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Date : 22/04/2022

Qantas Airways (ASX: QAN) shares are flying high; here is what you need to know.

Qantas Airways (ASX: QAN) is the biggest airline brand in Australia. It is regarded as the second oldest airline brand globally. The company was founded in 1920 and has over a hundred years of history. The ASX-listed company is the largest domestic and international flight carrier in Australia.

Qantas Airways is the most substantial airline company based in Australia that is believed to be amongst the most reliable airline brands globally. The company has two different airlines, Qantas and Jetstar. Jetstar is a low-cost airline brand that operates flights in Australia and New Zealand.

ACCC has recently given the company a notice that they will not take any action regarding the 19.9% acquisition of shares by Qantas in ACCC. After the press release, its stock declined for a day but has recovered since then.

Qantas Airways Limited (ASX: QAN) stock is currently valued at $5.45 and has gained more than 7% at the end of the last trading session. QAN stock’s previous close was $5.09 and had a trading volume of 8.41 million shares. The current market cap of the company is about 10.2 Billion AUD.

QAN: 1H22 Highlights

The stock has been rising since the company announced its results for the first half of 2022.

qantas airways share price target

  1. Qantas Group’s Underlying EBITDA loss was $(245) million.
  2. Total losses before tax totaled $(1.28) billion in 1H22.
  3. The company suffered a statutory loss before tax of $(622) million.
  4. Mascot property sale and Qantas’ outstanding performance contributed $552 million to their positive statutory net free cash flow.
  5. The firm has seen a rise in the financial contributions from Loyalty and Freight programmes.
  6. Debt-to-equity has decreased to $5.5 billion, which is within the desired range.
  7. In the first half of 2022, the company’s total liquidity was $4.3 billion.
  8. Lockdowns and ramp-up expenses have a substantial influence on its Flying performance.
  9. In the second half of this year, Omicron had a negative effect of around $(650) million.
  10. The company announced an employee recovery and retention strategy that includes the grant of 1,000 shares of company stock to around 20,000 employees.

ACCC will not take any action against Qantas Group

Back in August 2020, Qantas Group acquired 19.9% shares in Alliance Aviation Services. After the company acquired 19.9% of the company, it sparked a controversy that led to the investigation. The controversy revolved around the concerns of Qantas’ monopoly in the airline industry. Qantas acquired a 19.9% stake for approximately USD 45 million.

Alliance recently announced that the company has decided to take no enforcement against Qantas Group after three years. However, Alliance Aviation Services will continue to monitor Qantas’ conduct in the industry concerning the acquisition. They can, later on, decide what to do further next.

QAN: FY22 Outlook

  1. During the third quarter of this year, domestic group capacity is predicted to reach 68% of pre-COVID levels, rising to 90-100% in the fourth quarter.
  2. It is estimated that Group International’s capacity will reach 22% of pre-COVID levels in 3Q22, climbing to 44% in 4Q22.
  3. In FY22, net capital expenditure is estimated to be $850 million (excluding land revenues).
  4. In FY22, $1.8 billion in underlying depreciation and amortisation is predicted.
  5. By the end of FY22, the recovery and restructuring programme is estimated to provide annual benefits of more than $900 million.
  6. With a solid demand forecast, leisure travel is likely to drive the domestic rebound into the fourth quarter of next year.

Conclusion

Although the company incurred losses due to the Omicron and Delta variant, their guidance for the year shows that the company is optimistic about its performance once the situation settles down. The group is currently focusing on developing both its domestic and international operations, which will help them achieve its goals for fiscal 2022.

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