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Qantas Airways (QABSY)
OTHER OTC:QABSY
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Qantas Airways
(OTC:QABSY)
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Rating:68Neutral
Price Target:
$39.00
▲(10.80% Upside)
Action:ReiteratedDate:03/02/26
The score is driven primarily by mid-range financial strength constrained by leverage and uneven free-cash-flow trends, balanced by a favorable valuation (low P/E and strong yield). Earnings-call commentary adds support through solid H1 performance and shareholder returns, while technicals are neutral and do not add meaningful momentum.
Positive Factors
Domestic Market Leadership
Qantas' domestic operations delivered >$1bn EBIT and an 18% EBIT margin, reflecting scale, route density and pricing power. Durable domestic leadership underpins predictable cash flows, insulating core earnings from international volatility and supporting sustained operating margins over time.
Loyalty program strength
Qantas Loyalty generates high‑margin, recurring revenue (EBIT +12%) with >18m members and rising engagement. Monetisation via partner point sales and breakage provides steady cash and diversified earnings, reducing cyclicality tied to passenger volumes and supporting medium‑term profitability.
Fleet renewal driving unit-cost improvement
Accelerated fleet renewal (A321LR/A320neo mix) materially improved Jetstar unit economics and utilization, lifting earnings and margins. Newer, more efficient aircraft offer sustainable lower unit costs and operational flexibility that should support durable margin improvement across the network.
Negative Factors
High leverage and weak equity
Qantas carries elevated leverage and a weak equity ratio, which constrains financial flexibility and raises refinancing and interest exposure. In an economic or demand downturn this balance‑sheet profile increases risk to discretionary investment and shareholder returns over the medium term.
Capex-heavy cash flow pressure
Management's multi‑year capex program (FY26–FY27 several billion) plus $1.8bn H1 spend implies sustained high investment that has coincided with negative recent free‑cash‑flow growth. Prolonged capex intensity will compress free cash conversion and limit discretionary cash for returns until the cycle eases.
International earnings and cost inflation pressure
International operations face softer demand and rising structural costs: engineering, entry‑into‑service training and higher operational wages. Additions like Same Job Same Pay (~A$95m) and FX headwinds materially raise the cost base, weighing on international profitability over the medium term.
Qantas Airways (QABSY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.60B
Dividend Yield4.57%
Average Volume (3M)160.00
Price to Earnings (P/E)4.3
Beta (1Y)0.73
Revenue Growth7.09%
EPS Growth37.26%
CountryUS
Employees20,000
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)2.41
Shares Outstanding302,639,860
10 Day Avg. Volume0
30 Day Avg. Volume160
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)21.26
Price to Sales (P/S)0.71
P/FCF Ratio36.91
Enterprise Value/Market Cap2.22
Enterprise Value/Revenue0.88
Enterprise Value/Gross Profit3.25
Enterprise Value/Ebitda5.04
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)4.12
Revenue Forecast (FY)$18.00B
Qantas Airways Business Overview & Revenue Model
Company DescriptionQantas Airways Limited provides air transportation services in Australia and internationally. The company operates through Qantas Domestic, Qantas International, Jetstar Group, and Qantas Loyalty segments. It offers passenger flying, and air cargo and express freight services; and customer loyalty recognition programs. As of June 30, 2022, the company operated a fleet of 322 aircraft under the Qantas and Jetstar brands. Qantas Airways Limited was founded in 1920 and is based in Mascot, Australia.
How the Company Makes MoneyQantas Airways generates revenue primarily through passenger ticket sales for both domestic and international flights, which constitutes the largest share of its earnings. Additionally, the airline earns revenue from cargo services, freight transport, and ancillary services such as baggage fees, in-flight services, and seat selections. Qantas also benefits significantly from its Frequent Flyer program, which allows members to earn points that can be redeemed for flights and other rewards, creating a steady stream of income through membership fees and partnerships with various retail and service providers. Furthermore, strategic partnerships and alliances with other airlines, such as the oneworld alliance, help expand its reach and enhance its revenue through code-sharing agreements. Overall, Qantas's revenue model is diversified across various channels, contributing to its financial stability.
Qantas Airways Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 20, 2026
Earnings Call Sentiment Positive
The call presented a largely positive operational and financial picture driven by strong domestic demand, an accelerating fleet renewal that is already delivering measurable benefits (notably at Jetstar), rising EPS and operating cash flow, and enhanced shareholder returns (increased dividend and buyback). Material near-term headwinds were flagged for Qantas International and group costs — including engineering, entry-into-service costs, FX pressures and Same Job Same Pay — which are weighing on international EBIT and create execution and cost-management priorities for management. Overall, positive momentum in core domestic and loyalty businesses and clear fleet-driven upside outweigh the transitory and structural cost challenges highlighted.Q2-2026 Updates
Positive Updates
Underlying Profit and EPS Growth
Underlying profit before tax of $1.46 billion for the half, up 5% year-on-year (increase of $71 million). Underlying earnings per share $0.68, up 7% versus H1 FY25. Operating margin for the group 12.3%.
