CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Where next as Qantas completes $1.36 billion institutional placement?

We examine the details behind the airline's just completed institutional placement as well as look at how two top investment banks have changed their thinking on Qantas in the last couple of days.

Last Thursday, Australia's flagship carrier – Qantas (QAN) – announced an ambitious three-year plan to rebuild the airline. To achieve this, the airline said it would be tapping the market for $1.9 billion in fresh capital – made up of a $1,360 million institutional placement and a $500 million share purchase plan (SPP).

On Friday, Qantas announced the completion of the $1,360 million placement and noted that the raise was met by strong institutional demand, with 94% of the placement shares allotted to existing shareholders.

The SPP booklet is set to be released to eligible shareholders on 25 June.

Mind you, while there may have been strong demand from institutional investors, when the stock was lifted from its trading halt, the Qantas (QAN) share price dove, finishing out last Friday’s session down 9.069% at $3.810 per share.

Qantas continued to trend lower on Monday, with the stock down close to 5%, at $3.620 per share as of 1:11PM (AEDT).

In response to that announcement, Qantas CEO, Alan Joyce said:

'The fact that there was significant demand for this offer shows clear support for our recovery place and confidence in the fundamentals of this business.'

Mr Joyce finished by saying that 'The plan involves some difficult decisions but we are extremely well positioned to get through this crisis and start growing again on the other side.'

As a result of the raise the Group’s issued capital would expand by around 25%.

The analyst outlook: where next?

In response to the raise, UBS analysts reiterated their Buy rating on the airline, but cut their price target from $5.50 per share to $4.60 per share, as a result of the share count increase. Even so, UBS analysts noted that 'the raising should remove an overhang for some investors that were concerned with the outlook for gearing.'

Citi analysts, by comparison appear less confident in the outlook for Qantas: here, while the investment bank raised their price target from $3.70 per share to $4.60 per share, Citi analysts assigned the stock a Neutral rating with a High Risk disclaimer.

Indeed, although Citi’s price target implies potential upside from current price levels, the investment bank warned that ‘the longer-term outlook remains considerably uncertain and extremely difficult to forecast. We expect the path to recovery will be volatile and could lead to unexpected financial outcomes.’

Want to trade Qantas: long or short?

Create an IG trading account or log in to your existing account to get started now.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get commission from just 0.08% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

See more forex live prices


See more shares live prices


See more indices live prices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.