The Qantas Airways Ltd (ASX: QAN) share price has been an incredible investment for shareholders. In the past year, it has risen 75%, and in 2025 alone it has climbed around 30%, as the chart below shows.
I wouldn't expect the next 12 months to be as strong for gains, but it could still be a good time to invest if the market is yet to fully realise how good Qantas' profit generation could be in the coming years.
There was an initial boom of travel demand after COVID-19 lockdowns, but it now seems much more than just a short-term boost.
Let's get into the positives and negatives of a potential investment in Qantas shares right now.
Image source: Getty Images
Positives
The most important thing to see with a business is its profit generation and that the underlying financials are improving over time.
In the FY25 result, the company reported that its underlying net profit before tax climbed 15% to $2.39 billion and statutory net profit after tax (NPAT) jumped by 28%.
Qantas also reported that its on-time performance and customer net promoter score (NPS – customer satisfaction) increased, which I'd describe as a very positive development.
The strong profit growth allowed the business to declare $400 million of fully franked dividends (including a special dividend totalling $150 million), while still investing significantly in new aircraft. Fleet renewal is essential and new aircraft should come with lower costs.
A particular bright spot for me was the ongoing strength of the Qantas loyalty division, which saw underlying operating profit (EBIT) climb 9% to $556 million. The airline said Australian businesses continue to see value in partnering with Qantas loyalty, with more coalition partners joining the program and cash inflows from partners rising 10%.
Qantas domestic saw underlying EBIT rise by 12% to $1.52 billion, while the international and freight segment saw underlying EBIT jump 20% to $903 million.
Perhaps the most important thing to know is that Qantas expects ongoing strong travel demand in the first half of FY26. That's a key driver of how full the planes are and what it can charge per seat.
The individual segments are expected to perform strongly. Domestic unit revenue is expected to increase by between 3% to 5% year-over-year in HY26. International unit revenue is expected to increase by between 2% to 3% year-over-year. Qantas loyalty is projected by the airline to grow underlying EBIT by between 10% to 12% for FY26.
Negatives about Qantas shares
While revenue for its airlines may increase, some costs are also predicted to grow.
Qantas said fleet entry into service and transition costs are forecast to be approximately $160 million in FY26, around $30 million higher than FY25, primarily due to the introduction of the A321XLR fleet on Qantas' domestic network.
It also noted the gross impact of the same job, same pay for FY26 is approximately $115 million, an increase of around $50 million year-over-year.
Industry costs, including airport and infrastructure charges, net of recoveries, are expected to increase by approximately $50 million year-over-year.
The company also reminded investors that the closure of Jetstar Asia is expected to deliver an underlying EBIT loss of $23 million, while closure-related expenses of approximately $11l5 million will be recorded outside of its underlying earnings in FY26.
To help offset some of the cost inflation, it's targeting 'transformation' of approximately $400 million in FY26.
The massive rise of the Qantas share price is also a risk. The higher the price/earnings (P/E) ratio goes, the less sustainable that is – either profit growth has to justify that valuation or the Qantas share price reduces. It's currently trading at 10x FY26's estimated earnings – that's not high, but higher than it has been historically.
It could rise further, but I'm not sure how much further its non-loyalty earnings can go in the shorter-term. I wouldn't call it a great buy at this level, I'd rather look at other opportunities.
