As Alan Joyce offloaded a cool $17 million worth of Qantas shares in June, a senior hedge fund officer was already reading between the lines and betted on the value of QF shares dropping in price.
Marcus Hughes, the co-chief investment officer at LHC Capital said the widely accepted opinion that Qantas had underinvested in its fleet of aircraft compared to its international competitors served as an omen for the turmoil that has surrounded the company in recent months.
“When you don’t invest in your fleets, you’re clearly trying to take in profits,” Hughes, told the Australian Financial Review.
In 2012, Alan Joyce cancelled an order for 35 Dreamliner aircraft, an order which at the time was worth $8.5 billion, and later cancelled options to buy 50 more.
The tearing up of these contracts in 2012 could prove a costly mistake over a decade later as both leading manufacturers of commercial aircraft (Airbus and Boeing) outlining delays to their manufacturing process as a result of COVID will mean the delivery of new aircraft will not occur until the end of the decade.
Experts have made connections between increasing profits and the lack of purchase costs during this period.
Joyce sold 2.5 million shares in the airline on 6 June for a price tag of more than $17 million, he had reportedly held the shares since 2012 when they were worth approximately $1.50 which were worth $6.74 at the time of sale.
“Whenever an insider sells, we’ll look at shorting a company,” Hughes continued.
The Qantas share price has dropped significantly since Joyce’s sale, trading at $4.77 today.
