Why Qantas Airways Ltd Shares Took Off Today

 

What happened to Qantas’ share price?

Shares of Qantas Airways Ltd [ASX:QAN] soared more than 5.3% today as the company’s loss for the year was less than the market expected.

Why did QAN shares take off?

Qantas has faced a lot of pressure with competition, higher fuel prices, and more discounting of airfares.

For the first-half of the 2016 financial year, Qantas earnings were $688 million. A year later, earnings have fallen to $515 million.

What’s more, revenue is down too. From $8.46 billion, to $8.18 billion.

Airline earnings can be hyper-volatile. Airlines have to make as much money during the good times as they can. Aussie investors appear joyful at the better than expected fall in earnings (if you get our drift), but that may not last.

What now for Qantas Airways Ltd?

The stock price is up, and has recovered almost all of the ground it lost in early 2016. However, as we say, the airline industry is volatile. Small changes in the market can have a magnified impact on the bottom line. For investors tempted to look at Qantas now, we would suggest extreme caution.

By Kris Sayce

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