After years of operational disruption, balance sheet repair, and reputational rebuilding, Qantas Airways Ltd (ASX: QAN) is starting to look like a very different business again.
Qantas is no longer the distressed turnaround story it once was. But I still think the market may be underestimating how much earnings power this airline now has, and how durable those earnings could be through 2026 and beyond.
Here's why I'm bullish on Qantas shares from here.
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Earnings power is back, and looks more sustainable
One of the biggest changes at Qantas over the past few years has been the reset of its cost base and network discipline.
Capacity is being deployed more rationally, fleet decisions are more measured, and management has been far more focused on returns rather than simply chasing volume. That matters in an industry where margins can disappear quickly if discipline slips.
Consensus estimates currently point to earnings per share of 117.5 cents in FY26 and 126.1 cents in FY27. Those are not peak-cycle numbers driven by one-off factors. They reflect a business that is operating more efficiently and extracting better economics from both its domestic and international networks.
Importantly, from my perspective, that suggests Qantas is no longer just benefiting from post-pandemic travel recovery, but from a structurally improved operating model.
The domestic position remains a key advantage
Qantas' strength in the Australian domestic market continues to underpin the investment case.
It operates in a market with limited competitors, high barriers to entry, and rational pricing behaviour. That does not mean competition is absent; just ask Virgin Australia Holdings Ltd (ASX: VGN). However, it does mean that price wars are less likely to destroy industry profitability the way they have in the past.
Corporate travel is also an important piece of the puzzle. While volumes may fluctuate with economic conditions, Qantas' position as the preferred carrier for many business travellers supports load factors, yield quality, and revenue stability.
This domestic dominance provides a solid earnings foundation that many global airlines simply do not have.
Loyalty and premium segments add resilience
Another part of Qantas that I think is often underappreciated is the contribution from its Loyalty division.
The frequent flyer program is a high-margin business with strong cash generation, and it benefits from long-term partnerships across banking, retail, and travel. It adds a layer of earnings diversification that helps smooth the inherently cyclical nature of aviation.
At the same time, Qantas' focus on premium travel, both domestically and internationally, supports higher yields. Premium passengers are typically less price-sensitive and more loyal, which can be valuable when economic conditions are mixed.
Shareholder returns are back on the table
Income investors are also starting to look at Qantas differently again.
Dividend estimates currently stand at 46.9 cents per share for FY26 and 44.5 cents for FY27. This means that at the current Qantas share price of $10.20, the market is forecasting a dividend yield of 4.6% this year before any franking credits.
While dividends can always change, these figures reflect a business that is now generating sufficient cash flow to reward shareholders, not just repair the balance sheet.
For investors who remember when dividends were completely off the agenda, that shift is meaningful.
Qantas shares look good value
Based on consensus forecasts, Qantas is trading on a forward P/E ratio of 9 times. That looks cheap to me, given the level of earnings being generated and the improvements in business quality.
Airlines will never be low-risk investments. Fuel prices, demand shocks, and operational issues are part of the landscape. But Qantas today looks better equipped to handle those challenges than it has been for many years.
Foolish Takeaway
I'm bullish on Qantas shares because I think the business has emerged from a difficult period leaner, more disciplined, and more focused on returns.
Investors are not buying a blue-sky growth story. They are buying an airline with restored earnings power, a strong domestic position, improving shareholder returns, and a more resilient operating model.
If management continues to deliver on its strategy and industry conditions remain broadly supportive, I believe Qantas shares could continue to reward patient investors as we move through 2026.