Strong Operating Cash Flow and Capital Returns
Operating cash flow of $1.8 billion for the half. Board approved interim shareholder distribution of up to $450 million comprising a fully franked base dividend of $300 million (up $50 million) and an on-market share buyback up to $150 million; $400 million of dividends returned in the half.
Accelerating Fleet Renewal and Investment
Invested $1.8 billion in fleet and projects in the half; 18 aircraft joined the fleet (9 new). FY26 net CapEx guidance $4.1–4.3 billion, FY27 guidance $5.1–5.4 billion reflecting accelerated fleet renewal including first 4 Project Sunrise aircraft.
Jetstar Fleet Benefits Driving Earnings Uplift
Jetstar Domestic earnings up 38% with EBIT margin 22% (above target). New A321LR/A320neo fleet at scale; A321LRs contributed ~60% of Jetstar's earnings uplift through efficiency and higher utilization.
Group Domestic Outperformance
Group Domestic EBIT > $1 billion, up 14% year-on-year with an EBIT margin of 18%. Capacity grew 5% and RASK up 3%, underpinned by leisure and business purpose travel growth.
Loyalty Business Growth and Product Enhancements
Qantas Loyalty underlying EBIT $286 million, up 12% year-on-year. Points earned up ~10% and points redeemed up ~17%. Membership exceeds 18 million and member engagement (earning across 2+ categories) up 8%. Announced major program changes including status-credit rollover and ability to earn status via everyday spending.
Operational & Customer Metrics Improving
Qantas Net Promoter Score rose 5 points and Jetstar NPS rose 4 points. On-time performance Qantas 70% (highest among major domestic carriers) and Jetstar 71%. Frontline workforce increased 4% and multiple customer experience investments announced (lounge refreshes, WiFi rollout, cabin refreshes).
Balance Sheet Positioning
Net debt ended the half at $5.6 billion, at the bottom of the FY26 target range ($5.6–$7.0 billion), supporting capital allocation and shareholder distributions while maintaining the financial framework for low leverage and liquidity.
Negative Updates
Group International Earnings Pressure
Group International (ex. Jetstar Asia & Japan) underlying EBIT was impacted, down 6% year-on-year due to higher engineering costs, industry pressures, elevated operational wages and entry-into-service training costs for new aircraft.
Cost Inflation and FX Headwinds
Depreciation & amortization increased $89 million (fleet renewal acceleration). Net industry costs rose $40 million with airport security and navigation charges escalating above inflation. Profit was adversely impacted by ~$76 million from unfavorable foreign exchange on non-fuel costs.
Entry-into-Service and Transition Costs
Entry-into-service (EIS) and fleet-related transition costs rose (EIS costs +$10 million in the period). Management expects EIS/transition costs to increase by ~$20 million versus H2 FY25 and noted ramping pilot and training costs for new aircraft.
Same Job Same Pay Cost Impact
Gross impact of Same Job Same Pay now expected to be approximately $95 million in FY26 (a $15 million increase versus H2 FY25), representing a material near-term wage cost headwind that management expects to mitigate over time.
Statutory Profit Flat and International Demand Softness
Statutory profit after tax was $925 million, flat versus H1 FY25. Management noted softer leisure demand ex-Australia in some international markets and the Australia–U.S. market remains at ~88% of pre-COVID capacity.
Jetstar Asia Closure and Jetstar Japan Impacts
Closure of Jetstar Asia (July) and Jetstar Japan lease liability affected the result; closure and restructuring costs are being recognized and continue to be managed as part of portfolio adjustments.
Seat Factor Normalization and Load Challenges
Seat factors softened (domestic & international) driven by fewer same-day cancellations (improved ops reduced consolidation-driven seat factor) and a higher mix of resource-market flying (~10–15 points lower seat factors). A380 gauge on some routes also normalizes loads.
