Qantas Airways Ltd (ASX: QAN) shares have jumped higher in Thursday morning trade as investors digest the airline giant's latest FY26 earnings results.
At the time of writing, the ASX 200 airline shares are up around 4% and are changing hands for $9.55 a piece.
Today's increase is good news for investors after the shares crashed 14% over the past couple of weeks. But it hasn't done enough to recoup the heavy losses just yet.
For the year to date, the shares are still down about 9%, and they're 14% lower than they were 12 months ago.
Image source: Getty Images
What did the airline report today?
Qantas reported a 13.8% year-on-year decline in underlying profit before tax, to $2.06 billion.
Statutory profit after tax fell around 29% to $1.3 billion.
For the 12-month period, Qantas reported a 12.7% year-on-year decline in underlying earnings per share to 96 cents.
Qantas' $6.2 billion of net debt came in at the middle of its target range of $5.5 billion to $6.9 billion for FY26.
With profits down, management declared a fully-franked final Qantas dividend of 19.8 cents per share and a total dividend of 39.6 cents per share, down 25% from last year's final payout.
Management forecasts unit revenues to grow by 8% to 10% in the first half of FY27, despite ongoing pressure from elevated fuel prices.
It looks like investors are happy with today's update, and many are buying back into the stock while the shares are still trading for cheap.
Is Qantas a turnaround story?
Qantas shares were smashed lower earlier this year as conflict in the Middle East and rising fuel prices put airlines under pressure.
Jet fuel (refined from crude oil) is the highest operating cost for airlines. Given Australia imports more than 90% of its refined fuel, its local prices track global oil prices and currency movements.
That means that when oil prices increase amid tight supply and geopolitical tensions, jet fuel prices also jump. This means that airlines, such as Qantas, face higher operating costs, which can pressure profits and potentially weigh on their share prices.
In fact, this morning, Qantas reported that the impact from the Middle East conflict has cost the airline an estimated $420 million to date, largely driven by higher jet fuel costs.
But despite the higher fuel costs, the company expects to see unit revenues grow by 8% to 10% in the first half of FY27.
Robust domestic and international travel demand has helped the aviation giant's shares maintain some level of stability. And signs that inflation and the cost of living are improving have likely also supported the stock.
What do the experts expect next?
Market experts could revise their forecasts on the Qantas share price in the coming days, following the results announcement.
But at the time of writing, it looks like the share could fly a lot higher over the next 12 months.
TradingView data shows the majority (14 out of 15) have a buy or strong buy rating on the shares.
After the latest slump, all analysts anticipate a strong upside ahead.
The $11.68 average target price implies a potential 22% upside over the next 12 months, at the time of writing. Even the minimum target price implies the shares could jump 13% higher.
