Qantas shares soar 7% as demand returns

Let us take a look at the earnings report

The airline posted an annual underlying loss before tax of A$1.86 billion in the 12 months ended June 30, wider than the A$1.77 billion restated figure from a year earlier and slightly more than analyst forecasts.

Underlying earnings before interest, tax, depreciation and amortisation was $281 million, 31 per cent lower than 2021.

Qantas will also invest more than $400 million in customer loyalty offerings including new lounges and new routes such as Auckland to New York.

Qantas chief Alan Joyce said the airline said losses related to the pandemic now add up to nearly $7 billion over the last three years.

The main reason for the difference between them is the expectation.

Even though United Continental, American Airlines, and Delta Air Lines report different earnings, all of them are pessimistic about the future. As management stated at the earnings meeting, the airline industry faces three major obstacles: first, capacity constraints, including staff shortages and limited airport capacity; second, high fuel prices; and third, an increased risk of economic recession.

However Qantas Airways Ltd said on Thursday it would buy back up to A$400 million ($276 million) of shares after the lifting of COVID curbs spurred a strong rebound in travel demand, surprising the market and sending its shares up 7%.

"We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional," Qantas Chief Executive Alan Joyce told reporters.

In addition, $QANTAS AIRWAYS LIMITED(QAN.AU)$  is awaiting a decision in November from Australia's competition regulator on its proposed $614 million acquisition of Alliance Aviation Services. Qantas currently provides about 23 percent of its charter services to Queensland and Western Australia, and the acquisition would give them access to another 30 percent of the service.

In my opinion, Qantas' valuation is low due to the impact of the epidemic, which has caused the airline industry to suffer losses. If the acquisition can be completed, Qantas will have a stronger voice in the Australian aviation industry in the long run, as the economy recovers. what do you think?