Qantas Airways Limited (ASX: QAN) shares have climbed nearly 4% in the past month, but what is the outlook ahead of FY22 earnings?
Qantas shares are lifting 0.22% today and are currently trading at $4.61. For perspective, the S&P/ASX 200 Index (ASX: XJO) is up 0.57% today.
Let's take a look at the outlook for the Qantas share price.
What's the outlook for the Qantas share price?
Analysts at Citi have downgraded Qantas from neutral to sell, according to a Thomson Reuters report cited on NAB trade.
Citi is concerned about the impact of fuel costs and hiring more staff on the company's profit margins. Analysts said:
We expect short term, higher fuel prices and over-staffing will put pressure on margins, decrease capacity and increase difficulty for management
Analysts also noted Qantas has reduced flight capacity by 10% and hired 3% more staff. In a market update in late June, Qantas advised it has recruited 1,000 new operational team members and hundreds more call centre staff.
Citi is also predicting lower capacity growth and greater cost of available seat kilometres than the market expects, The Australian reported. Analyst Samuel Seow said:
Additionally given what we estimate as a slow start to FY23, we are cautious heading into results given what we expect might be more muted guidance.
Citi has cut the price target by 21% from $5.47 to $4.28.
Qantas has recently been hitting headlines amid flight cancellations and delays. Qantas is due to report FY22 earnings on 25 August.
Qantas share price snapshot
The Qantas share price has climbed 2% in the past year, but it has lost 8% in the year to date.
For perspective, the benchmark ASX 200 index has fallen nearly 7% in the past year.
Qantas has a market capitalisation of nearly $9 billion based on the current share price.
