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Qantas (ASX: QAN) dropped 9% today, on the back of the deteriorating coronavirus cases around the world. The coronavirus has seen the biggest spike in active cases in Italy with a total of 119,179 cases around the world at the time of writing. The latest update from Qantas groups notes that the continue coronavirus cases have led the company to cut the number of active aircraft. This resulted in less frequent flights around the world with the biggest reductions in Asia, the United States, and the UK.
The company plans to combat the short-term effects of the coronavirus by reducing its expenditure. Qantas has decided to cancel its share buyback in hope that the $150m cash can be used to offset the negative effects of COVID-19. Moreover, to reduce massive sell-off, the company’s board members have decided to take a cost reduction with the CEO having no salary for FY20. Additionally, the company is still in a strong position with a recorded $1.9b in cash and $4.9b in unencumbered assets.
Qantas is known as Australia’s oldest Airline with a high-quality management team. Alan Joyce, the CEO of Qantas, is recognized as one of the best CEOs in the market. The company’s Project Sunrise has seen tremendous success in the eyes of the media. The ambitious plan to make 20-hour flights more comfortable for passengers could increase their value proposition to consumers. Demand for direct flights from Australia to the US is particularly popular amongst the time-pressed business travel market, and Qantas could increase market share by developing a strong competitive advantage in that space.
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