Will QAN survive?, page-2249

A problem for Qantas is that they only know one way to face competition. That is to use their size to throw capacity at it.

So the return of Virgin, coupled with the jet expansion of Rex and the threat of Bonza saw QF group increase flying, including new routes that hadn't been serviced pre pandemic. Accompanied by Joyce sprouting nonsense about domestic travel about to reach 110% of pre pandemic levels.

This is a disastrous move for the airline. Whilst Virgin have rightsized themselves for the return of normal travel and Rex seem to be staying the course until the Singaporean investors pockets are bled completely dry, Qantas should not be in the financial position to throw capacity around at the moment.

No doubt there will be continued efforts to get underhand subsidies from the federal government, however, the bleeding has to be giving their accountants sleepless nights.

Whilst many would see Qantas as an Australian icon, too important to fail, there is a good nearby precedent to keep the airline alive when it collapses. That is Air New Zealand where shareholders were wiped out and the NZ Government bought the remains, recapitalised it then floated 49% off to the market. AIZ has been a fantastic investment under this model, (prior to the pandemic, of course). They are assured of survival now as the NZ Government has given a loan which will be repaid by a capital raising when profitability returns. That is how to have an icon.