australians over 16 have had their first dose.

Mr Morrison said:

Today I can tell you that Australia’s first dose vaccination rate is now higher than the United Kingdom, so well done Australia!

COVID-19 continues to affect global travel rules. A large amount of countries will need prospective travellers to be fully vaccinated and return a negative COVID-19 ‘pre-departure’ test before being allowed in.

How is Qantas looking to capitalise on this?

The airline has been busy making plans to get tickets available for purchase and preparing for various routes.

Last week, Qantas outlined how the Jetstar and Qantas businesses were gearing up for the accelerated border reopening.

It said that all Australian-based Qantas and Jetstar employees will be able to return to work in early December 2021. The company wasn’t expecting this to happen until June 2022.

Flights from Sydney to Singapore, Bangkok, Phuket, Johannesburg and Fiji are resuming ahead of schedule.

Qantas is planning to launch a new route from Sydney to Delhi on 6 December 2021 with three return flights per week with its A330 aircraft, building to daily flights by the end of the year. This is subject to discussions with Indian authorities.

The airline also plans to bring back two of its Airbus A380 aircraft earlier than planned and is in discussions with Boeing about accelerating the delivery of the three brand new 787 Dreamliners, which have been in storage for most of the pandemic.

The Qantas share price could also be taking into account the domestic update.

The airline business is preparing to ramp up capacity between Melbourne and Sydney as quarantine-free travel is set to resume between Australia’s two largest cities. Before COVID, The Sydney-Melbourne route was the second busiest route in the world. By Christmas, it’s expecting to operate up to 37 return flights per day.

CEO comments

The Qantas CEO Alan Joyce has recently said:

In recent weeks, sales on international flights to and from Sydney have outstripped sales on domestic flights, which shows how important certainty is to people when making travel plans.

While these flights will initially be for Australians and their families, we expect tourists from Singapore, South Africa and India to take advantage of these flights once borders reopen to international visits, which is great news for the industry.

Qantas also hopes that as vaccination rates increase in other states and territories, it will be able to restart international flights out of capital cities.

Broker rating on the Qantas share price

Ord Minnett is one of the most positive brokers on Qantas at the moment, with a price target of $6.50. It’s attracted to the ideas of it being a COVID recovery idea as well as benefiting from the recently-announced sale of land.

Based on the estimated earnings, Ord Minnett thinks Qantas shares are valued at under 10x FY23’s potential profit.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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