The Qantas Airways Ltd (ASX: QAN) share price has gone through a hefty bit of turbulence, as the below chart shows. The airline has suffered a decline of 24% from its peak in August 2025.
The business has faced headwinds from a higher oil/fuel price amid the events happening in the Middle East.
But, I'm not afraid to invest when there is uncertainty.
I think it's important to take into account how the business performed in the recent result and keep in mind it's not certain the oil price will be impacted for the longer-term. If there is to be a negative hit to Qantas earnings, the share price may already reflect that.
So, I'm going to focus on the operational performance of Qantas and analyst views on the financials when the Qantas share price was trading at $9.67 (it's lower now – $9.24 at the time of writing).
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Solid numbers by the ASX travel share
In a note, UBS highlighted underlying profit before tax (PBT) was up 5% year-over-year and was 1% higher than UBS was expecting. While revenue was slightly lower than expected (but still up 6% year-over-year), this was more than offset by lower operating expenditure, depreciation and amortisation (D&A) and interest expenses.
Qantas' operating profit (EBIT) was below expectations, Qantas' international was roughly in line with expectations, and Jetstar and corporate costs were better than expected.
Pleasingly, the base dividend was lifted by 20% to $300 million (or 19.8 cents per share, fully franked), which was 12% higher than UBS was forecasting. Additionally, Qantas' board decided to announce a $150 million share buyback, though this is a 'non-recurring' part of capital returns.
Why the Qantas share price is attractive
UBS said that the market response after that FY26 half-year result, being a 9% decline, was an overreaction. It thought the drop happened because:
(1) incoming expectations of favourable earnings revisions which did not eventuate, mostly due to recent oil price moves; (2) undue attention placed on 'normal' earnings seasonality that would have implied consensus downgrades; (3) concerns about the performance of Qantas International, particularly ahead of Sunrise adding material new capacity from next year. However, we are less concerned, with our EPS forecasts and valuation hardly changed.
UBS' projection of Qantas' profit suggests the business could make $1.75 billion of net profit in FY26 and $1.9 billion in FY27. That implies the business is currently valued at 8x FY26's estimated earnings.
The broker has a price target of $11.60 on the airline at the time of writing, suggesting an appealing double-digit return over the next year. If the fuel price does stay higher for longer, the airline can pass on those costs onto customers.
