Qantas has been in pain for quite a while because of the pandemic, but now it just announced a hefty share buyback.
👉 Background: It’s safe to say Qantas has been through the wringer - from COVID shutdowns and staff shortages to a massive increase in lost baggage. Not to mention the fact that CEO Alan Joyce’s house literally got egged.
👉 What happened: Now Qantas’ earnings are in and the pain isn’t quite over yet. The company made an underlying loss of $1.9 billion before tax in the last financial year, meaning losses from the pandemic were nearly $7 billion over the last three years.
👉 What else: But thankfully, these results were actually right in line with what the investment world was expecting. And there's a teeny silver lining: Qantas announced a $400 million share buyback.
💡A share buyback is when a company decides to buy back some of its own publicly available shares at the market price. And generally, the investment world loves it.
💡There are two big reasons why Qantas has done this. Firstly, share buybacks can be used to signal that a company is feelin’ mighty fine about its future.
💡Secondly, Qantas shareholders tipped in $1.4 billion bucks to help Qantas survive at the start of the pandemic... and now Qantas is reducing the number of shares available again. And it looks like the market approves of this strategy, ‘cos shares spiked 7.6% on the news.
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