AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Shares of Australia’s Qantas Airways (ASX:QAN) edged up 0.7% to AU$6.79 in recent trading, buoyed by improving earnings momentum and favorable sentiment surrounding the company’s outlook. Analysts at Jarden have expressed optimism about the flag carrier’s prospects, pointing to multiple factors that could provide near-term earnings support and a potential re-rating of its price-to-earnings (P/E) multiple.
Jarden Highlights Earnings Momentum and P/E Re-Rating
Jarden analysts remain bullish on Qantas, suggesting that the airline’s improving earnings momentum, coupled with favorable market sentiment, could lead to a re-rating of the company’s P/E multiple. The brokerage has a price target (PT) of AU$7.10 on Qantas shares, maintaining a "buy" rating.
According to Jarden, several items in the company’s outlook and broader market conditions are expected to support Qantas’ earnings performance in the near term. Despite recent challenges, such as weaker financial results, the airline has taken strategic steps to strengthen its position, including announcing an additional share buyback in August.
Capacity Management and Load Factors
A key area of focus for Qantas moving forward will be the careful management of its capacity. Jarden analysts believe that the airline will continue to adopt a rational approach in both its domestic and international capacity settings, aiming to preserve load factors and optimise profitability.
Maintaining capacity discipline is crucial in the competitive aviation market, where balancing supply and demand is essential to protect margins. With demand for air travel fluctuating and external factors like fuel prices playing a role, Qantas’ ability to effectively manage its fleet and seat availability will be closely monitored by investors.
Fuel Price Benefits Expected in FY25
Jarden’s outlook for Qantas extends beyond the near term, with the brokerage predicting that the airline will benefit from favorable underlying fuel prices starting in the second half of FY25. Lower fuel costs are expected to provide a significant boost to Qantas’ bottom line, as fuel represents a major expense for airlines.
The expected drop in fuel prices aligns with broader market forecasts, and Qantas is likely to capitalise on these cost savings as part of its overall strategy to improve profitability and enhance shareholder value.
Share Buyback and Strategic Initiatives
Qantas’ decision to implement an additional share buyback in August, despite reporting lower-than-expected earnings, signals management’s confidence in the company’s long-term prospects. The buyback program is designed to return capital to shareholders while boosting earnings per share by reducing the number of shares in circulation.
This move also highlights Qantas’ commitment to maintaining a balanced capital allocation strategy, with a focus on rewarding investors while navigating industry challenges.
