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Qantas Airways 1H24 earnings preview: recovery in the air?

With a history marked by robust FY23 results and recent controversies, all eyes are on the new CEO, Vanessa Hudson, and her team's ability to navigate challenges, enhance customer service, and capitalise on strong travel demand.

Source: Bloomberg

When will Qantas report its latest earnings?

Qantas Airways Limited (QAN) is Australia's flag carrier and the third oldest airline in the world. It reports its half-year figures on Thursday, 22 February 2024.

Key financials

  • Revenues of $10.61 billion expected
  • Underlying Profit of $1.16 billion expected
  • A Statutory Profit of $711 million expected
  • EPS of $0.52

Soaring high: Qantas' record-breaking FY2023 performance

Qantas reported bumper FY2023 earnings in late August, benefiting from strong demand for travel, a slimmed-down cost base, and high ticket prices. The report showcased the following highlights:

  • The Group achieved an Underlying Profit Before Tax of $2.47 billion.
  • A Statutory After-Tax Profit of $1.74 billion. This compares with $7 billion in accumulated statutory losses over three prior years.
  • Earnings Per Share (EPS) of $0.93.

Qantas revenue chart

Source: TradingEconomics

Turbulence ahead: controversies cloud Qantas

However, the first half of 2024 was one of turmoil for Qantas. Beset by several controversies, including accusations of greed, misuse of power, and arrogance, the once much-loved company lost the trust of the public, acknowledged by outgoing Chairman Richard Goyder in the Qantas 2023 Annual Report: "As we move through our recovery, management and the Board are acutely aware of the need to rebuild your confidence in Qantas. We're also conscious of the loss of trust that has occurred because our service has often fallen short of expectations, compounded by a number of other issues relating to the pandemic period.

Despite the apology, the company's annual general meeting in November turned heated as shareholders rejected the executive pay deal and criticised management for issues ranging from ghost flights, poor customer service, and preferential treatment to Prime Minister Anthony Albanese's son.

Hopes that 2024 would provide a fresh start have been dashed following a report by former ACCC chairman Alan Fels, who accused the company of price gouging and recommended airport prices be formally regulated and restrictions on domestic and international aviation removed.

Flight path to recovery: Qantas's operational overhaul

After former CEO Alan Joyce's early departure, this will be the first set of results for the new CEO, Vanessa Hudson. Ms Hudson has made changes to the executive team and appointed consultant McKinsey for a major overhaul of its operations, focusing on improving its on-time performance.

In its last trading update in September, the company noted that travel demand remains robust for the Qantas Group and that the first quarter of FY24 mirrors the strong trading conditions witnessed in the final quarter of FY23. While analysts expect to see higher spending on customer service to repair its tarnished image and higher fuel costs, Qantas is expected to unveil another set of robust earnings numbers.

Source: Bloomberg

Qantas technical analysis

The Qantas share price and the company's reputation took a substantial hit in 2023, falling over 30% from a high of $6.94 in April to a low of $4.67 in October.

Since that point, the share price has reclaimed about half of those losses to be trading at $5.72, just below resistance at $5.80, which is the 50% Fibonacci retracement of the decline from the $6.94 high to the $4.67 low. Above $5.80, there is a formidable layer of horizontal resistance at $6.00/$6.20 before the March 2023 $6.94 high.

On the downside, near-term support is viewed at $5.50 before weekly uptrend support at around $5.00, coming from the March 2020 $2.03 low. Be aware that a sustained break of uptrend support would open the way for the price to test the October $4.67 low before a band of horizontal support at $4.20.

Qantas weekly chart

Source: TradingView

  • Source: TradingView. The figures stated are as of 12 February 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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