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Down 16%: Can the Qantas (ASX:QAN) share price fly again?

The Qantas Airways Limited (ASX: QAN) share price has fallen 16% over the last three months. Can the airline stage another recovery?

What’s happening with Qantas?

The airline has gone through a really volatile last year and a half.

In April and May it seemed like the airline was on the path to a true recovery. In April the business said that there was extremely strong leisure demand right now, helped by the government’s half-price fare offer and the return of the majority of corporate and small to medium business travel.

As a result of the higher demand, Qantas revised its estimate of reaching 80% of its pre-COVID domestic capacity for the fourth quarter of FY21 and was expecting this to be above 90% as long as there are no significant border closures. Jetstar was expected to exceed 100% due to strong leisure demand.

Qantas was focused on generating positive cashflow. Growth in domestic capacity was expected to continue into FY22, with Jetstar to reach 120% of pre-COVID levels and Qantas to be at 107%.

Qantas said it was focused on its market position, including network and frequency advantages, which puts the market share at around 70%.

A Delta spanner for the Qantas share price

The highly infectious Delta strain has really delayed things for Qantas.

As the airline warned, its expectations were only possible as long as there are no significant border closures. But now a lot of the country is in lockdown.

Qantas is yet to financially quantify how much this is going to hurt or delay things. But it has certainly put back the recovery. Domestic flights were the main thing that was giving the company confidence of producing some sort of profit in FY22.

I do think it’s just a delay of profit, so the share price shouldn’t drop too much. The last few months have shown that people want to travel. The rising number of people that have been vaccinated may make more passenger volume more likely in time. But nothing is certain in this volatile and strange time.

Qantas is a great brand and has a very strong market share right now, but I’d want to see that the lockdown strategy is no longer needed before buying Qantas shares for my own portfolio.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

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So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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