The Qantas Airways Limited (ASX: QAN) share price is above the S&P/ASX 200 Index (ASX: XJO)'s clouds on Thursday amid what could be exciting news for the airline.
First up, its takeover target Alliance Aviation Services Ltd (ASX: AQZ) has posted a return to profit.
Meanwhile, the United Nations' International Civil Aviation Organization (ICAO) has forecast demand for air travel will make a complete recovery this year, returning to pre-pandemic levels.
Right now, the Qantas share price is trading at $6.55, flat with its previous close.
For comparison, the ASX 200 has dropped 0.35% at the time of writing.
Let's take a closer look at what might be going right for the flying kangaroo this morning.
Qantas share price gains amid takeover target's profitability
The Qantas share price is outperforming amid the release of Alliance Aviation's half-year earnings. Here are the key takeaways from the takeover target's results, released after the market closed on Wednesday:
- $9.5 million statutory profit – a $14 million improvement on that of the prior comparable period (pcp)
- Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) nearly doubled to reach $42.2 million
- Revenue lifted $68.4 million to $238.5 million
- Underlying cash flow came in at $27.4 million
- Declined to pay a dividend
The Alliance Aviation share price is down 0.87% to trade at $3.40 at the time of writing.
Qantas put forward a successful $4.75 per share bid for the aviation services provider in May 2022, valuing it at $764.5 million.
However, the Australian Competition & Consumer Commission (ACCC) is proving hard to convince. It's concerned the acquisition could have a negative impact on competition in the aviation sector.
Demand for air travel tipped to grow in 2023
Qantas might also be front of mind today after the ICAO stated it expects passenger demand for air travel to reach pre-pandemic levels by the first quarter of 2023.
Demand is tipped to be around 4% stronger than it was in 2019 this year, translating to a compound annual growth rate of 0.7% between 2019 and 2024.
It also tips airlines to return to profitability in the final quarter of 2023, ending three years of losses, as long as risks impacting international air transport don't escalate.
Qantas expects to beat that prediction. The ASX 200 airline upgraded its first-half guidance in November, tipping a $1.35 billion to $1.45 billion underlying profit before tax for the period.
