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Date : 01/12/2022

Qantas Airways (ASX: QAN) Shares Surged on Robust Profit Upgrade for 1H23

Qantas Airways Limited (ASX: QAN) shares rose on Wednesday after the airline raised its profit guidance for 1HFY23 due to “robust” demand. On October 13, 2022, the firm last updated its forecast. Qantas shares were trading 5.45% higher at AU$6.19 a share at 10:45 AM AEDT, giving the company a market worth of AU$11.07 billion. Qantas stock price is up 17.87% over the last year, and it’s up 20.39% so far this year.

ASX QAN: Highlights from the New Guidance

ASX QAN Shares Analysis

Here are our Qantas Airways Shares Analysis & Forecast:

  1. It is now anticipated that 1H23’s underlying profit before tax would range from $1.35 billion to $1.45 billion.
  2. By the end of 2022, we anticipate the net debt of Qantas Airways Limited will decrease to between $2.3 billion and $2.5 billion.
  3. The last COVID wave and the extreme weather that followed benefited from the operations centre’s investments.
  4. On schedule to distribute recovery proceeds, regular workers may get incentives of up to $11,000.

QAN: The Reason Why Qantas Shares Surged?

Qantas share price was pushed up by investors on Wednesday after the firm raised its profits guidance.

The announcement claims Qantas shares are on track to achieve a greater-than-projected profit for the first half of the year because of the sustained strength in travel demand.

The management of Qantas Airways Limited projects a half-year underlying profit before tax of $1.35 billion to $1.45 billion. The early October projection range has been raised by $150 million.

Qantas Airways Limited attributes this to customers prioritising travel expenditures above those for other categories. Also, there are encouraging indicators that foreign capacity constraints are increasing domestic leisure demand, which is good news for Australia’s tourist industry.

That such a healthy profit is being made despite continued much higher fuel prices compared to FY 2019 is cause for optimism.

Specifically, the company’s management estimates that fuel expenses will hit a record high of almost $5 billion in FY 2023. Even though global capacity has been trending around 30% below pre-COVID levels, this has stayed the same.

QAN: Total debt continues to decrease

Qantas Airways Limited (ASX: QAN) anticipates its net debt to reduce to an anticipated $2.3 billion to $2.5 billion at the end of December, which might also be positive for the stock price today. By a margin of around $900 million, this is a significant improvement above the most current projections.

Increased bookings for flights in the second half and beyond are mostly to blame. It has also improved its financial position due to deferring around $200 million in capital spending to the year’s second half.

At last, Qantas Airways Limited reported on its COVID credits. It emphasises that consumers have redeemed $1.6 billion out of the total $2 billion in travel credits tied to COVID. New efforts will be launched soon to promote the full use of the remaining credits over the next year. Credit consumption has remained stable at $70 million per month. By 2022’s end, Qantas stock had gained almost 20%.

QAN: Qantas was rated as the most punctual domestic airline

In October, Qantas Airways Limited was named the most punctual domestic airline. Since then, it has claimed steady gains in operational efficiency. Qantas said it would spend AU$200 million on hiring more people, booking more planes, and continuing recruiting to keep operating at these high rates. This investment will help throughout the busy Christmas season and prevent adverse weather impacts.

Take Away

As ASX-QAN shares surged on robust profit upgrade for 1H23, should they be on your “to buy” list?

Qantas Airways Limited (ASX: QAN) is focusing on capitalising on the opportunities the post COVID era offers. The company is boosting international and domestic flights, which is impressive.

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