Qantas Airways Ltd (ASX: QAN) shares got hammered in March.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed out February trading for $9.95. When the opening bell sounded on 31 March, shares were swapping hands for $8.37 apiece.
This saw Qantas shares down 15.9% over the month just past, or more than twice as much as the 7.8% loss posted by the ASX 200 over this same period.
Though it's worth noting that Qantas traded ex-dividend on 10 March. Investors who owned the stock at market close on 9 March can expect to receive the 100% franked 19.8 cent per share dividend on 15 April.
If we add that dividend payment back in, then the ASX 200 airline stock sank a modestly less 13.9% in March.
Here's what's been pressuring the flying kangaroo.
Image source: Getty Images
What sent Qantas shares into a tailspin?
Turning directly to the elephant in the room, the biggest tailwind pressuring Qantas shares last month was the outbreak of the Iran war at the end of February.
That's causing two separate difficulties for the airline.
First, the Middle East conflict could disrupt international travel destinations and see travellers delay their business or holiday flights.
Second, the conflict in the oil-rich Middle East and the closure of the vital Strait of Hormuz shipping route sent the oil price rocketing in March.
Here's what I mean.
On 27 February, Brent crude oil was trading for US$72.50 per barrel. By 31 March, a barrel of Brent crude oil was trading for US$107.50, up more than 48% over the month.
And any sustained major increase in the oil price could have a material impact on Qantas shares.
Indeed, on 26 February, Qantas forecast fuel costs for H2 FY 2026 would be around $2.5 billion, inclusive of hedging and carbon costs.
But with the Iran war sending global oil prices surging, Macquarie Group Ltd (ASX: MQG) analyst Ian Myles said Qantas' overall costs could increase by $250 million over two to three months.
And the ASX 200 airline's former chief economist, Tony Webber, said that if the Middle East conflict dragged on, it could see Qantas earnings fall by more than 50%.
According to Webber, a prolonged war could see some major changes in the company's flight operations. He noted:
They will cut capacity most on longer sectors where fuel costs are a higher percentage of total costs and where reducing capacity provides the strongest fare response, usually routes with more business and fewer leisure travellers.
Following the March carnage, Qantas shares are now down 4.3% since this time last year, not including dividends.
