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Qantas shares plummet after sell rating, more calls for Goyder’s resignation

Qantas Airways’ share price fell to a 12-month low on Tuesday, as brokers moved to downgrade the stock after damning calls from pilots who said they had lost faith in chair Richard Goyder.

The price of shares in Qantas fell to $5.06 on Tuesday morning after major broker CLSA moved to recommend investors sell their shares. CLSA’s is the first downgrade on the stock in a year. Although the share price rebounded to $5.15 by lunchtime, other analysts have already reduced their price targets for the business.

Qantas boss Vanessa Hudson said the airline needs to better balance the interests of investors and customers in the future.

Qantas boss Vanessa Hudson said the airline needs to better balance the interests of investors and customers in the future.Credit: Edwina Pickles

Citi reduced its rating on Qantas by more than 10 per cent to $6 a share. Barrenjoey reduced its share price target by 17 per cent to $7.20 and said it expected the cost of Qantas’ reputational improvements to exceed the $80 million it announced on Monday.

When former chief executive Alan Joyce unveiled the group’s record underlying profit of $2.47 billion in late August, its share price was $6.24. Its share price has lost more than 20 per cent over the past six months, with most of the plunge occurring since the consumer watchdog announced it was suing the airline over alleged failings of consumer law. Qantas is Asia’s worst performing airline stock this month, Bloomberg reported.

Qantas released a market update on Monday flagging a $200 million increase to its fuel bill, $80 million in additional customer improvements, and a $50 million hit due to foreign exchange rate changes. The airline also said it may increase the price of airfares if the cost of fuel remained elevated in the coming weeks.

Qantas boss Vanessa Hudson said last week the airline business had not always balanced the interests of investors and customers over the past couple of years, after a turbulent month that resulted in her early elevation following the departure of Joyce after 15 years at the helm. She and Goyder are expected to appear before the Senate on Wednesday.

“We recognise Qantas has not been where it needs to be for a long time,” Hudson said last week.

The head of the Australian International Pilots Association, Tony Lucas, said on Monday the airline’s pilots had no faith in Goyder, who ruled out resigning at the end of last week.

Prime Minister Anthony Albanese refused to weigh in on the calls for Goyder’s departure but said the airline business had “a lot of work to do” to repair the damage to its reputation.

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The pilots’ association is one of many groups that represent elements of Qantas’ 32,000-strong workforce and has at times had a turbulent relationship with the group’s former leadership, which included Hudson as the former chief financial officer.

It’s one of many workplace groups that has welcomed Hudson’s early succession. Lucas said on Tuesday that the association was saddened it had to speak against the governance of the business when the focus should be on paving a way for Hudson’s tenure, but the recent revelation that all directors received pay rises for the 2023 financial year had forced his hand.

“We do not think Vanessa Hudson is able to turn the airline around with Goyder as chair. A leader is supposed to leave a business better than where they found it and I’m not sure you could say that’s the case at Qantas,” Lucas said.

Air New Zealand, another ASX-listed airline stock, also flagged the cost of fuel was eating into its cost base.

“The airline notes the 2023 financial year was particularly unique with significant customer demand, constrained capacity and lower fuel prices in the second half. As such, we believe 2024 will be more reflective of future financial performance,” Air New Zealand said ahead of its annual general meeting.

Air New Zealand’s operations continue to be hampered by ongoing supply issues at global engine behemoth Pratt & Whitney. The carrier business also said other factors, including the weakened NZ dollar, sustained wage inflation and increased airport charges has also restricted its growth.

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