At time of writing, the share price of Qantas Airways Ltd [ASX:QAN] is up 1.28%, trading at $4.76.
From a high of nearly $7.50, the QAN share price was savaged through to March but clawed its way back, up over 120% from the low:
We look at their two most recent updates, the outlook for the QAN share price and the return of the its dividend.
Latest Qantas update highlights
Here are the highlights from yesterday’s announcement:
‘• Group Domestic capacity at 68 per cent of pre-COVID levels for December, rising to nearly 80 per cent for Quarter Three.
- Maintaining strong liquidity of $3.6 billion.
- Balance sheet repair process expected to begin in Second Half of FY21.
- Restructuring and recovery program remains on track to deliver at least $1 billion in annual savings from FY23.’
And further announcement highlights from today:
‘• Alliance to provide capacity using recently acquired Embraer E190 aircraft commencing from mid-2021.
- Range and route economics make the E190 an attractive option in a post COVID-19 aviation market.
- The transaction confirms Alliance’s confidence in deploying the recently acquired E190s.’
What to make of this?
Well for one, both announcements highlight a continued recovery for domestic air travel in Australia.
Outlook for QAN share price and dividend
About midway through last year, Qantas scrapped its dividend to preserve capital in the new lockdown environment.
It wasn’t just prudent, it was required.
Prior to the February/March crash, the ASX 200 [XJO] was ticking along nicely and there were a lot of big bets placed on blue chip stocks that had a dividend.
But if you are bleeding cash it makes less sense to pay a dividend.
A lot of the 120% or so of the QAN share price rise from the $2 level is a combination of bargain hunting, macro recovery/vaccine optimism.
It’s not as if these investors are betting that there’s going to be a big $1 billion profit announced anytime soon.
Qantas looks to be the only airline in the game at the moment — it’s a bit like a bank — too big to fail.
Calling when the dividend will return is a tough one given that a successful vaccine rollout is needed globally to get travellers back in the skies.
I’d say given their cost savings program is targeting FY23, this would be the earliest the dividend will come back.
If dividends are what you’re after, be sure to check out this excellent dividend stock report (there are no banks in it I promise).
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