Qantas Airways Limited (ASX: QAN)Share Price and News
Overview Of Qantas
Qantas Airways Limited is Australia's flagship carrier, operating both domestic and international flights. Founded in 1920, Qantas is the third-oldest airline in the world and has established a strong reputation for safety and service quality.
The company provides air transportation services under the Qantas and Jetstar brands and also has an extensive cargo division. Most important is its Frequent Flyer division (Qantas Loyalty) enabling users to earn points, and Qantas gets paid for those points by card payment providers. There were over 17m members - nearly as many adults in Australia. The Loyalty division remained profitable even during the pandemic.
Qantas differentiates itself with its commitment to sustainability, having made substantial investments in carbon offset programs and fuel-efficient aircraft. Its global footprint spans ~100 destinations across the world, making it a pivotal player in the international aviation sector.
Qantas' Company History
Qantas was originally founded in the outback town of Winton, Queensland, by Hudson Fysh, Paul McGinness, and Fergus McMaster. It initially served regional flights before growing into the global airline it is today first operating flying boats then the jet age with the 707, 747 and later the 767.
Until the 1990s, it was international-only until it bought Australian Airlines which flew domestic routes. It was also during that decade that the company was privitised and listed on the Australian Stock Exchange. The 2000s were a difficult era with 9/11, SARS and the GFC as well as increased domestic competition, but Qantas thrived during the period as it used the crisis to acquire 737 aircraft on the cheap and it launched low-cost carrier Jetstar in 2004.
Between 2008 and 2023, the airline was run by Alan Joyce who left a mixed legacy. He was credited for improving the financial standing of the airline, and getting it through the COVID pandemic which literally eliminated international travel. He also deserves credit for his boldness in launching longer long-haul flights, culminating in Project Sunrise which will eventually see non-stop flights between Australia and London and New York. But many criticised him during and after his tenure for being conservative with his capex and some of the changes he made during the pandemic.
He departed in late 2023 and was replaced with his long-term CFO Vanessa Hudson.
Future Outlook of Qantas (ASX: QAN)
Qantas' outlook remains positive as it has put the pandemic and Alan Joyce's tenure behind it. With increased demand for air travel, particularly in the domestic and Asia-Pacific markets, Qantas expects to see continued revenue growth in the coming years.
The challenge is that the lack of investment in new aircraft during Joyce's tenure has led to a big bill as Qantas seeks to renew its fleet and supply chain issues are not helping the cause with its upcoming (and existing aircraft). The good news for investors is that the fleet renewal project is well underway, and the company hopes to launch its non-stop flights between the East Coast of Australia and New York and London in the next couple of years.
The airline remains vulnerable to fuel price fluctuations, regulatory changes, and the possibility of future pandemics or geopolitical tensions, all of which could affect global air traffic.
Is Qantas (ASX: QAN) a Good Stock to Buy?
Whether Qantas is a good stock to buy depends on an investor's focus on long-term stability or growth potential. Qantas stock is relatively priced, making it a viable option for long-term investors.
But market conditions such as fluctuating fuel prices could affect short-term performance. And that's before you consider that airlines as a high-capex and low-margin business.
Overall, the airline's future outlook appears promising, particularly for long-term investors, but investors need to know the risks of investing in airlines generally.
Our Stock Analysis
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Frequently Asked Questions
Qantas' dividend yields tend to be below 2% with the most recent being 1.81%. Qantas has only just resumed paying dividends for the first time since the pandemic, but it has a preference for stock buybacks rather than payouts.