Can the Qantas Airways Limited share price continue flying sky high?

Since January 2014, shares in Qantas Airways Limited (ASX: QAN) have been some of the best performing on the ASX, with the share price going up over 400%.

Of course this is after a very difficult period in the company’s history when it had lost over 80% of its value from its pre-GFC peak. Already there is an investing lesson there. The share market can be very volatile. It’s an often repeated mantra but one that’s not fully appreciated.

Those ups and downs are all in the past now and all Qantas shareholders care about is the future. So can Qantas shares keep flying high?

I think there is an argument for both a bear and bull case.

Bull case

Leadership. I think Alan Joyce has done a fantastic job as CEO at Qantas. He’s very ambitious and appears to be playing the long game which is great for shareholders.

Dual brands. The dual Qantas and Jetstar strategy is a winning one in my option. There will always be cost sensitive travelers who will choose Jetstar and the Qantas Frequent Flyer program is really popular with corporate travelers. I’m sure the sales team at Corporate Travel Management Ltd (ASX: CTD) will be able to confirm that.

New routes and partnerships. Qantas is constantly pushing the limits, searching for new routes such as direct flights from Australia to London, or smart partnerships with other leading global airlines such as Emirates.

Bear case

Oil prices are cyclical and sensitive to geo-political tensions. There is always the threat of rising oil prices.

Competition from Virgin Australia Holdings Ltd (ASX: VAH) makes it difficult for Qantas to raise ticket prices. There is also little bargaining power to negotiate airport fees with Sydney Airport Holdings Pty Ltd (ASX: SYD) and Auckland International Airport Limited (ASX: AIA) operating as virtual monopolies.

Foolish takeaway

I think Qantas is a premier Australian brand that stands out as one of the best in the world. When it’s run by sensible management like it is now, it is likely to perform well over the long run. There are external factors however beyond the company’s control that almost guarantee that it will be a bumpy ride.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. 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 Scott Phillips.

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