Own Qantas shares? Here’s what’s coming up for the ASX 200 airline in September
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The stocks of Qantas Airways Ltd (ASX: QAN) experienced a decline of 9.5% during the month of August.
The airline stock listed under the S&P/ASX 200 Index (ASX: XJO) is already facing some difficulties as we enter the second trading day of September.
The value of Qantas shares decreased by 1.5% at the end of trading on Friday, September 1st. Currently, in the early afternoon, the stock has further declined by 2.9%, trading at $5.65 per share.
To provide background information, the ASX 200 has experienced a 0.47% increase at the current moment.
After a turbulent beginning to the fresh month, what does the future hold for the leaping marsupial in September?
Qantas stocks may encounter challenges from multiple directions in the upcoming month.
The previous week witnessed the Australian Competition and Consumer Commission (ACCC) charging the airline with promoting and vending 8,000 flights, even though they were well aware that those flights had been canceled.
ACCC chair Gina Cass-Gottlieb expressed that the Commission intends to impose substantial penalties in order to effectively communicate its message to the management.
"We will pursue a penalty that signifies that this should not merely be considered a normal expense in business operations; it is intended to discourage such behaviors," she expressed.
So, what exact amount of penalty is needed to emphasize that idea?
"We believe that the consequences for violations should be in the range of hundreds of millions, rather than tens of millions," stated Cass-Gottlieb.
The ACCC has made accusations against Qantas at a time when the airline's reputation is already suffering in various areas. We want to assure the community that we acknowledge and comprehend their feelings of dissatisfaction.
We understand that the sole solution is to consistently deliver what is needed. We acknowledge that it will be a gradual process to mend the situation. However, we are fully committed to achieving that objective.
If the legal actions taken by the ACCC show progress or receive substantial media coverage in September, it could further impact the performance of Qantas shares.
Investors will also be monitoring the airline's prominent market position during this month.
Qantas announced that their revenue for FY 2023 has increased by 118% compared to the previous year, totaling $19.8 billion. Despite the ongoing high airfares and the recovery in travel demand following the pandemic, the airline has achieved its highest ever underlying profit before tax, reaching $2.5 billion.
The enormous earnings seemed to be in jeopardy in the beginning of June, which could negatively impact the performance of Qantas shares. This occurred when Qatar Airways requested Federal Transport Minister Catherine King to increase the number of international flights permitted on the Sydney, Melbourne, and Brisbane routes.
Qantas received a significant relief in July when King declared, "The Australian administration has no plans to discuss further bilateral air rights with Qatar."
However, this narrative is still developing and has the potential to affect Qantas stocks in the upcoming month of September.
Many lawmakers and government members are raising concerns about whether it is right for the government to protect Qantas' profits by limiting competition in the market.
And the airline's rivals are entering the battle.
According to ABC News, John Sharp, the deputy chairman of Regional Express Holdings Ltd (ASX: REX), stated that the aviation sector in Australia is the "most centralized industry globally."
Sharp supports the idea of potentially granting Qatar permission to increase the number of flights it can operate in Australia.
"I believe it would be fitting if they were to reconsider their verdict regarding flights to Qatar," he stated.
Sharp highlighted that Qatar played a vital role in repatriating a greater number of Australians stranded abroad during the pandemic in comparison to the efforts made by Qantas.
Although this could have an effect on Qantas' future earnings and their stock value, Sharp also mentioned that this decision would be beneficial for customers. He stated that with increased competition, airfare prices would undoubtedly decrease.
