May was an interesting month for Qantas Airways Ltd (ASX: QAN).
The first week brought more of the same pain that has characterised 2026: elevated jet fuel costs, Middle East uncertainty weighing on booking confidence.
Then the mood shifted. Reports of US-Iran peace negotiations sent oil prices lower. Qantas shares surged almost 5% in a single session on 26 May.
By month end, the stock had recovered meaningfully from its lows.
The broker community, which has been bullish on Qantas throughout the 2026 selloff, appears to be vindicated in at least one sense: the pain that drove the selling is beginning to ease.
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What drove the May recovery in Qantas shares
The most important catalyst was the oil price.
Jet fuel is the single largest operating cost for any airline, and Qantas had been absorbing a severe fuel cost shock in 2026.
In its April update, the company flagged second half FY2026 jet fuel costs of $3.1 billion to $3.3 billion, more than double previous expectations, as Middle East conflict sent oil prices surging above US$105 per barrel.
The emergence of US-Iran peace talks pushed Brent crude from US$115 to US$103 per barrel in a single session on 26 May, directly reducing the near-term fuel cost outlook.
Furthermore, Qantas simultaneously increased its international unit revenue growth guidance for the second half of FY2026 to 4% to 6%. This increase was on the back of the extraordinary strength of demand on European routes despite the Middle East headwinds.
What brokers are saying about Qantas shares
The broker consensus on Qantas shares is unusually unified for a stock under such obvious pressure.
Macquarie upgraded Qantas shares to outperform following the 20% share price pullback from February highs, with a price target of $11.25. The broker cited demand-side resilience as evidence the selloff has been driven by temporary fuel cost concerns rather than any fundamental impairment of the business.
Ausbil co-portfolio manager Mans Carlsson described Qantas as the most undervalued stock his fund holds, noting that at an FY2028 price-earnings ratio of approximately 7 times, the market is pricing in an assumption that oil prices remain permanently elevated.
The tailwinds brokers keep coming back to
Beyond the near-term fuel noise, brokers point to three longer-term reasons for their bullish conviction on Qantas shares.
First, international travel demand has recovered well above pre-pandemic levels and continues to grow, particularly on premium cabins where Qantas earns the highest margins.
Second, the Qantas domestic business has maintained pricing discipline, with domestic unit revenue growth of approximately 5% guided for the second half of FY2026.
Third, Project Sunrise, Qantas's planned direct flights from Sydney and Melbourne to London and New York, represents a new transformative revenue opportunity that is not yet fully reflected in broker forecasts.
The risks brokers acknowledge
The bear case on Qantas shares is not without merit.
A re-escalation of the US-Iran conflict could push oil prices back above US$110 per barrel, undoing the relief rally quickly.
The airline is also exposed to Australian consumer confidence, which has been under pressure from the RBA's rate hiking cycle.
Any deterioration in domestic traffic volumes would compound the international fuel cost headwind.
Foolish takeaway
The fuel cost shock that drove the 2026 selloff is beginning to ease.
If geopolitical tensions continue to ease, investors may have an opportunity to buy into the stock at an attractive price.
For investors who have been watching Qantas shares from the sidelines, the broker community is sending a clear signal that the opportunity may be closing.
