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.

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

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


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.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

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.