Shares in Qantas Airways Limited (ASX: QAN) are looking volatile in Tuesday’s trade on the ASX. Qantas rose by more than 3% shortly after today’s open, boosting the stock’s total return over the last 12 months to more than 45%. However, some profit taking saw the Qantas share price dip later in the morning.

Overall, Australia’s national carrier has enjoyed a cracking return to form — unthinkable compared to the dire straits it faced less than two years ago.

Why did this happen to Qantas Airways shares?

This morning, Qantas announced a record performance for the six months ending 31 December 2015. Qantas revealed a 150% rise in underlying profit before tax to $921 million. That’s toward the high end of the guidance management provided in mid-December.

Every Qantas segment contributed strongly to the result, with Jetstar Group and Qantas International both posting growth in underlying earnings before interest and tax (EBIT) of more than 100%.

This leaves Qantas well diversified across five attractive businesses.

Group revenue rose 5% in the period to $8.5 billion. To drive profit so much more strongly than revenue growth, Qantas exploited lower fuel prices, controlled its costs across the group and took a smarter approach to aircraft utilisation.

Qantas also reaped the benefit of the lower Australian dollar, which is driving an inbound tourism surge. As CEO Alan Joyce put it: ‘Today’s record result reflects a stronger, leaner, more agile Qantas…the strength of our performance also means we can continue to reward our shareholders for their confidence in our business.’

The reward Mr Joyce referred to is a new on-market share buy-back scheme worth up to $500 million. Investors should see this as an attractive way to boost returns, absent the payment of a regular dividend, which would be harder given Qantas’ low franking credit balance.

Today’s result reflects a healthy and confident Qantas Airways, so it’s a little surprising to see the Qantas share price selling off in heavy trade this morning.

What’s next for Qantas Airways Limited?

With oil prices continuing to decline, it’s likely that market analysts will now have to upwardly revise their estimates of Qantas’ future profit potential.

Even after their strong recent run, Qantas Airways shares are still trading at a price-earnings (PE) multiple of only around seven times. Historically, Qantas Airways shares have traded at between 8 and 12 times the group’s earnings.

On that basis, and in light of today’s robust result, Qantas shares are looking cheap today. If jet fuel stays cheap, Qantas Airways Limited could be set to continue its brilliant share price rise.

Foolish takeaway

It’s hard to make money investing in airline stocks. Businesses like Qantas Airways, Virgin Australia Holdings Ltd (ASX: VAH) and Regional Express Holdings Ltd (ASX: REX) have a lot of moving parts, many of which are beyond management’s control.

When things go wrong, these stocks and those of companies like Sydney Airport Holdings Ltd (ASX: SYD) can suffer serious share price drops. Despite Qantas Airways’ household name status, it is not a low-risk stock.

But if you’re comfortable with the view that airlines can continue to benefit from cheap oil, cost discipline and rational competition, you could ride solid gains through an investment in Qantas Airways.

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Motley Fool contributor Tim Dohrmann has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.