Problems continue to mount at Qantas:
A rise in airfares is on the cards for Qantas customers if the cost of jet fuel remains high, the airline has cautioned.
The warning comes in the airline’s September market update and just three days after new Qantas boss Vanessa Hudson issued an apology to customers, promising to make changes to win back customers’ trust and rebuild the company’s flagging reputation.
Apologies are cheap. Hudson must resign. She was CFO during the labour fiddle and alleged fraud in selling non-existent seats.
More:
Qantas Airways Ltd. was hit with its first sell rating in a year, reflecting investor concern about the cost of repairing the airline’s bruised reputation.
CLSA’s Justin Barratt cut his recommendation on Qantas shares to reduce from accumulate, becoming the sole analyst with a sell rating on the airline among 17 tracked by Bloomberg. Qantas is Asia’s worst-performing airline stock in September, with the shares down 11.5%.
Qantas said Monday it will spend an extra A$80 million ($51 million) on passenger improvements in the year ending June 2024, in addition to the A$150 million previously allocated in an attempt to soothe passengers disgruntled by cancellations and long call wait times.
Some folks never learn:
Qantas pilots are calling for the airline’s chairman, Richard Goyder, to resign, describing his position as untenable after the High Court found the company had illegally sacked almost 1700 employees.
…Some major shareholders, however, appear to be backing the company’s existing board. Pendal, Qantas’ largest shareholder, said the airline was fundamentally a good business that had recognised it needed to change.
In his presentation, Mr Murray said Pendal believed Qantas was “fundamentally undervalued”. “It’s understandable why because people are angry, people are frustrated, and that translates into the valuation of the company as people fear that decline in profits.
“[But] their profits are materially higher, so they can absorb a substantial decline in profit and still be good value when you look at historic valuation. We take the view that they can ultimately fix it. It will take time, but the early signs are that they are now addressing those issues.”
Jeez, dude, talk about out of touch. Qantas is somewhat undervalued, given its very low multiple. But that is discounting a large problem that focusing on profits cannot solve.
In fact, neither can spending $200m solve it.
The Qantas board and management have overplayed their political economy hand. This will be met with a period of greater competition than is normal as accountability to the public takes centre stage in Canberra. So, that has to be factored into the price.
Moreover, the best chance of avoiding that outcome is for the firm to take more drastic steps to demonstrate accountability. Goyder and Hudson both have to go.
Ironically, Pendal holding that up is damaging the value of its stock holding short and long-term:
If you only care about money, you think it can fix anything.
