Why Qantas’ Share Price Surged 8.45% Today

Qantas Airways Ltd [ASX:QAN] continues to see improvements in its share price, having risen 8.45% today at time of writing.

Shares have more than doubled in 18 months, with Qantas on course to repurchase almost a quarter of its capital base.

Qantas’ market cap is holding steady at $9.29 billion. The airline has an enterprise value of $12.3 billion. The profit margin stands at 5.31%, with the operating margin at 8.58%.

Qantas has returned over $2 billion to investors during the past three years, and remains confident about its future.

How has Qantas maintained such a positive platform?

Qantas has said that it will return up to $500 million of capital to shareholders.

The airline disclosed an overall income tax expense of $250 million. However, due to utilisation of carry-forward tax losses and other differences, it will not pay any of it back.

Sales revenue, driven by domestic services, is up 6%.

Today’s result comes from investing in areas that provide margin growth and a network strategy that makes sure we have the right aircraft on the right route,’ chief executive Alan Joyce stated.

Domestic flight demand has helped Qantas’ pre-tax profit climb 14.6%.

Despite an increase in fuel prices, Qantas is coping well.

Earnings from domestic flights have shot up by 20% — a record result.

Flying into the future

Qantas expects domestic flight capacity to fall by 1% in the second half of the financial year.

Davis Chau, from ABC News, notes: ‘In contrast, its prediction for international capacity is a 2-3 per cent uplift — which is lower than the 5 per cent rise it expects from its competitors on overseas routes.’

Qantas will renew its Jetstar fleet by taking delivery of the new Airbus A320 aircraft.

By the end of 2022, almost 20 of the long-haul NEO variation, which are known as 321LRs (long distance aircrafts with 232 single-aisle seats), will be delivered to replace older versions.

Qantas will also be opening its very own pilot academy in 2019.

The academy will be capable of producing hundreds of pilots a year. Qantas hopes it will be the biggest pilot academy in the southern hemisphere.


Ryan Dinse,
Editor, Markets & Money

PS: Despite market expectations of rising interest rates, property and cycles guru Phil Anderson has a new free report, ‘Why Interest Rates Could Stay Low for the 21st Century’, detailing why low interest rates are in fact here to stay.

Ryan Dinse is an analyst at Markets and Money. He has two decades of experience in financial planning, equity analysis and credit markets. Ryan combines fundamental, technical and economic analysis to identify and invest in good ideas at the appropriate stage of the economic cycle. He has a strong interest in technology, economic history and disruptive business models. His focus at the moment is as lead analyst on two of our most recent and innovative investor services, Crash Market Investor and Sam Volkering’s Secret Crypto Network. He will write about the exciting opportunities for investors to benefit from significant changes in world markets. He is a member of Fintech Australia, a former member of the Digital Currency Council, and is a fully accredited financial adviser.

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