Qantas Airways Limited (ASX: QAN) share price jumps higher after flagging a record full-year profit

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ASX:QAN

The Qantas Airways Limited (ASX:QAN) share price has jumped 26 cents or 4.5 per cent higher to $6.06 after the airline said it expects to post a record pre-tax profit.

The carrier lifted third-quarter revenue 7.5 per cent and has flagged a full-year underlying pre-tax profit of between $1.55 billion and $1.60 billion.

That would beat the record $1.5 billion it made in 2016 and comfortably exceed last year’s $1.4 billion.

Shareholders have benefited from a series of capital returns since Qantas’ return to profitability, with the airline buying back almost a quarter of its stock since October 2015, and they could get another boost when full-year results are reported in August.

“The board will consider further capital management initiatives in line with the Group’s financial framework as part of full-year results in August 2018,” Qantas said in a statement on Wednesday.

Domestic revenue per passenger for the three months to March 31 increased eight per cent on the prior corresponding period – which Qantas says was partly due to the resources sector’s continuing recovery – while international revenue per passenger rose 5.2 per cent.

Chief executive Alan Joyce said the airline’s overhaul in the past few years – including changes in its hedging program – meant it was able to grow earnings despite industry-wide increases in fuel costs.

“Qantas is on track to deliver another record full year result even though we’re facing a $200 million increase in our total fuel bill in FY18,” Mr Joyce said.

“We’re seeing solid results from each of our business units, which is a reflection of broadly positive trading conditions and the work we’ve done to strengthen the group.”

Over the past 12 months, the Qantas share price has gained 39 per cent, easily outpacing the 1.4 per cent return from the benchmark S&P/ASX 200 Index.

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au