Why is the Qantas share price flying higher than the ASX 200 this month?

Qantas shares are beating the market as the airline's operations return to almost full capacity.

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A woman stands on a runway with her arms outstretched in excitement as a plane takes off behind her representing the rising Qantas share price today

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Key points

  • Investors appear to be feeling more bullish about Qantas than the broader market
  • This comes as the demand for international travel soars
  • The airline's chief rival, Air NZ, is flagging blue skies ahead as well

The Qantas Airways Limited (ASX: QAN) share price has been beating the broader market over the past month.

Shares in the iconic Australian airline are soaring 13.22% over this period. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down at a 6.05% loss. The Qantas share price closed at $5.14 on Friday.

There has been a lack of news from Qantas over this time to support its market-beating performance, but some positive developments have occurred. Let's cover the highlights.

Qantas's passenger numbers recover

Figures released by the Bureau of Infrastructure and Transport Research Economics (BITRE) show that the airline's total number of passengers increased by 27,990 to 351,988 from July last year to July 2022. This represents almost full passenger capacity.

Another reason Qantas's shares could outperform the ASX 200 is that investors feel more bullish on Qantas compared with the aggregate of its peers in the index. Headwinds of rising inflation and interest rate hikes have hit some sectors more severely than others, particularly the tech and consumer discretionary sectors.

Earnings improve for chief rival

Higher passenger numbers mean potentially more cash hitting Qantas's coffers. This effect is already observed with Air New Zealand Limited (ASX: AIZ) posting a positive half-year earnings guidance for FY23.

Air NZ notes that it saw "strong forward sales" for the first three months of this financial year and is operating at approximately 70% of its capacity for FY19. The bottom line is that it expects its earnings before taxes and other significant items to be between $200 million and $275 million.

These expected results are a significant improvement, as the airline reported a loss before other significant items and taxation of $440 million ending FY21.

So if Air NZ's results are anything to go by as a closely related peer company, then Qantas's shares could be kept buoyant by the expectation that its fundamentals will also improve in the future.

Qantas share price snapshot

The Qantas share price is up 2.59% year to date. Meanwhile, the S&P/ASX 200 Index is down 11.68% over the same period.

The company's market capitalisation is $9.69 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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