The rivalry between Qantas Airways Ltd (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT) shares continues to push investors to the edge of their seats.
Over the past 12 months, Qantas shares have significantly outperformed Flight Centre shares by more than 100%.
As of Thursday morning, Qantas shares are trading at $10.09, surpassing the $10 mark for the first time since March this year. The new trading price represents a 61.44% increase over the year and a rally of 20.69% over the past month alone.
Meanwhile, Flight Centre shares are trading at $13.22 after falling 35% over the year and plummeting 25.73% since late February.
The two stocks are travelling in opposite directions.
What is driving Qantas' strong share performance?
A combination of Qantas' strong financial performance and a frequent flyer revamp has helped drive its share price higher.
At its interim results for H1 FY2025, the airline reported an underlying profit before tax of $1.39 billion, an 11% increase from the same period in 2024.
Increased crude oil production means crude oil prices fell to four-year lows in May, around US$61.83. Given that jet fuel represents a significant portion of airline costs, any reduction would improve airline profitability. Higher profitability also helps present a strong financial performance.
In April of this year, the airline announced its decision to overhaul its frequent flyer program by adding 200 million more reward seats with the launch of Classic Plus Flight Rewards. Qantas plans to invest another $60 million in more flight rewards for frequent flyers this year.
The expansion will build on the airline's five million, or more, existing Classic rewards seats across Qantas, Jetstar, and 45 partner airlines.
And it looks like there could be more to come, too.
According to analysts, one-year price forecasts for Qantas have a maximum estimate of $11.97, with nine analysts rating the stock a buy or strong buy.
What is pushing Flight Centre shares down?
Over the past year, fierce competition from online travel agencies and changing market dynamics have put pressure on Flight Centre's traditional business model, and the business has struggled to adapt.
Investor confidence has dwindled, bringing share value down with it.
Last month, Flight Centre's share price suffered more disturbance after it downgraded its FY 2025 profit guidance to between $300 million and $335 million. The business cited shorter-term volatility spurred by uncertain trading conditions.
Flight Centre said it was still on track to deliver a record total transaction value in FY 2025. But it has said it is now unlikely to deliver the 14% to 26.5% year-on-year growth needed to achieve its earlier FY 2025 profit guidance of $365 million to $405 million.
It's not all bad news for the business, though. In a recent report, Macquarie Group Ltd (ASX: MQG) listed Flight Centre as one of 7 companies sitting on excess franking credits, piles of excess cash, and the capacity to increase their dividend yields.
Analysts noted there is a potential likelihood of capital return for Flight Centre in the form of Special DPS or Buyback.
The report shows the company currently has a 3% franking credit balance as a percentage of market cap and holds 66% excess cash.
Analysts estimate Flight Centre's share price could reach a maximum of $20.66 within the next 12 months, recovering a significant volume of its recent losses.
