Qantas Airways Ltd (ASX: QAN) shareholders have had a brutal month. This time last month, the national carrier's share price was sitting at $10.65 a share. Today, those same shares are worth just $8.77 at the time of writing. And that's after today's 5.1% rally (so far). As of yesterday's closing price of $8.34, Qantas stock was down by almost 22% over the previous month.
As of current pricing, the broader S&P/ASX 200 Index (ASX: XJO) has lost 6.35% since 25 February. So, Qantas has been a disproportionate loser for investors during this tough period.
The obvious catalyst for this underperformance is the ongoing US-Iran war.
Qantas is being hit from all angles here. The most obvious headwind the airline is facing is oil prices. With Brent crude surging past US$100 a barrel amid the escalating conflict in the Middle East, Qantas is staring down one of the sharpest spikes in its single largest fixed cost in years. Fuel typically accounts for somewhere between 20% and 25% of an airline's total costs. When it moves this quickly, there is little management can do to offset the hit in the short term.
But Qantas' pain doesn't end with oil. The war has also disrupted some of the busiest airline routes in the world, with popular airports in Dubai and Abu Dhabi now under constant threat.
Further, airlines are sensitive to broader economic growth – Australians (along with everyone else) tend to cut back on travel when they are worried about economic uncertainty. With global growth in doubt thanks to the spike in energy prices we are seeing, demand for air travel over at least the remainder of 2026 is arguably looking a little shaky.
But I think this sell-off raises much bigger questions than just what oil prices do next.
Image source: Getty Images
Should investors buy the dip on Qantas stock?
I've never been a huge fan of airline stocks as long-term investments.
Airlines are capital-intensive businesses that require enormous ongoing investment just to keep operating. They face fierce competition, thin margins, powerful unions, and huge sensitivity to an endless array of potential external shocks that no CEO can control. Oil prices, pandemics, geopolitical crises, recessions. The list goes on.
I've got nothing against Qantas itself. It is a well-run airline that has delivered some impressive results in recent years. Its Frequent Flyers program is one of the most valuable assets in corporate Australia.
However, it is difficult for even a well-managed company to be a lucrative long-term investment if it operates in a structurally difficult industry. Just as having the best house on a bad street doesn't guarantee prosperity.
For my money, there are simply better places on the ASX to park long-term capital. Companies with genuine moats, recurring revenue, and the ability to raise prices without losing customers. The kind of businesses that don't need oil prices to cooperate in order to turn a consistent profit.
As such, I wouldn't be buying Qantas shares at $8.77 today, or indeed at $4.77 if they got back to that pricing. There are simply better investments elsewhere, at least in my view.
