Qantas Airways Limited (AU:QAN) unveiled a new share buyback plan of up to $271 million (AU$400 million), despite reporting a 16% drop in its FY24 underlying pre-tax profit. In FY24, the airline completed share buybacks totalling AU$869 million of the AU$900 million announced previously. The remaining AU$31 million will be repurchased in the first half of FY25. Qantas shares gained 0.79% in today’s trading session.
Qantas Airways is Australia’s national airline and operates the largest fleet of aircraft in the country.
Qantas Sees Profit Drop Due to Fuel Costs
In FY24, Qantas’ statutory pre-tax profit was AU$1.9 billion, down AU$588 million from the previous fiscal year. The bottom line was hit by increased fuel costs and sluggish freight revenue. Total underlying fuel costs increased to AU$5.3 billion in FY24 from AU$4.5 billion a year ago. Meanwhile, net freight revenue was down 12% year-over-year due to lower yields from intense international competition.
Additionally, rising fuel prices and a return to normal travel capacity have resulted in lower fares, as passengers seek more affordable travel options.
Looking ahead, the airline is trying to attract customers through promotions and enhanced in-flight amenities following a series of controversies over travel bookings. In May 2024, Qantas was hit by a fine of AU$120 million to settle a lawsuit related to the sale of tickets for flights that had already been cancelled.
Analysts Weigh in on Qantas’ Results
Following the results, analysts maintained an overall bullish outlook on Qantas stock. Today, the stock received three Buys and one Hold recommendation from analysts.
Among these, analyst Niraj Shah from Goldman Sachs sees a significant upside potential of 86%. On the other hand, Macquarie and Citi predict a modest downside in the share price.
Is Qantas a Good Stock to Buy?
According to TipRanks, QAN stock has received a Strong Buy rating backed by six Buy and two Hold recommendations. The Qantas share price prediction is AU$6.83, which represents 7% upside potential from the current price level.
Year-to-date, QAN stock has gained nearly 20%.
