Qantas will seek to reduce international capacity by -23% until September 2020, or at least until the operating environment is clearer. To ensure the balance sheet can withstand the challenges, the company is cancelling the $150m off-market buyback.
Capacity reductions are largely in Asia but also in the US and UK. Domestic capacity will also be cut from -3-5%.
Uncertainty continues for the FY20 earnings outlook, Citi assesses. The broker still envisages the risk/reward trade-off is asymmetric to the downside and retains a Neutral/High Risk rating and $6.70 target.
Sector: Transportation.
Target price is $6.70.Current Price is $4.18. Difference: $2.52 – (brackets indicate current price is over target). If QAN meets the Citi target it will return approximately 38% (excluding dividends, fees and charges – negative figures indicate an expected loss).
