Virgin Australia wants a bailout from Canberra, regional operator, Rex does as well, while Air New Zealand, which last week received a $NZ900 million capital injection from the Kiwi government, has started following its Australian rivals and slashing staff numbers.
Regional Express (Rex) says it will shut down its Regular Public Transport (RPT) air services in all States, except in Queensland from April 6 unless state and federal governments come to the party and underwrite the losses on these services.
Don't be surprised if trading in the shares of Qantas and Virgin Australia is suspended after the federal government warned against non-essential interstate travel and the states tightened their borders to stop the spread of coronavirus.
The crisis in the travel and aviation sector worsened yesterday with the Federal government banning all foreigners from entering Australia from midnight tonight and again told Australians returning from overseas that they will have to undergo 14 days of quarantine.
More problems for our three listed carriers yesterday. Qantas and Jetstar have announced another round of cuts, REX Airways has gone into a trading halt while Standard & Poor’s has downgraded the rating of Virgin Australia's debt to B-.
Target $1.18 (was $1.20). The broker has undertaken a reality check to account for still tough conditions and now forecast a 45% drop in FY net profit. Increased costs and a weak pricing environment were held to blame. The broker also expects ongoing weakness in traffic data and the falling AUD will continue to make things tougher.
A general sector update on transport stocks in Australia has revealed a downgrade in rating for Regional Express. RBS analysts are forecasting subdued proift results for the sector overall in the short term, but they see value emerging on a longer term view.