The Qantas Airways Ltd (ASX: QAN) share price has dropped close to 20% since its 2025 peak, as the chart below shows. When a large business has fallen that far, I think it's a great time to consider an investment as a buy-the-dip opportunity.
As the last five years have demonstrated, there can be significant volatility in the valuation of a business like this. Travel demand is not a certain thing year to year, and fuel prices can change significantly, so it's no wonder that investors' thoughts on the business can change quite significantly over 12 months.
In August, the business delivered a strong set of results. Underlying profit before tax increased 15% to $2.39 billion, and statutory net profit after tax (NPAT) jumped 28%. It also revealed an improvement in both Qantas and Jetstar on-time performance and customer satisfaction scores.
Pleasingly, this strong level of profit helped the business pay total dividends of $800 million to shareholders for FY25. Let's take a look at whether the Qantas share price is an attractive buy today or not.
What's the outlook for earnings?
The broker UBS recently said in a note that the Australian international market is expected to grow FY26 capacity by 9% year over year, with consistent growth across both peak Australian summer months and off-peak.
Qantas and Jetstar reportedly represent only 26% of the Australian international market, but are also growing capacity strongly. UBS suggested that unless there's strong growth of passenger demand, this may have an impact on market fares or (plane) load factors.
Qantas is adding capacity to mainland US, New Zealand, Singapore, and Hawaii routes. Jetstar is adding capacity to Bali, New Zealand, Thailand, South Korea, and Singapore routes. Jetstar is also entering the Philippines.
UBS suggests the Australia-US market is "heavily underserved", but New Zealand and Bali look like more competitive routes. The bulk of new foreign capacity is being added from the Middle East, Turkey, China, Hong Kong, and Malaysia, suggesting UK and Europe routes may be becoming more competitive for Qantas.
But, UBS expects that Qantas' core customers (corporate and premium leisure) will be "relatively loyal", though price-sensitive travellers "pose more risk".
The broker is forecasting that Qantas' group international revenue per available seat kilometre (RASK) can grow 3% in the FY26 second half, with the airline guiding RASK for between 2% to 3% growth in the FY26 first half.
Is the Qantas share price a buy?
UBS wrote:
We think QAN's challenge is not so much competitor pressure, but whether the core Australian customers will grow with it. So far, FY26 has been tracking well.
It has a buy rating on the business, with a price target of $11.50. That implies a possible rise of more than 17% in the next year from where it is today. For FY26, UBS predicts that Qantas could deliver $1.79 billion in net profit and a dividend per share of 35 cents.
