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Due to the ever-growing issues with COVID-19 cases in Australia, Qantas Australia has unfortunately decided to lay off 2500 more staff mostly working in the ground crews. This news comes right after Qantas laid off more than 6000 employees during the summer of 2020 effectively retaining only a small number of staff to accommodate domestic flights and a few flights to nearby New Zealand.

The company has commented on the issue stating that there was almost nothing that could be done. There was no demand for outbound flights from Australia, and there was surely no direct support from the government to allow outbound flights in the capacity at which they worked before the pandemic.

All of this means less revenue, less profit, and therefore an economic crisis for the airline. The biggest cost an airline usually has is fuel and staff. The airplane can still fly without staff, but it can’t fly without fuel.

Despite this sudden decrease of ground crews, Qantas hinted that as soon as the situation gets under control and people start leaving the country, the positions will be opened up once again.

Is this enough to recover losses?

Considering that the only source of revenue for Qantas are domestic flights and an occasional one to New Zealand, it is very unlikely that they will be able to recover their losses even with 8,500 laid off staff.

The volume is simply not there to ensure a quick and smooth recovery. The maximum that these small flights can do is cover the severance payment to these employees in the hopes of increasing volume in the future. No matter what, the airline will most likely have to stand on its toes for the remainder of the year as it has already rescheduled outbound flights to 2021.

What about cargo shipments?

Several market experts have commented that these passenger airplanes can still be used for the transportation of raw materials and export goods. This might actually sound like a good idea, but considering the weighted availability of passenger planes, it may be too much of a stretch.

For example, many people say that Australia’s gold reserves are always required to be shipped out to more favorable markets, or at least to be delivered as fast as possible due to how trading works for this commodity.

In the financial world, once a trader buys some gold, it’s not some kind of certificate that they own this amount of price, now that is called a CFD. If actual gold is bought, the buyer is then responsible for storing it somewhere. So why would they risk storing it in Australia where they could not travel to in the foreseeable future?

No, how gold trading is done usually is that the buyer asks for a shipment of his or her gold to be delivered either to a storage facility in their own country, or a country that has more favorable gold tax laws. There it sits for quite a lot of time until the buyer decides its time to sell it.

Considering the volatility of gold prices nowadays, it is in the best interest of the buyer to get his shipment as fast as possible. Using transport planes to ensure that fast delivery may be the side hustle that Qantas is looking for. It’s just the documentation and the transportation license they need to apply for, which could prove extremely costly or time-consuming.

Is there still hope?

As long as Australia is able to take a hold of the pandemic, they can very easily join the Green-zone countries so to say. Countries whose citizens don’t require a 12-day quarantine once they arrive abroad. If this is ensured, then it is very likely that Australians will start traveling to nearby South-East Asia as they always do during the Summer. This may bring the airlines back up again for a short while, but they would still require completely unhinged air traffic.

In order to reach that desired air traffic, the whole world should have the virus under control, which means that it’s not up to the airlines to make that change. Back home they at least may have a say in the installment of guidelines and further precautions.

But regardless of what is done in attempts to save themselves, Qantas will most likely require a bailout from the government if things continue to deteriorate with both the COVID-19 cases in the world as well as the denial of outbound travel from Australia. Overall, it’s very unlikely that the recent stock surge that Qantas had in August is going to remain stable. This layoff of 2500 staff is going to send it straight down again to 3.20 AUD per share or maybe even less.