The Qantas Airways Limited (ASX: QAN) share price has hit a spot of turbulence on Thursday morning.
After starting the day higher, the airline operator's shares have slipped into the red at the time of writing.
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What's going on with the Qantas share price?
The company's shares have been bouncing around this morning as investors weigh up the positives and negatives from its FY 2024 results.
As a reminder, Qantas reported a 10.7% increase in revenue to $21.9 billion and a 16% decline in underlying profit before tax to $2.08 billion. The latter was in line with the consensus estimate for FY 2024.
The stars of the show for the airline in FY 2024 were its Jetstar Group and Qantas Loyalty businesses. Jetstar Group reported a 23% increase in underlying EBIT to $497 million and Qantas Loyalty delivered a 13% lift in underlying EBIT to $511 million.
This was offset by profit declines from the Qantas Domestic and Qantas International businesses.
Qantas Domestic posted a 16% decline in underlying EBIT to $1,063 million and Qantas International reported a 39% decline to $556 million.
But this didn't stop Qantas from announcing a $400 million on-market share buy-back that will take place during the first half of FY 2025. Qantas' CEO, Vanessa Hudson, commented:
Our strong financial performance and balance sheet will allow us to continue to invest in our largest ever fleet renewal program, which will benefit our customers and people, as well as delivering shareholder returns. These investments come at a time when Australians are continuing to prioritise travel over other spending categories, with intention to travel over the next 12 months remaining high.
Broker reaction
The bullish analysts at Goldman Sachs were relatively pleased with Qantas' results. They said:
Revenue came in at -1% vs GSe and Visible Alpha Consensus Data. Group Capacity came in at -2% vs GSe and unit revenues (RASK) was +2%. PBT of $2,078m was +4% vs GSe but largely in line vs VA consensus. The result included A$230m of total customer investment in the period (in line with guidance). The customer investment has driven 12%pts improvement in QAN's reputation score in Jun24 vs Sep23 lows and further increased by 4%pts in Jul24. Importantly, key operating metrics improved through the 2H.
Dividends to return soon
While there was no dividend declared with Qantas' full year results, Goldman Sachs notes that management has revealed plans for a dividend return next year. It said:
Adjusted ND [net debt] was A$4.1bn vs GSe $4.4bn (towards the bottom of the A$3.9-4.9bn target range). We note that the target range is dynamic and is expected to increase by A$0.7-0.9bn to Jun25. This implies an FY25 target range of A$4.7-5.7bn with net debt expected to be at or below the middle of the range (GSe FY25 ND is currently $5.4bn). $400m buyback announced for 1H25 (GSe A$100m). QAN stated that it is anticipating fully franked base dividends to be reinstated from 2H25.
Goldman currently has a buy rating and $8.05 price target on the Qantas share price. Though, this could change once it has updated its financial model in the coming days.
