Why is the Qantas share price beating the ASX 200 today?

The airline has faced a plethora of issues lately.

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Key points

  • Qantas is facing troubles at its terminals with respect to baggage handling, amongst other issues 
  • The airline today announced initiatives to overcome the challenges in the short-term 
  • The Qantas share price is up nearly 3% for the past 12 months of trade 

The Qantas Airways Limited (ASX: QAN) share price has held a steady flight path throughout the day and is rangebound at the time of writing.

On last check, shares in the flying Kangaroo are 22 basis points higher on the day at $4.64 on no news.

In broad market moves, the S&P/ASX 200 Hotels Restaurants & Leisure Index (AXHRJD) is up less than 1% on the day. Yearly returns for Qantas are seen below.

TradingView Chart

What's up with the Qantas share price?

Anyone keeping up with Australian news would be familiar with the current issues facing airlines with respect to baggage handling and processing delays.

If you haven't – it's as simple as that. Qantas in particular has been facing substantial delays and an increased rate of mishandled baggage.

The rate of baggages mishandled is now at 0.009%, or 9 in every 1,000 –which, might not seem like much, but when multiplied of hundred's of thousands (perhaps even millions) of baggage items, the numbers start to stack up.

In response to the challenges, Qantas announced today that it will be increasing the waiting times between domestic to international flights by 30 minutes, in order to slow the pace of foot traffic through the airport.

Specifically, those travellers flying Qantas out of Australian airports will only have the option of a 90 minute connection time (60 minutes previously).

The moves are designed to reduce the number of baggage faults and hopefully improve the airline's sluggish operating performance, after it made 1,700 employees redundant back in 2020, by outsourcing its baggage ground handling.

It's thought today's decision will attempt to "[bring] operations back to pre-COVID standards" as CEO Alan Joyce said, as Qantas continues to battle with ongoing staff shortages and worker-union action.

The Qantas share price is up nearly 3% for the past 12 months of trade.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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