The Qantas Airways Limited (ASX: QAN) share price is up 3.5% after the travel company revealed a trading update for the third quarter of FY19.
Qantas is Australia’s leading airline. It was founded in the Queensland outback in 1920, the Qantas name was originally Queensland and Northern Territory Aerial Services. The company operates two main airlines – Qantas and Jetstar – and subsidiary businesses including other airlines, businesses in specialist markets such as Q Catering, Qantas Freight Enterprises and the popular Qantas Frequent Flyer program. It employs some 30,000 people with around 93 per cent of them based within Australia.
Why The Qantas Share Price Is Soaring
Qantas reported that its third quarter revenue was up 2.3% to $4.4 billion compared to the same period last year. However, the company warned that comparisons have been impacted by the timing of key holidays (Easter) shifting significant revenue to the fourth quarter.
Qantas said that if you remove the effects of Easter, group revenue per available seat kilometre (RASK) for the four months to the end of April 2019 grew by around 5.5%.
The airline said that it had maintained its capacity discipline in Group Domestic, down 1%, and Group International (down 1.9%), which assisted with profit margins and the recovery of fuel costs.
Qantas Domestic Unit revenue increased by 1.1% and International Unit revenue grew by 6.2%. In International, where there has been weakness recently, network changes drove revenue performance as did competitor capacity reductions on long haul routes which led to increased market share for Qantas International.
Melbourne Terminal Sale
Qantas also said that it and Melbourne Airport have reached an agreement for the sale of the airline’s domestic terminal for $355 million, of which $276 million will be paid for in cash this year.
The transaction includes a 10-year access agreement for Terminal 1 with exclusive access for Qantas.
Is Qantas A Buy?
Airlines may be better investments these days than the past, as we’ve seen with Warren Buffett’s Berkshire Hathaway buying some US airlines. Qantas is expecting another record year for revenue, However, I’m not sure how market-beating or defensive airline shares are at this stage in the cycle.
I would rather have one of the leading ASX shares in the FREE REPORT below for my portfolio.
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