Qantas shares fell to their lowest price in two years as the carrier was forced to cancel more flights on Tuesday due to short-term walkouts by engineers seeking a wage increase.
At 1113 AEST Tuesday, Qantas shares were down six cents, or 1.98 per cent, to $2.97, having dropped as low as $2.95 in the morning’s trading.
The last time Qantas shares fell below $3.00 was in August 2006 when the airline’s shares traded at a low of $2.94.
ABN Amro Morgans private client adviser Bill Bishop said Qantas shares had been hit due to a number of factors.
“It’s a combination of things,” Mr Bishop said.
“They are having the traditional battle with unions, which has manifested itself with this engineers strike.
“The engineering staff are using their muscle to withdraw services and the company is saying it’s not going to budge – but they’ll meet in the middle somehow.”
Mr Bishop said the negative market sentiment toward Qantas was broader than the engineers’ wages dispute.
“I think because one or two of the American airlines have gone broke or are poised to go broke it’s affected the market sentiment towards airline profitability … which is a bit silly,” he said.
“Qantas is one of the most profitable, if not the most profitable airline in the world.”
“But like all airlines they’re flying planes that are a bit old and a bit thirsty.”
Making life tougher for airlines, US crude oil futures finished up $US1.38 at $US136.74 per barrel on Monday.
The rise was due to several factors including fears that an oil workers’ strike in Nigeria could widen, following recent attacks on oil facilities there.
Qantas shares have lost about 50 per cent of their value over the past year in response to higher fuel prices.
That fall is much steeper than a 16 per cent drop for the overall share market.
Mr Bishop said there is a feeling of disquiet about all airlines when looking at it from an investors’ point of view.
“The market looks and says – very high fuel cost, the carrier is having to reduce the number of old planes, it’s having to reduce the number of flights on certain routes and some routes have been taken out altogether and they’re increasing the fuel surcharge – but all airlines are doing the same thing.”
Shares in Australia’s second largest airline, Virgin Blue, and country airline Regional Express (REX) also fell on Tuesday.
At 1157 AEST Virgin Blue was down one cent, or 1.82 per cent, to 54 cents, while REX was off one cent, or 0.94 per cent, to $1.05.
