The Qantas Airways Ltd (ASX: QAN) share price is grabbing headlines today after the airline announced it purchased its remaining 49% of online travel player TripADeal.
The investment was made on a consideration of $211 million and comes after Qantas purchased its original 51% stake in 2022. This move is set to boost Qantas's exposure to the $13 billion online holiday packages market, the announcement says.
Qantas shares opened the session on Thursday at $6.14 apiece and are now trading almost 1% higher at the time of writing. This comes after a 14% rally this year to date. Here is the rundown.
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Qantas share price in focus
TripADeal is a Byron Bay-based online travel company. Qantas says the acquisition aims to provide cost synergies and enhance the experience for Qantas Frequent Flyers. Cost synergies occur when two businesses with very similar operating lines save on running costs when they combine interests.
The acquiring company (in this case Qantas) can sell more products to the selling company's customers at a cheaper cost. It can also use the selling company's (in this case, TripADeal) technology to grow its network – again, at a cheaper cost.
With the full stake in TripADeal, Qantas anticipates annual synergies of at least $50 million. Qantas Points would be redeemable on various holiday packages, ranging from "African safaris" to "European getaways", the company said.
Qantas Loyalty CEO Andrew Glance said the partnership "turbocharged" TripADeal's value to customers.
TripADeal has been building on-trend and well-priced holiday packages for over a decade and has delighted millions of holidaymakers in the process. This success has only been turbocharged by the Qantas partnership, and the opportunity for our members to earn and use their points.
If only these points were redeemable to increase the Qantas share price as well.
What does this mean for Qantas investors?
Under the new terms, TripADeal will continue operating independently, expanding its offerings and maintaining partnerships, including with Qantas and Jetstar.
TripADeal founders Norm Black and Richard Johnston will step down, with Matt Wolfenden taking over as CEO.
"We have worked hard to build and grow TripADeal from the ground up and know Qantas will take it into a new era of success," the pair said in a statement.
The deal could be a growth lever for the business, in my view. TripADeal's bookings have surpassed $450 million in the last 12 months, doubling the pre-COVID level, the company says.
This aligns with Qantas's strategy to boost its loyalty program, aiming for underlying earnings before interest and tax (EBIT) of $500-$525 million in FY 2024 and at least 10% growth in FY 2025.
Glance added, "With TripADeal bookings growing at 70% over the last year and more opportunities to strengthen the offering and realise further synergies, this deal is great news for our customers and the Loyalty business."
Qantas share price takeaway
The Qantas share price has lifted more than 14% into the green this year to date.
This comes after a difficult 2022–2023 period, where shares traded as low as $4.74 in October last year. Currently, Qantas's price-to-earnings ratio (P/E) ratio is 6.7, below many of its regional peers.
