Qantas Airways Limited share price soars as profits fall 25%

The Qantas Airways Limited (ASX:QAN) share price will be in focus after the Flying Kangaroo reported a 25% fall in profit for its most recent half year.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Qantas Airways Limited (ASX: QAN) share price rose 4% to $3.70 after the Flying Kangaroo today reported a 25% fall in profit for its most recent half year.

Here are the key takeaways from the Qantas result:

  • Revenue fell 3.3% to $8.2 billion
  • Profit fell 25.1% to $515 million, from $688 million (down 7.5% on an underlying basis)
  • A 50% franked dividend of 7 cents per share was declared
  • Jetstar grew profits 5%

Qantas is Australia's leading Airline operator, flying popular domestic and international routes. It also owns the Jetstar brand and makes money from freight services and its loyalty cards.

"Our transformation program has built a strong, sustainable business that generates returns throughout the economic cycle," CEO Alan Joyce said. "Qantas and Jetstar's domestic operations produced an outstanding result and Qantas Loyalty continued to thrive. It's a combination that keeps delivering and sets us apart from our competitors."

During the half, Qantas domestic reported a 4% fall in profits while the international division was affected by competition and reported a 23% reduction.

"The international market is tough because of capacity growth and lower fares, and Qantas International is not immune from those pressures," Joyce added. "But the work we've done on removing costs and making the business more efficient means Qantas International is outperforming its peers in the region."

Qantas is introducing the Boeing Dreamliner, seating just 236 passengers but providing a better experience for travellers, and high-speed Wi-Fi to its planes.

Looking ahead over its full 2017 financial year, Qantas plans to increase capacity marginally. It also expects fuel costs less than $3.2 billion, and up to $450 million from transformation benefits.

Should you buy Qantas shares?

Qantas is in a good paddock at the moment, with oil prices still low relative to historical levels. However, competition is always increasing and costs can be subject to any number of external drivers. Therefore, I would not invest in Qantas shares right now.

Do get me wrong, I think Qantas is probably the best Australian airline. But that does not make it a good investment.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »