How to buy Qantas shares (ASX:QAN)

About Qantas Shares (ASX:QAN)

Qantas (ASX:QAN), originally the Queensland and Northern Territory Aerial Services, is one of the oldest airlines in the world. As of Oct, 2021 it is the 51st largest company on the ASX and employs 28,957 people worldwide. 2020 was its centennial year, and a year of unprecedented challenges due to the COVID-19 pandemic.

If you want to add Qantas shares to your portfolio, you can do so through ThinkMarkets.

Qantas has four market segments:

1. Domestic: This sector includes the full-service Qantas airline, the Qantaslink regional airline, and Network Aviation, a charter airline that serves the mining industry with flights to remote locations.
2. International: This includes passenger and freight traffic into and out of Australia.
3. Jetstar: A low-cost, no frills domestic and international airline.
4. Loyalty: Data and marketing services for businesses that want to reward customers with Qantas airline miles.

When you buy Qantas shares, you buy exposure to each of these segments.

The company has 1.86 billion shares outstanding and a market capitalisation of $10.3 billion. Each share paid a dividend of $0.25 in FY2019. However, the dividend was suspended in FY2020 because of the effects of the pandemic on air travel, especially international flights. Cutting the dividend gave Qantas management more cash to cover its expenses and helped it remain one of the few airlines worldwide with an investment-grade rating (Baa2 on Moody’s).

The company’s financial year begins on July 1 of each calendar year. For FY2022, the 12 analysts who publish estimates on Qantas have an earnings per share consensus of $-0.31 (with a range of $-0.61 to $0.02) on revenue of $9.14 billion, up from the $5.7 billion in revenue in FY2021. For FY2023, analysts expect the airline should return to profitability. The earnings per share consensus is $0.50 (with a range of $0.20 to $0.76) on revenue of $15.89 billion.

History of QAN shares

Qantas was founded in 1920 to provide domestic flight service across the Australian continent. It added international flights in 1935. The company operated under government authority as Australia’s national carrier until 1995. That year, the company was privatised, and shares were issued to the public.

Prior to the COVID-19 pandemic, the QAN share price hit an all-time high of $7.34 on 22 December 2019. It fell to $2.36 on 15 March 2020 when pandemic restrictions began in earnest. On 14 October 2021, the Qantas share price was $5.50 as the pandemic recovery was underway.
Its revenue for FY2019, the last financial year prior to the pandemic, was $17.6 billion. The company’s fleet was mostly grounded at the start of the pandemic, although it conducted over 400 repatriation flights for Australian citizens and residents stranded abroad. Domestic flights restarted in FY2021, and an international restart is expected in FY2022.

Why buy QAN shares?

The case for buying Qantas in the near term has three parts. The first is the return to air travel post-pandemic. The second is the operating leverage from the company’s ongoing restructuring program. The third is the continued growth in the Australian and East Asian economies which may drive both international travel and freight transport.

Qantas management used the break caused by the pandemic to embark on a three-year recovery plan. The goal is to save a total of $850 million in 2021/22 and a total of $1 billion in 2022/23. As state and national borders reopen, Qantas hopes to be able to operate more efficiently. As part of the restructuring program, net debt has been cut to $5.9 billion, allowing Qantas to maintain its investment grade rating.
The company has total assets of $17.880 billion, including 311 planes in a range of sizes and configurations. This alone gives it some asset value. Total equity is $516 million, reflecting the company’s debt levels and the losses incurred in the pandemic.

Qantas ASX competitors

Qantas is the largest of the four airlines trading on the ASX. The others are Air New Zealand (ASX: AIZ), Alliance Airlines (ASX: AQZ), and Regional Express (ASX: REX). They compete in different segments of the industry.
With respect to non-ASX listed competitors, Qantas (and Jetstar) have plenty of competition within the Asia-Pacific region and for international flights to and from Australia. The airline industry has price-sensitive customers who are willing to shop around. The loyalty program helps within Australia, and customers can participate in earning reward miles globally through the OneWorld Alliance.

Key growth factors

One reason to buy Qantas or any other company’s shares is the potential for growth. The main driver for Qantas’s revenue and earnings growth is the rate of recovery in air travel. The airline took a massive financial hit as a result of the pandemic. The faster Australians return to travel, the faster Qantas’s earnings will improve.

Longer term, Qantas’s results will be driven by growth in the Australian and Asia-Pacific economies.

Key challenges

In the annual report, Qantas’s management team identified several risks facing QAN shares. The most important risks were the ongoing impacts of the pandemic and the rate of local and global economic growth. If the pandemic continues to cause government travel restrictions and personal decisions to stay home, then the company’s revenue and profits will take a further hit. With respect to the post-pandemic economic recovery, it’s unclear how fast or how strong this might be.

A third risk is not related to the pandemic: it’s climate change. Greater action on climate change may lead to harsher regulations on carbon emissions, which may limit the company’s operations or require a greater degree of investment in carbon-mitigation technologies. More frequent and more severe weather events may lead to flight delays, cancellations, and increased operating costs.
Like any other company, Qantas also has challenges related to competition, employee relations, and customer loyalty.

How to buy shares in Qantas on the ASX

ThinkMarkets offers services to investors and traders alike. Our proprietary trading platform, ThinkTrader, makes it easy to buy QAN shares as well as shares in all other ASX-listed companies. 

To get started, all you need to do is: 

1. Download the ThinkTrader app from the App or Play store
2. Create a ThinkMarkets share trading account. 
3. Deposit funds into your account
4. Place your order to trade QAN shares. 

You can trade QAN shares based on short-term moves or buy QAN shares as a long-term investment, the choice is yours. 

What are you waiting for? Buy QAN shares today with ThinkMarkets

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.