Shares in dive on airline cuts plan
The dizzying heights of a $6 share price seemed like a distant memory for Qantas investors on Thursday, as the airline continued its atrocious run with its biggest one-day loss since June last year.
After Qantas announced it will axe at least 1000 employees over the next 12 months and face a loss of up to $300 million in the first half of the year, shares plunged 11.2 per cent to finish at $1.07, and at one point in the day slipped under $1.
Just over six years ago, in June 2007, Qantas hit its record high of $6.06. Since then, the airline's share price has fallen more than 80 per cent.
At its peak, Qantas was worth $13.3 billion. Its market capitalisation now sits at $2.4 billion.
"As far as Qantas goes, at these kinds of prices it's hard to see how they can get out of this spiral downwards," BBY private client adviser Henry Jennings said.
"In the last five to 10 years, the emergence of the Middle East airlines with pockets and pockets of money has made it hard for people like Qantas to compete."
The airline, which used to be part of the national psyche, had lost much of its allure for Australian consumers despite the fact they were travelling more than in previous generations.
"People like the feeling of having Qantas, but the reality is that a lot of people fly with alternative airlines," Mr Jennings said.
Increased competition and shrinking margins have taken their toll on the company.
"The government is probably not going to step in because it's not that kind of government. I think they're very much on their own," Mr Jennings said.
“We cannot and we will not stand still in these extraordinary circumstances.’’
Qantas chief executive Alan Joyce
“Some iconic businesses such as Qantas are under significant comparative pressure… we grieve for every worker whose job has been lost.”
Prime Minister Tony Abbott
“This is a very difficult period for Australia’s aviation industry. Labor’s thoughts and my thoughts are… with the workers who may face losing their jobs.”
Opposition Leader Bill Shorten
“It’s a big call to say the CEO and board of a company should resign, but this is a crisis of their own making.”
Senator Nick Xenophon
“Qantas’ problem is not a lack of capital. It’s a lack of management.”
TWU national secretary Tony Sheldon
“The proposition that Virgin Australia has access to cheaper capital by virtue of our shareholder base is completely false.”