The Qantas Airways Limited (ASX: QAN) share price has edged higher in morning trade following the release of a third-quarter update from Australia's leading airline.
At the time of writing its shares are up 1% to $4.47, bringing its year-to-date return to a massive 34%.
For the third quarter of FY 2017 the company posted a 1.4% drop in Group Revenue to $3.96 billion. This was the result of a solid 4.6% increase in Group Domestic unit revenue and a 5.6% fall in Group International unit revenue.
Furthermore, today's update revealed that Qantas expects to report full-year underlying profit before tax in the range of $1.35 billion and $1.4 billion.
Although this will be lower than last year's record result of $1.53 billion, according to Bloomberg the high end of its guidance range is ahead of current market expectations.
Management has pointed to an improved performance from both its Domestic and Loyalty segments for the stronger than expected guidance.
While its International segment continues to be a drag on its results, management appears confident that things are improving. Alan Joyce stated that:
"Internationally it's still tough, with high levels of capacity growth pushing fares down, but we've seen those conditions ease slightly. Because of the work we've done to transform Qantas and expand into growth markets, our international businesses are navigating the headwinds better than our key competitors."
Should you invest?
With the oil price falling and in my opinion unlikely to rise significantly over the next 12 months, Qantas certainly does look like an attractive option for investors.
Whilst the days of it being a bargain buy are long gone, I do believe there could still be significant upside potential ahead for its shares if the macro environment remains favourable and its international operations return to form.
Overall, I think Qantas could be a buy today and would pick it ahead of its rivals Virgin Australia Holdings Ltd (ASX: VAH), AIR N.Z. FPO NZX (ASX: AIZ), and Regional Express Holdings Ltd (ASX: REX).
