Qantas Airways Limited shares take off on record profits

The Qantas Airways Limited (ASX:QAN) share price has ascended 9% higher to $5.75 during morning trade following the release of the airline’s half-year result.

Here are key takeaways from the six months ending December 31:

  • Half-year revenue increased 5.8% on the prior corresponding period to $8,660 million.
  • Underlying first-half profit before tax up 15% to a record $976 million.
  • Statutory profit before tax increased 20% to $857 million.
  • Statutory earnings per share of 34 cents.
  • Net free cash flow increased 2.7 times to $772 million.
  • 7 cents per share ordinary unfranked dividend declared, plus an on-market buyback of up to $378 million.
  • Outlook: Expects healthy consumer demand growth.

Overall I thought this was an impressive result and I can’t say I’m surprised to see its shares surge higher this morning. The half saw record results for the Qantas Domestic, Jetstar, and Qantas Loyalty segments.

The star performer was the Qantas Domestic segment which delivered a 5.3% increase in revenue to $3,070 million, with underlying EBIT up 20% to $447 million.

This was closely followed by the Jetstar segment which produced a 4.1% increase in revenue to $1,936 million and a 15.6% lift in underlying EBIT to $318 million

Also contributing to the company’s growth was the Qantas Loyalty segment. It delivered a 1.7% lift in underlying EBIT to $184 million on a 2.7% increase in revenue to $763 million.

Pleasingly, the performance of these three segments more than offset another weak performance from Qantas International. Although the segment delivered a 7.3% increase in revenue to $3,439 million on the back of an increase in capacity, underlying EBIT fell 5.5% to $222 million.

Should you invest?

I’ve been talking up Qantas for some time now as a great investment option and my opinion hasn’t changed after this result.

It may not be the bargain buy it was a year ago, but I still see a lot of value in its shares today. I would suggest investors choose it ahead of industry peers Air New Zealand Limited (ASX: AIZ) and Virgin Australia Holdings Ltd (ASX: VAH).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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