The Qantas Airways Ltd (ASX: QAN) share price has been a very impressive performer since the dark days of COVID-19. But now that the original post-COVID travel jump has gone, investors may be wondering what the new normal is for profitability.
The airline has certainly made use of the travel demand in the last few years, and shareholders have benefited handsomely.
However, while the business has seen strength in demand, it also faces the task of fleet renewal, which it will need to invest substantial sums to carry out.
Let's take a look at how the company's earnings are projected by UBS to grow in the coming years.
FY26
A clear highlight of FY25 for UBS was the positive, "very strong" demand outlook and that the dual brand strategy is working well alongside double-digit loyalty growth. In its analysis, the broker said:
Combining +5% Group capacity growth with +3-4% RASK growth (1H26 guidance Domestic +3- 5%, International +2-3%) would achieve high single digit passenger revenue growth (i.e. similar to FY25). The strength in RASK guidance is consistent with UBS air fares tracking which recently turned strongly positive for Domestic and showed continued improvement in International. We have updated our forecasts to align with the Domestic RASK guidance but we're relatively more conservative on International given the rate of industry capacity growth over FY26 (+8.5%).
RASK stands for revenue per available seat kilometre, so the projections are positive for revenue growth.
It also said it expects "costs to be contained too, post the capacity recovery, as on-time performance improves and benefits from transformation and fleet renewal are realised."
UBS forecasts that owners of Qantas shares could see a big rise in net profit to $1.9 billion in the 2026 financial year. However, net debt could increase to $6.3 billion.
FY27
In the 2027 financial year, the company's earnings could increase again, with an improvement in revenue, operating profit (EBIT), and net profit.
UBS forecasts that in the 2027 financial year, the net profit could increase to just over $2 billion. However, the net debt could rise to just under $7 billion.
FY28
The 2028 financial year could see yet another increase in profitability for the airline on the back of higher revenue and strong operating profit (EBIT).
The broker is currently suggesting that the airline's net profit could grow to $2.1 billion, though net debt is predicted to rise again to approximately $7.5 billion.
FY29
The 2029 financial year could be the best one of this series of projections. Qantas' revenue and operating profit could rise in FY29, helping the net profit increase to a predicted $2.281 billion. The net debt is predicted to rise slightly to $7.67 billion.
FY30
Normally, when I look at forecasts like these from a broker, FY30 is predicted to be the best one, thanks to compounding and earnings growth.
However, interestingly for Qantas, UBS predicts that Qantas' net profit could stay virtually flat in FY30, falling slightly to $2.278 billion, while net debt could fall to $7.5 billion.
UBS currently has a neutral rating on Qantas shares with a price target of $12, which is where analysts think the airline's shares will be trading in 12 months.
