Qantas Airways Limited (ASX: QAN) is an ASX listed aviation company and the largest domestic and international airline in Australia with over 30,000 employees. The company has a stronghold in the long-distance flights and have a good reputation for excellence in safety, customer service etc.
The company operates customer transportation business with two different brands; Qantas and Jetstar. Apart from this, the company also has several other subsidiary businesses, including Qantas Freight Enterprises, Q Catering, etc.
QAN has identified four global forces that are likely to impact the business in the short and long run, and are as follows:
- Digitalisation and big data.
- Climate change and resource constraints.
- Geopolitical shifts and the rise of Asia.
- Shifting customer and workforce preferences.
On 21st February 2019, the company announced a buy-back of 1,625,648,997 fully paid ordinary shares for the ongoing capital management. The total consideration for the shares to be bought back is $305 million, and the company will be using two major brokers; Citigroup and Macquarie Bank for the on-market transaction. It also stated the time period for the buy-back would be unlimited, and no shareholder approval was required for the buy-back.
Since then the company has been on a buying spree, and according to the latest filing on 17th May 2019, the company had bought back a total of 36,563193 shares from the market excluding another 1 million shares bought back on 16th May 2019. The company had spent a total of $209.57 million and still approximately $95.42 million is still left to be spent on the buy-back.
Trading update form March 2019 quarter
On 9th May 2019, the company announced its trading update for March 2019 quarter. Some of the highlights of the update were as follows:
- The total revenue was increased by 2.3% to $4.4 billion versus pcp.
- The Domestic Unit Revenue of the group notched up by 1.1%.
- The international unit revenue of the group saw an increase of 6.2%.
- The company settled to sell its entire stake in domestic terminal to Melbourne Airport. The total value of the deal stood at $355 million.
- In February 2019, the company announced share buy-back with the unlimited time period for a total amount of $305 million.
Financial performance for 1HFY19
The group reported net passenger revenue of $8.02 billion, which is a 6% increase compared to pcp revenue of $7.6 billion. Total expenditure for the reporting period stood at $8.33 million, and underlying profit before tax (PBT) stood at $780 million.
The company reported operating cash inflow of $1.25 billion, investing cash outflow of $1.03 billion and financing cash outflow stood at $332 million. The company reported net cash of A$1.49 billion at the end of the reporting period.
Group Outlook for FY19
The company expects fuel cost to be around $3.9 billion and net depreciation and non-cancellable aircraft operating lease rentals is expected to be around $120 million higher than FY18. Another $250 million of inflation impact is expected to be incurred in FY19, which includes wage growth.
The market capitalisation of the company is A$8.54 billion. The stock has 52-week high and low of A$6.92 and A$5.18, respectively. The stock traded and touched the day’s low of 5.185 and closed the session at A$5.23, as on 17th May 2019. The last one-year return of the stock is negative 15.6%, and the YTD return stands at negative 7.1%.
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