Qantas share price takes off on 'biggest ever expansions' of core loyalty program

ASX 200 investors are bidding up the Qantas share price on Monday.

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The Qantas Airways Ltd (ASX: QAN) share price is lifting off today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed on Friday trading for $5.43. In morning trade on Monday, shares are changing hands for $5.58 apiece, up 2.8%.

For some context, the ASX 200 is up 0.2% at this same time.

This comes as Qantas unveils what it labels "one of the biggest ever expansions" of its frequent flyer program.

Here's what we know.

Qantas share price soars on frequent flyer upgrade

In a move intended to boost customer satisfaction following a turbulent year, Qantas is adding 200 million more reward seats with the launch of Classic Plus Flight Rewards.

Commenting on the revamped frequent flyer points scheme lifting the Qantas share price today, CEO Vanessa Hudson said, "The Qantas Frequent Flyer program is an integral part of Qantas and has always been about recognising our customers for their loyalty."

Hudson added, "It's one of the biggest expansions we've made to the Frequent Flyer program in its 35-year history."

"The widespread availability of Classic Plus means that frequent flyers have more options to fly where they want, when they want and more often, using their points," Qantas Loyalty CEO Andrew Glance said.

The ASX 200 airline will continue to offer more than five million existing Classic rewards seats across Qantas, Jetstar and 45 partner airlines.

This financial year, Qantas said it will invest $60 million in more flight rewards for its frequent flyers.

Costs and benefits

Looking at the potential impact on the Qantas share price, the airline expects to spend around $120 million on its Classic Plus product in FY 2025. That includes the value of displaced seat revenue, as well as the non-cash impact applied to future sale of points in its loyalty segment.

This falls within Qantas' existing planned customer investment of $230 million for FY 2025.

In new guidance, the airline said it now expects Qantas Loyalty to deliver between $500 million to $525 million underlying earnings before interest and taxes (EBIT) in FY 2024 before returning to growth of around 10% in underlying EBIT in FY 2025.

That could be taking some of the lift out of the Qantas share price today, with the airline previously having forecast underlying EBIT of up to $550 million for its loyalty program.

However, management expects the new program will deliver a "substantial improvement in member engagement". They said it will help drive the long-term growth of Qantas Loyalty as it continues to target $800 million to $1 billion underlying EBIT by FY 2030.

Qantas share price boosted as buyback back on

Also likely boosting the Qantas share price, today management announced that the on-market share buyback of up to $448 million Qantas shares will commence.

The airline had previously said it would wait on launching the buyback until it had finalised all the details of its revamped Frequent Flyer program.

Subject to market volumes, management expects the buyback to be completed by 30 June.

Motley Fool contributor Bernd Struben 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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