Why the Qantas (ASX:QAN) share price is soaring today

The Qantas Airways Limited (ASX:QAN) share price is soaring on Thursday after the government announced a major tourism stimulus package…

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The Qantas Airways Limited (ASX: QAN) share price is soaring on Thursday morning.

At the time of writing, the airline operator's shares are up 4% to $5.38.

Why is the Qantas share price soaring?

Investors have been buying Qantas shares today after the Federal Government announced a major $1.2 billion stimulus package to support the Australian tourism sector.

The package will see the government halve the price of almost 800,000 airline tickets in an attempt to get more Australians to spend on domestic holidays.

The Qantas response

This news has gone down well with Qantas' CEO Alan Joyce, who believes this is the perfect time to launch the stimulus.

In response to the news, he said: "This support is fantastic news for aviation and for the thousands of businesses, big and small, that rely on the tourism industry. With the vaccine rollout now giving more certainty that state borders will stay open, this is the perfect time to provide stimulus and get people travelling domestically again, particularly given there won't be any international tourists for another seven months."

"In total, this package is a lifeline for broader travel and tourism sector in Australia, just as it's trying to get back on its feet. Ultimately, it's an investment in an industry that has always been a huge driver of economic activity and will be again," added Mr Joyce.

What's next?

The company notes that the stimulus program will support the company's plan to increase its capacity from 60% currently to 80% in the fourth quarter. In fact, depending on take-up, the stimulus could accelerate its capacity increase.

Over the coming weeks, Qantas will be working with the Federal Government to support the rollout of the stimulus program. Special Qantas and Jetstar fares will be available online from 1 April 2021 for travel from 1 May 2021.

At this point, Qantas intends to offer up to 32,000 fares per week discounted by 50% of median prices to key regional destinations such as Far North Queensland, Launceston, and Alice Springs. This will equate to a total of ~550,000 fares over the life of the program.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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