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Qantas Airways Limited (ASX: QAN) is an ASX listed airline company, operating both the domestic and global flights. The group owns two different airline brands under its umbrella; Qantas and Jetstar. It is the largest airline company in Australia having 30,000 employees. Apart from the airline business, the company also operates other complementary business brands like Qantas Freight Enterprises, Qantas Frequent Flyer, Q Catering etc.
On 9th May 2019, the company released its trading update for Q3FY19. The total revenue was reported at $4.4 billion (up by 2.3%) for the period. It was a healthy revenue despite the Easter timing (period of high travelling) which commenced in Q3FY19 but shifted to Q4FY19.
Group Domestic and Group International faced continued capacity discipline, by 1% and 1.9% respectively which was benefited with the recovery of fuel costs and yield management.
The revenue of Group Domestic was increased by 1.1% according to the expectations which accounted for the Easter timing shift. It witnessed weakening demand in other parts of the corporate market which was more than offset by the ongoing strengthening in the resources market.
The revenue of Group International increased by 6.2%. This notched up performance was resulted by revenue performance driven by network changes, a robust performance by Qantas International and decrease in competitor capacity for long haul routes.
The Performance of Jetstarâs international services was highly impacted by school holidays and the timing of Easter, but the impact has been shifted in the coming months, not negated altogether. Despite the impact, the ancillary revenue per passenger of Jetstar Group increased by 8%, contributed by Club Jetstar membership and new luggage options.
The companyâs other services Qantas Loyalty, Qantas Insurance and Qantas Money also saw strong growth in revenue primarily through frequent flyers. Company has further plans for Qantas Loyalty performance which would be announced in Q4FY19 with a view to increasing the earnings growth by 7-10% for 2HFY19.
Melbourne Domestic Terminal
The company has agreed to sell its domestic terminal to Melbourne Airport for a total of $355 million, out of which $276 million will be received in cash in FY19 and the remaining $79 million will be received in future periods.
The agreement includes a 10-year access agreement for Terminal 1, and the company retains its exclusive rights to Terminal 1 including lounges.
Capital management update
In February 2019, the company announced a share buyback of $305 million which was completed up to 54% by 6th May 2019, with a total of 29,477,272 shares being acquired. Further capital management initiatives will be considered in the coming months as part of the full year results which would be announced in August 2019.
Additional Development
Other miscellaneous developments are;
- The company signed three-year wet-lease with Atlas Air for the upgradation of its freighters, operated by Qantas Freight.
- Retirement of another 747, leaving a total fleet of eight.
- Announcement of a new Jetstar route from Gold Coast to Seoul, Korea and from Sydney to Sapporo, Japan.
- Appointment of Michaela May as an assistant company secretary of Qantas Airways Limited.
On 21st January 2019, the company announced that Anna Rachel Pritchard, Company Secretary of Qantas had resigned from her position.
Stock performance
The market capitalisation of the company is A$8.74 billion. The 52-week high and low of the stock is A$6.92 and A$5.18 respectively. The stock touched an intraday high of A$5.64 and is now trading at A$5.640, as of 9th May 2019 (AEST: 2:06 PM). In the last one year, the stock has delivered a negative return of 13.2%, and the YTD return stands at negative 5.6%.
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