S&P/ASX 200 Index (ASX: XJO) stock Qantas Airways Ltd (ASX: QAN) has now more than recovered from the COVID-fuelled crash of early 2020.
In fact, shares in the ASX 200 airline stock notched new all-time highs of $9.34 on 10 January.
The Qantas share price has retraced a touch since then, closing yesterday at $8.93. Still, that sees shares in the Flying Kangaroo up 72% over the past full year. Or enough to turn a $500 investment into a tidy $857.
For some context, the ASX 200 is up 12.3% over this same period.
While I don't expect Qantas shares to deliver that same kind of blistering outperformance in 2025, I do believe the Flying Kangaroo is well-placed to outperform the benchmark index once more.
Here's why.
Why the ASX 200 stock can keep flying higher
Qantas overcame many standing hurdles in 2024, paving the way for a smoother flight in 2025. Those hurdles included improvements in its on-time performance and customer service, settling a number of outstanding legal actions, and settling in with CEO Vanessa Hudson, who took over the reins in September 2023.
The ASX 200 stock has also been investing in new efficient aircraft, which will lead to lower fuel and maintenance costs over time. And Qantas long-haul carriers are leading the charge on offering flights halfway across the globe without ever touching down.
As for that fuel efficiency, jet fuel costs are among the biggest expenses for global airlines.
In FY 2024, Qantas reported operating expenses, excluding fuel, of $12.58 billion. Those fuel costs came in at $5.32 billion, or more than 42% of the other combined operating expenses.
Qantas shares could catch some tailwinds in 2025 if oil prices remain subdued. While that remains to be seen, global oil production was already forecast to grow in the year ahead before Donald Trump won the US presidential election. With Trump pushing for more domestic drilling, Qantas could benefit from any downward pressure on fuel prices.
Cashed-up travellers and pent-up demand
I also think the ASX 200 stock is set to benefit from strong ongoing travel demand. There's still some pent-up travel demand left following the domestic and international border closures in the wake of the pandemic.
And Australia's resilient economy and historically low 4.0% unemployment rate mean many Aussies should support both business and leisure travel into and out of the country.
Finally, there's a chance we could see the ASX 200 stock reinstate dividends, which were suspended in 2020 following the shutdown of most all air travel.
And failing a return to dividends, management may help boost Qantas shares in 2025 by announcing more share buybacks. Management announced a $400 million share buyback in August.
