For quite some time now, Qantas Airways Limited (ASX: QAN) has been working on its direct route “Flying Non-Stop” from the East Coast of Australia to London and New York, reducing the journey time of up to four hours. These non-stop flights are part of the company’s “Project Sunrise”, which will take Qantas to new heights of achievement.
Earlier, it was speculated that the flights for the route were likely to be extra comfortable for the passengers and will have amenities like bunk beds, gym and other luxurious facilities.
Recently, on Monday 3rd June 2019, various aviation leaders assembled in Seoul for International Air Transport Association’s (IATA) Annual General Meeting, at which Qantas’ CEO, Alan Joyce confirmed that the company is not planning to offer additional luxury features like bunk beds, gym, children’s playground, bars, etc. in its non-stop flights. Instead, Qantas is planning to design cabins in such a way that the passengers could stretch, exercise and hydrate themselves in these long-duration flights. Moreover, to make planes as weight efficient as possible, the flights will occupy less number of passengers in the cabin.
The company has been working in tandem with Boeing and Airbus, both being a leading aircraft manufacturers, to start these flights by 2020 and soon enough, the company will get the best final offers from these manufacturers in order to successfully complete the Project Sunrise.
Recently, in the first half of FY19, Qantas Airways delivered a strong first half profit despite a 27% increase in its fuel bills. The company reported an Underlying Profit Before Tax of $780 million for the six months ended 31 December 2018 and Statutory Profit Before Tax of $735 million.
H1 FY19 Results Highlights (Source: Company Reports)
During the half-year period, the net passenger revenues increased by 6%, helping to offset higher fuel and other costs. Operating cash flows for the first half of FY19 were $1.3 billion, $480 million lower than the first half of 2017/18, reflecting timing differences associated with temporary working capital movements and outflows for the group’s fuel cost hedging program. Investing cash flows were $1.0 billion, excluding aircraft operating lease refinancing.
Financial Highlights for the First Half of FY19 are:
- Statutory earnings per share of 30 cents per share (cps), reflecting current earnings and the accretive benefit of the on-market share buy-back
- Continued strong Group Return on Invested Capital of 19.3 percent compared with 20.7 percent for the same time in 2017/18
- Further, the company’s ongoing transformation is on track to deliver gross benefits of greater than $400 million in FY19. As at 31st December 2018, around $206 million already been delivered
- All operating segments delivering Return on Invested Capital greater than the group’s Weighted Average Cost of Capital with Record results in Group Domestic, Jetstar Domestic, Qantas Domestic and Qantas Loyalty.
With all the financial framework targets met, a disciplined capital investment approach and robust net free cash flow of $218 million, the Board decided to distribute up to a further $500 million of surplus capital to the company’s shareholders through an increase in the base dividend from 10 to 12 cents per share (cps) fully franked interim dividend, totalling $195 million and an additional on-market share buy-back of up to $305 million.
Now, let’s have a glance at the company’s stock performance and the returns it has posted over the past few months. The stock is trading at a price of $5.390 during the day’s trade with a market capitalisation of ~$8.51 billion as on 4th June 2019. The counter opened the day at $5.350 and reached the day’s high at $5.440 and touched a day’s low at $5.340, with a daily volume of ~3,306,108. The stock has provided a year-to-date return of -6.42% and also posted returns of -10.02%, -2.71% and -6.59% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $6.920 and 52 weeks low at $5.180, with an average volume of ~6,325,928.
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