Will QAN survive?, page-934

A Federal Govt agency called BITRE has just released statistics for domestic air passengers in May 2021. Victoria had its fourth lockdown from close to the end of May.

In the month of May 2021, only 3.38 million passengers were carried domestically by all the airlines. This was a drop of 32 per cent on May 2019 - I'm not counting May 2020 as being also in coronavirus, it wasn't a 'normal month'.

The Melbourne - Sydney route (both ways together) had just 378000 passengers in May 2021. A couple of years ago in May 2019 it had 768100 passengers. This is a drop of 50 per cent, and bearing in mind QAN carries the bulk of corporate passengers paying the highest median fares given they often book at short notice, it's probable that the hit to QAN's revenue per seat would be even worse.

While the overall nationwide 'load factor' (the percentage of seats filled on flights) rose from about 40 per cent in May 2020 to 68.2 per cent in May 2021, on the Melbourne - Sydney - Melbourne route it was only 61.4 per cent in May 2021. REX is only a small operator so even if it's been doing poorly, its flights don't pull the total average seat occupancy figure down a lot. QAN will be feeling the pain.

In May 2019, two years prior to the latest figures, seat occupancy on Melbourne - Sydney - Melbourne was 82.4 per cent (21 per cent above May 2019) and overall around the nation it was 77.4 per cent.

If airlines are charging super high fares, empty seats may not matter quite as much, because this 'yield' is really important. However a few days ago this Federal agency published its air fare index that claimed median airfares were at a low level in 2021, so if that's true, again, bad news for QAN, REX and Virgin Oz.

July 2021 will be shocking with thousands of cancelled flights due to the Sydney lockdown and now the firth Melbourne one.

While I'm not an analyst, I struggle to see how QAN shares are worth $4.50 or $5 even if one looks forward as 'Mr Market' likes to.