Can the Qantas share price keep flying higher in FY25?

Can Qantas impress the market in the 2025 financial year?

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The Qantas Airways Limited (ASX: QAN) share price has soared more than 21% since 6 March 2024, as investors become more positive about the ASX travel share again.

The share market is usually forward-looking, so let's consider how FY25 is shaping up for Australia's biggest airline company.

As expected, travel demand has returned — and boomed — in the couple of years since Australia's borders reopened after COVID-19 restrictions.

You'd think Australians might have made up for all the holiday time lost during the pandemic by now, but that's not what Qantas is seeing. Travel demand, it appears, is in flight mode.

Strong travel demand continues

In the Qantas FY24 first-half result, Qantas reported statutory net profit after tax (NPAT) of $869 million.

It reported that result in February 2024 and said at the time:

Travel demand remains strong across all sectors, with leisure continuing to lead and business travel now approaching pre-COVID levels.

The airline said that "intent to spend on travel among Qantas frequent flyers over the next months remains significantly higher than most other major spending categories."

It added that it expected unit revenue to remain stable for domestic flying and continue to normalise for international flying as market capacity returned.

Qantas developments

In the last few months, the airline has experienced a number of headline events that may have impacted Qantas shares.

In April, Qantas added more than 20 million frequent flyer reward seats, enabling members to use more of their Qantas points to book flights to places like London, Tokyo, New York and Singapore. This new offering will be fully launched by the end of the 2024 calendar year, which is within FY25.

In May, it was announced that Qantas had agreed to pay $20 million to more than 86,000 customers who were sold tickets on flights that Qantas had already decided to cancel or, in some cases, were re-accommodated on flights after their original flights were cancelled. A $100 million ACCC penalty is being imposed on the airline as well. While these payments will be reflected in FY24, they are expected to be paid after the end of FY24.

The ASX travel share also revealed at the end of May what changes would occur when Perth Airport is expanded, which could lead to more flights and seats. However, this may not affect FY25 much.

Analyst forecast for the Qantas share price

The broker UBS has forecast that in FY24, Qantas can generate $21.8 billion of revenue, $2.3 billion of earnings before interest and tax (EBIT), and $1.49 billion of net profit after tax (NPAT). The airline is also expected to pay a dividend per share of 10 cents.

In FY25, the broker suggests Qantas could grow revenue to $22.1 billion, EBIT could be flat at $2.3 billion and net profit could decline to $1.44 billion. The dividend per share is projected to double to 20 cents per share.

UBS thinks that if Qantas shares do not experience any negative catalysts, the company could perform for shareholders because of its "single-digit valuation multiple." According to UBS forecasts, the Qantas share price is valued at under 7x FY25's estimated earnings.

The broker's price target of $7.50 suggests a possible rise of more than 20% in the next 12 months.

Motley Fool contributor Tristan Harrison 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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