Qantas Airways Ltd (ASX: QAN) shares slumped further on Thursday.
At the close of the ASX on Thursday, the shares were are 0.92% lower at $8.59 a piece.
The tumble means the airline's shares are now 18% lower year to date and 14% lower than this time last year.
The airline's shares have faced significant headwinds so far in 2026 as conflict in the Middle East and rising fuel prices put the business under pressure.
The largest operating cost for airlines is its jet fuel, which is refined from crude oil.
Australia imports more than 90% of its refined fuel, which means local prices track global oil prices and currency movements.
When oil prices rise due to tight supply or geopolitical tensions, jet fuel prices also rise. This then means that airlines, such as Qantas, face higher operating costs, which can pressure profits and potentially weigh on their share prices.
Last month, the flying Kangaroo confirmed that its fuel costs for the second half of FY26 are now estimated to be significantly higher than prior expectations, at $3.3 billion. The airline previously forecast fuel costs to be around $2.2 billion.
But Qantas has a plan to help tackle rising costs. The airline said it will increase ticket prices and reduce domestic capacity by about 5% in May and June. It will also temporarily suspend some routes. International fares have already risen by 5%.
It hasn't been enough to ignite investor confidence, though, and the shares keep on tumbling.
The thing is. At the current trading price of $8.59, I think Qantas shares are now a bargain. Here's why.
Image source: Getty Images
Second-half fuel exposure is hedged
Qantas said that around 90% of its second-half fuel exposure is already hedged. Its plan to increase fares and make some route changes will also help to recover part of the fuel price pressure.
Qantas is a dominant airline
The aviation heavyweight has dominated the Australian domestic aviation market for decades alongside rival Virgin Australia Holdings Ltd (ASX: VGN). Qantas' share of the domestic market currently accounts for around 60%, and it's still growing.
It's expanding its offshore routes
The airline is planning to expand its route offering offshore, including routes to mainland US, New Zealand, Singapore, and Hawaii, which will open up more demand.
Meanwhile, its subsidiary, Jetstar, is adding capacity to routes to Bali, New Zealand, Thailand, South Korea, and Singapore, and it operated its first direct flight to the Philippines late last year.
Qantas is branching out with AI
The company is also planning to scale AI usage across the business this year. Earlier in 2026, the Qantas CEO said the business is laying the foundations for increased AI use and that he thinks Australia needs to move quickly on the "unprecedented" opportunities it represents.
Travel demand is still stronger than expected
Despite cost-of-living pressures and higher fares, demand for domestic, international, and corporate travel remains high.
In fact, last month, Qantas significantly upgraded its second-half FY26 revenue guidance off the back of strong demand and capacity shifts despite higher fuel costs. Its international and domestic unit revenues are currently running ahead of expectations.
Brokers tip a strong upside ahead
Market Index data shows a consensus strong buy rating for Qantas shares. The average $11.25 target price implies a potential 30% upside ahead.
TradingView data shows that some are even more bullish and are tipping the airline's shares to climb as high as 49% to $12.80 a piece, at the time of writing.
