What Happened to Qantas Airways Ltd’s Share Price?
Australia’s biggest airline, Qantas Airways Ltd [ASX:QAN], extended its winning share price run today with a gain of more than 5%. When you add that to the big lifts the price saw last week on Thursday and Friday, Qantas shares have appreciated by nearly 40% in the year to date.
Why Did This Happen to QAN Shares?
Last week Qantas reported a loss of $2.8 billion for the year ended 30 June 2014.
It’s a staggering sum of money, even in the high-stakes airline game. But the market brushed it aside. Investors are increasingly taking the view that the worst is over for Qantas.
Having taken its medicine in the form of cost cutting and a freeze on seat capacity (or at least less growth), Qantas now forecasts a return to profitability in the last six months of 2014.
When you factor in the ongoing success of the company’s hugely profitable frequent flyer loyalty program, you can see how the stars can align for Qantas once again.
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That’s the vision that CEO Alan Joyce put forth last week, and investors have jumped on board to boost the share price.
What Now for Qantas Airways Ltd?
It’s hard to make money out of airline stocks as a trader, investor or speculator. A lot of things can go wrong, as Qantas shareholders have found out over the past four years.
But if Qantas and Virgin Australia Holdings Ltd [ASX:VAH] stop going for each other’s throats, they might find there’s enough room here for both firms to make money.
With the government seemingly reluctant to let this Aussie icon fail, any continued success in Qantas’ turnaround strategy should see this stock continue to rise.
But it’s fair to say investors’ expectations are now higher than they have been in some time. The Qantas stock price may have climbed the stairs this year…but any missteps could see it fall down the elevator shaft.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
Join Money Morning on Google+
The post Why the Qantas Airways Ltd Share Price Soared Today appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
