Is the Qantas (ASX:QAN) share price a buy?

Could the Qantas Airways Limited (ASX:QAN) share price be a buy? Some brokers have had their say on the airline after reporting.
The post Is the Qantas (ASX:QAN) share price a buy? appeared first on The Motley Fool Australia. –

rising airline asx share price represented by happy pilot standing inside empty plane

Could the Qantas Airways Limited (ASX: QAN) share price be a buy after the airline released its FY21 half-year result.

What did Qantas announce?

The airline announced that it made an underlying loss before tax of $1.03 billion and a statutory loss before tax of $1.47 billion.

Qantas said that it suffered a $6.9 billion revenue impact from the COVID-19 crisis in the first half of FY21, which amounts to a 75% reduction.

Despite that, underlying operation cashflow was still $1.05 billion. It was the domestic airlines that generated positive underlying cashflow for Qantas. Whilst Qantas International is still suffering because of COVID-19 and closed borders, Qantas Freight is performing very strongly due to the limited number of passenger planes flying (which used to carry freight along with the passenger cargo).

The airline also said that Qantas Loyalty continues to generate good cashflow thanks to credit card spending, health insurance, Qantas Wine and the Qantas rewards store.

Cost cuts

A major feature of the report was cost savings. It’s looking to save a substantial amount of costs over the next three years, the target is at least $1 billion of permanent annual savings from FY23. The short-term target is $600 million of permanent savings for FY21, which Qantas said is on track.

This involves at least 8,500 people leaving the business. More than 5,000 have already left so far, with the remainder expected to have left by the end of FY21.

A total of 14,500 full time equivalent roles are now stood up while around 11,000 full time equivalent roles remain stood down, most of which are associated with international flying.

Qantas also said that significant permanent savings are also being achieved through new deals with major travel agents.

It’s looking at the rationalisation of the group’s property footprint, including the handback or subleasing of surplus office space. It also said that the finalisation of a major review, which includes Qantas and Jetstar head offices, is expected by the end of March.

Finally, Qantas said that it’s renegotiating its supplier deals, including expiring aircraft leases.

In terms of government support, it’s still receiving assistance. Jobkeeper payments are still going to employees who are not working. Support for regional and domestic passenger flights, and for some international freight routes, which would not otherwise have been commercially viable, helped to keep key transport links active.


Qantas said that the recent border closures have delayed the group’s recovery by an estimated three months. However, it believes that international travel can restart by the end of October 2021, with the exception of increased travel with New Zealand expected for July 2021.

Domestic capacity is expected to rise to 80% of pre-COVID levels in the fourth quarter of 2021. Qantas is continuing to focus on managing the business to positive net free cash flow.

Broker opinions

UBS has a share price target of $6.20 for Qantas. The result was a little better than what the broker had been expecting. The state borders were temporarily shut off, but the Qantas liquidity didn’t fall. UBs thinks the market isn’t quite pricing in all of the potential cost cuts that the airline can achieve. 

However, Credit Suisse has a Qantas share price target of $3.90. The delay in the domestic recovery is a negative and the balance sheet will come under greater scrutiny. However, a change in the pace of recovery could change its views. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the Qantas (ASX:QAN) share price a buy? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!