Qantas struggles, Virgin progresses to ‘bidder shortlist’

As Virgin makes progress towards finding a potential buyer, investors continue to have mixed feelings about Qantas.

Up there with the most impacted industries as a result of the coronavirus pandemic are airline and travel companies. Indeed, as governments rush to cut off the spread of Covid-19, across the globe blue-chip airlines have seen their fleets grounded and aggressive, but necessary domestic and international travel restrictions put in place.

Qantas share price in focus

Overall, in the last few months – Qantas Airways Ltd (QAN) – Australia’s flagship carrier has extended its domestic and international flight cancellation programs, raised over $1.5 billion in fresh debt and stood-down around 25,000 of its staff.

In light of that, Alan Joyce, the Qantas CEO recently said:

'We're expecting demand recovery to be gradual and it will be some time before total demand reaches pre-crisis levels. That means we need to think about what the Qantas Group should look like on the other side of this crisis in order to succeed.’

At the time of writing and in the last month, the Qantas share price has fallen around 9%, and in the last three months, about 45%. The airline last traded at $3.385 per share, well off its 52-week high of $7.46 per share.

Virgin version two

Though its share price remains battered and its operations significantly impacted, according to the Qantas management team, the airline remains well-placed to weather the short and long-term impacts of Covid-19. Virgin Australia (VAH), by comparison has struggled, with the low-cost carrier entering voluntary receivership in late-April.

While the specifics of what Virgin as a company may look like in a post-receivership world – today the company provided the market with further details around the bidders currently vying for control of the airline.

Here, Vaughan Strawbridge Lead Partner for the Administrators, commented:

'We are delighted by the strength of each of those on the shortlist, with parties selected being well funded and possessing deep aviation experience. The parties have also worked constructively with the administration process and put forward credible indicative bids.’

'These parties enable us to seek the best available commercial solution which we are all looking for, while meeting our responsibility to maximise the outcome for creditors and see the airline continue as one of the country's two carriers serving Australians.'

Positively and framed against a backdrop of falling employment rates within Australia, Mr Strawbridge further stressed that:

'Importantly, each [bidder] has a plan for the business which can secure the future for thousands of Virgin Australia employees.'

Interestingly, while Virgin's media release today did not mention the names of those on the short-list due to ‘confidentiality commitments', according to the Australian Financial Review’s Street Talk column, the shortlisted parties include Bain Capital, BGH Capital, Indigo Partners and Cyprus Capital Partners.

Prior to Virgin Australia (VAH) entering voluntary administration, the airline traded at the 86 cents mark.

How to trade Qantas

You can use CFDs to trade Qantas and other airline and travel stocks – LONG or SHORT through IG’s world-class trading platform now. For example, to buy (long) or sell (short) Qantas, follow these easy steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘Qantas’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

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.