Departure lounge: What's next after Qantas' great exodus?
Only two months ago, Qantas' post-COVID momentum was seemingly unstoppable.
Even while mired in the controversy of alleged unethical conduct and poor performance, consumer demand continued to skyrocket alongside soaring share prices.
At the time, I speculated that bad weather may be on the horizon for investors.
Qantas executives resign
Amid the growing anger of consumers, then-CEO Alan Joyce opted to resign early. To many, it felt like a sign perhaps that the worst was yet to come, even as the share price held strong amid fairly bleak conditions.
Now, Qantas' top office has been hit with a slew of additional high-profile resignations.
Just weeks ago, Chairman Richard Goyder finally relented to pressure to resign in 2024. Perhaps more symbolic is the departure of Olivia Wirth, who has overseen Qantas' Frequent Flyer program since 2018.
Even in good times, the sudden resignation of a chairman and a key customer loyalty strategist is a concern to consumers and investors alike.
Last week, we saw Todd Sampson, possibly the most recognisable board member at the airline, receive a sizable protest vote at Qantas' annual shareholders meeting.
Meanwhile, board members Maxine Brenner and Jacqueline Hey are also due to depart in February.
Qantas share price cops a beating
All the while, Qantas' share price continues to receive a battering - only beginning to hint towards recovery around the time of last week's AGM.
The impact on consumers has been clear, with rumours circulating that even federal politicians are opting for Virgin flights instead due to Qantas' notorious cancellations and delays.
Ticket prices are also set to soar as the airline reportedly struggles to absorb climbing fuel prices, which will force some loyal consumers to shop for flights within their budget elsewhere. Even partner airline Jetstar's comparably cheaper offering is slated to climb in price.
Amidst this PR headache, Qantas' share price hit a 52-week low, undoing an entire year's worth of impressive recovery at blistering speed.
At the time of writing, the share price has plummeted by as much as AU$1.29 between now and when I first speculated that the carrier could be set for turbulence.
Qantas on notice with ACCC
So, is there a way to curb this freefall? Not if ACCC's pending action against Qantas for allegedly selling tickets for cancelled flights reveals more poor conduct once it reaches the courtroom.
ACCC's pledge to reinstate domestic aviation monitoring may also reveal further concerns for shareholders if it's found that Qantas is not making substantial improvements on the tarmac.
The airline is firmly in the regulator's crosshairs, having just axed its China Eastern partnership in one of several recent concessions to the commission.
Airline stocks struggle after COVID
Overall, many airline share prices have struggled to recover post-pandemic after a run of miserable years grounded on the tarmac.
However, companies such as Emirates, Singapore Airlines and - of course, Qantas, have reported huge profits and demand for flights is not relenting.
The argument could certainly be made that the sector has been oversold by investors over this recent period and ahead of the December and January break period, many airlines may experience a boost to earnings as fuel costs are passed down to consumers amid global conflict.
The Global Jets ETF, a barometer for global Airlines has fallen 15% in the last 6 months with many believing that record profits may not be here to stay.
However, budget airlines such as RyanAir have fared slightly better with shares up more than 15% YTD as downtrading consumers look to find the best deals, meaning more bums on seats for Europe's budget airliner.
Challenges ahead for new CEO
Back closer to home, Qantas' new CEO, Vanessa Hudson, will have her work cut out for her in 2024.
Should she undertake the difficult task in 2024 of bringing the cost per ticket down while ensuring profits remain steady, she will likely be rewarded by market positivity.
Additionally, the next strategist to claim the Frequent Flyer chief executive role could focus on revitalising the ageing rewards program. Customers may then see greater value in the cost of a seat on the flying kangaroo.
Some relatively fresh faces on the board and greater accountability for poor performance will almost certainly restore some investor confidence.
Qantas has the chance to use these board and staff departures to essentially advertise that it's under new management and willing to change to benefit the public.
If the airline is able to embrace this initiative, outpace intensifying competition, and improve employee and union relations, we could be seeing a much healthier share price by this time next year.
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