Company Guidance
Qantas reported strong H1 results (underlying PBT $1.46bn, +5% y/y; underlying EPS $0.68, +7%; operating cash flow $1.8bn; net debt $5.6bn; net capex H1 $1.8bn) and gave forward guidance that Group RASK is expected to rise ~3% in H2 (Group International RASK +1%–3%), FY26 net capex is expected at $4.1–$4.3bn and FY27 at $5.1–$5.4bn (including the first four Project Sunrise aircraft), the group transformation target remains ~$400m for the full year (weighted to H2), entry‑into‑service/fleet transition costs are expected to increase by ~$20m vs H2 FY25, the gross impact of Same Job Same Pay for FY26 is ~ $95m (up $15m vs H2 FY25), Qantas Loyalty underlying EBIT is forecast to grow 10%–12% for FY26, net freight revenue in H2 is expected in line with H2 FY25, management expects seasonality to normalize toward a ~60/40 H2 skew, and the Board has approved an interim shareholder distribution of up to $450m (fully franked base dividend $300m, +$50m; on‑market buyback up to $150m).Qantas Airways Financial Statement Overview
Summary
Income statement trends are solid (revenue growth and improving net margin), but the balance sheet is a key constraint due to high leverage and a weak equity ratio. Cash flow is positive, yet recent negative free cash flow growth and imperfect cash-to-earnings alignment reduce quality.Income Statement
Qantas Airways has shown consistent revenue growth over the past few years, with a notable increase in gross profit margin, indicating improved operational efficiency. The net profit margin has also improved, reflecting better profitability. However, the EBIT and EBITDA margins have been fluctuating, suggesting some volatility in operational performance.72
Positive
Balance Sheet
The company has a high debt-to-equity ratio, which poses a risk of financial instability. Although the return on equity has improved, it remains low due to the high leverage. The equity ratio is weak, indicating a heavy reliance on debt financing, which could be a concern in times of economic downturn.55
Neutral
Cash Flow
Operating cash flow has been positive and growing, which is a positive sign for liquidity. However, the free cash flow growth rate has been negative recently, indicating challenges in generating cash after capital expenditures. The ratios of operating and free cash flow to net income suggest that cash generation is not fully aligned with reported earnings.60
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 24.18B | 23.41B | 21.62B | 19.82B | 9.11B | 5.93B |
| Gross Profit | 6.56B | 12.76B | 11.46B | 7.00B | 1.91B | 1.57B |
| EBITDA | 4.23B | 4.54B | 3.90B | 4.52B | -70.00M | -176.00M |
| Net Income | 1.59B | 1.60B | 1.25B | 1.75B | -860.00M | -1.73B |
Balance Sheet | ||||||
| Total Assets | 23.87B | 23.36B | 20.56B | 20.35B | 19.65B | 17.88B |
| Cash, Cash Equivalents and Short-Term Investments | 1.85B | 2.36B | 1.98B | 3.25B | 3.98B | 2.22B |
| Total Debt | 9.43B | 7.96B | 6.59B | 6.73B | 7.23B | 8.23B |
| Total Liabilities | 22.52B | 22.57B | 20.27B | 20.34B | 19.84B | 17.36B |
| Stockholders Equity | 1.34B | 778.00M | 289.00M | 5.00M | -197.00M | 513.00M |
Cash Flow | ||||||
| Free Cash Flow | -463.27M | 448.00M | 680.00M | 2.49B | 1.75B | -1.15B |
| Operating Cash Flow | 3.84B | 4.25B | 3.44B | 5.05B | 2.65B | -407.00M |
| Investing Cash Flow | -4.13B | -3.81B | -2.89B | -2.59B | -240.00M | -722.00M |
| Financing Cash Flow | -173.70M | 42.00M | -2.01B | -2.63B | -1.31B | -181.00M |
Qantas Airways Technical Analysis
Negative
35.20
Price Trends
35.35
Negative
34.21
Negative
34.61
Negative
Market Momentum
-0.77
Positive
32.89
Neutral
0.24
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QABSY, the sentiment is Negative. The current price of 35.2 is below the 20-day moving average (MA) of 35.86, below the 50-day MA of 35.35, and above the 200-day MA of 34.61, indicating a bearish trend. The MACD of -0.77 indicates Positive momentum. The RSI at 32.89 is Neutral, neither overbought nor oversold. The STOCH value of 0.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for QABSY.
Qantas Airways Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $13.21B | 10.91 | 140.98% | 3.50% | 6.81% | 58.22% | |
71 Outperform | $30.86B | 8.76 | 23.99% | ― | 4.24% | 20.29% | |
69 Neutral | $40.04B | 8.99 | 27.70% | 0.96% | 4.33% | -1.58% | |
68 Neutral | $9.60B | 4.30 | 296.72% | 4.57% | 7.09% | 37.26% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $21.57B | 50.61 | 4.82% | 1.73% | 0.65% | ― | |
47 Neutral | $7.78B | 91.22 | ― | ― | 1.27% | 118.64% |
* Industrials Sector Average
QABSY
Qantas Airways
31.83
1.69
5.60%
DAL
Delta Air Lines
61.31
7.02
12.92%
LUV
Southwest Airlines
43.90
15.00
51.91%
UAL
United Airlines Holdings
95.43
9.16
10.62%
AAL
American Airlines
11.79
-1.46
-11.02%
LTM
LATAM Airlines Group SA Sponsored ADR
48.58
17.39
55.76%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.