Qantas Airways Limited (ASX: QAN) shares soared 4.7% to $1.33 today, despite the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) posting a slim gain of just 0.2%.
Why the shares climbed is hard to fathom, especially given the news that Qantas would no longer maintain its 65% domestic market share line-in-the-sand, as we reported yesterday.
Perhaps news that Qantas was no longer taking a hard line, means the airline will report a smaller loss than the $700 million most analysts expect. I could be wrong, but to me a loss of say $500 million or a loss of $700 million is pretty much the same thing – it shows the airline is struggling and up the proverbial creek.
No wonder Virgin Australia Holdings (ASX: VAH) boss John Borghetti was reported to have had a giant smile on his face yesterday morning, as he attended the opening of partner Etihad Airway's new Sydney Airport lounge.
For Qantas, the tough times are likely to continue as it seeks to cut costs, with an estimated 2,200 staff to be sacked by the end of June, while another 1,800 jobs will be made redundant next financial year. This year's staff cuts are estimated to be costing the airline around $200 million in redundancy payments.
The airline also faces more headwinds in the form of falling consumer confidence, a weak resources sector and major overcapacity in the domestic market. This is one stock we'll be steering clear of – there are plenty of other stocks to choose from – such as the one highlighted in the report below.
