The Qantas Airways Limited (ASX: QAN) share price is up 2% as investors got a look at the airline’s update.
Promising progress for Qantas shares
Qantas said that the domestic operations for both Qantas and Jetstar are positioned to deliver growth at “industry-leading margins”, while with its international divisions both brands are positioned to “leverage unique competitive positions to deliver margin and earnings growth.”
The airline said that traveller ‘intent to travel’ remains “significantly above pre-COVID levels”, with “two times more plan to fly domestically in the next 12 months, and there’s 80% more planning to fly internationally in the next 12 months.
Qantas said that its domestic revenue is at 118% of pre-COVID levels, while international revenue is 123% of pre-COVID levels. That’s really promising for the Qantas share price.
The airline said that it’s now the most reliable major domestic airline, with the lowest average cancellation rate for the last 11 months.
International update
Qantas said that the 20-year passenger growth outlook provides confidence in long-term global market demand.
Market supply constraints are expected to persist “for several years”.
Qantas said that it’s aiming for an 8% EBIT (EBIT explained) margin in its international division for FY24, and between 10% to 12% for the long-term.
The airline said it can leverage its brand and distribution strength to serve outbound business and premium leisure customers.
Qantas revealed that it’s aiming for the international division to generate “incremental earnings” of at least $400 million per year by FY30, with an incremental working capital benefit of around $400 million. Freight is also expected to make more profit, partly thanks to e-commerce growth.
FY30 and final thoughts on the Qantas share price
The business is aiming to significantly grow its EBITDA (EBITDA explained) to FY30, thanks to revenue growth and cost transformation.
Qantas Loyalty is expected to generate even more profit in future years. The airline is hoping for $1 billion of EBIT thanks to growth in the active member base, an increased earn and redemption per member and operational efficiencies.
I think Qantas shares have a very promising future if it can grow its underlying profitability. It’s doing well and I think demand will stay strong for FY24 and perhaps beyond.
