Qantas Airways Ltd (ASX: QAN) shares are up 1.26% in lunchtime trade.
The S&P/ASX 200 Index (ASX: XJO) airline stock closed down 2% yesterday at $6.36 per share. Shares are currently changing hands for $6.44 apiece.
Qantas shares dropped yesterday despite the company releasing an update announcing some promising profit guidance.
And it's those outsized profits that are making waves for the airline.
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Why are the ASX 200 airline's big profits an issue?
Qantas shareholders were greeted with some good news in the update on the profit front.
Namely that the airline is forecasting an all-time high underlying profit before tax of between $2.4 billion and $2.5 billion for the 2023 financial year (FY23).
That's thanks to a number of factors including resurgent travel demand.
Qantas said domestic capacity should be at 104% of pre-pandemic levels by the end of the second half of FY23. International capacity is expected to equal pre-pandemic levels by March 2024.
By the end of the second half, Qantas expects its domestic capacity to be 104% of pre-COVID levels.
Continued elevated ticket costs combined with falling jet fuel costs are also benefiting Qantas shares.
As an added bonus to investors in Qantas shares, the airline is also increasing its ongoing on-market buyback by $100 million.
But that's not how the Transport Workers Union (TWU) thinks the company should be spending its windfall profits.
The TWU is still engaged in legal proceedings with the airline over the dismissal of 1,700 ground workers, let go when the fleet was grounded during the pandemic.
Now the union is saying that Qantas shouldn't benefit from that cash. Rather the airline should return its record profits to the government to pay back the $2.7 billion in aid it received during the lockdowns.
"This obscene profit forecast is the result of Qantas management bleeding dry workers, passengers and the taxpaying public," TWU national secretary Michael Kaine said (quoted by The Australian).
Kaine continued:
The right thing to do would be to pay back every dollar of no-strings government handouts Qantas received from Scott Morrison before it trashed every essential section of the airline to prop up executives and shareholders.
How have Qantas shares been performing longer-term?
Qantas shares have been strong performers over the past 12 months, up 20%. That compares to a full-year gain of 1% posted by the ASX 200.
