We just got some more news about the on-the-ground impact of the collapse in consumer sentiment that surrounded the federal budget in May.
Qantas shares fell today on a set of soft traffic numbers for that month, with the airline saying the poor performance of its Australian domestic arm was “negatively impacted by weak consumer confidence and business sentiment”.
Revenue passenger kilometres for Qantas domestic were down 4.5% year-on year, but for Qantas Group overall, the same figure was up 1.5%. The stock was down around 4.5% in early trade to $1.275 a short time ago.
Goldman Sachs described an “audible snap” in consumer sentiment triggered by the Australian public learning about the depth of government spending cuts in the federal budget. The NAB monthly business survey has found business sentiment relatively steady, but the ANZ-Roy Morgan and Westpac-Melbourne Institute consumer sentiment indices both recorded sharp falls. Markets have been anxiously awaiting information on the extent to which this would translate to real changes in spending.
The fall in consumer sentiment came in line with a shift in strategy by Qantas, which abandoned its guiding principle of maintaining two-thirds market share that persisted through its capacity war with Virgin Australia. Via investing.com, here’s the chart showing the fall at the market open: