The Qantas Airways Limited (ASX: QAN) share price is up 1.31% during afternoon trade. The flying kangaroo is currently trading for $5.42 per share.
The Qantas share price is marching higher even as the S&P/ASX 200 Index (ASX: XJO) has returned its early gains to be down 0.39% at this same time.
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What's impacting the Qantas share price?
Investors could be bidding up the airline after it received positive coverage from UBS.
The broker just added Qantas to its 'best ideas' list.
If you're not familiar with that, the list includes UBS' most preferred ASX shares to hold over the next 12 months. Its analysts look at both the broader macro picture as well as company specific fundamentals.
While inflation, geopolitical turmoil and rising interest rates throw up plenty of headwinds, Australia's unemployment rate is at historic lows and households remain cashed up post the lengthy COVID restrictions.
And it's the strength of the Aussie economy during the reopening that has UBS bullish on the Qantas share price.
"Qantas is also added to our most preferred as a means to fully capture the domestic economy's reopening momentum, and the strength in Airlines globally," UBS said.
Higher jet fuel costs to trim capacity
In a press release this morning, Qantas reported that rising fuel costs over the past months will see it rebalance its capacity and fares.
Looking ahead to flying levels for July and August, the airline said domestic capacity would be reduced from 107% of pre-COVID levels to 103%.
The reduced capacity is unlikely to have a materially negative impact on the Qantas share price. As the airline reported, "These adjustments are not expected to materially impact customers due to the large number of flights on most routes."
This could see its aircraft flying with fewer empty seats.
Qantas added that it "will continue to monitor market conditions and adjust capacity as needed".
On the international front, capacity is forecast to remain just under 50% of pre-COVID levels by the end of the fourth quarter of FY22. Qantas expects international capacity to increase to some 70% by the end of the first quarter of FY23.
Qantas share price snapshot
The Qantas share price has gained 8% in 2022. That compares to a year-to-date loss of 4% posted by the ASX 200.
