This is why Qantas shares are flying high

Shares of Qantas [ASX:QAN] gained 2.93% today. Shares went from trading at $5.80 yesterday up to $5.96 at time of writing.

Why is the Qantas share price up 2.93%? 

The company posted the second highest results in its 97 year history. For the 2017 financial year, Qantas reported a profit before tax of $1.4 billion. The company also reported record levels of customer satisfaction and employee engagement.

According to the announcement, the company´s domestic business is strong, with the combination of Qantas and Jetstar owning 90% of the domestic profit pool. Internationally, Qantas came under pressure due to competitors’ growth in the first half of the year, but recovered in the second part.

Another sector that posted a record profit was the Qantas Loyalty program, driven by the Frequent Flyer business and the addition of new businesses like health insurance.

The company has announced shareholders will be receiving up to $500 million from this record result though a $373 million buyback. Qantas also announced an unfranked dividend of 7 cents per share to be paid on 13 October 2017.

Future goals for Qantas

Qantas is setting big goals for the future with the launch of a new direct flight from Perth to London next year.

It has also launched Project Sunrise, which takes the name from the flights operated by Qantas during World War II. These flights could fly long enough to see two sunrises, an incredible accomplishment considering the technology back then.

For the project, Qantas is looking to increase direct services between the eastern Australian states and Europe. In particular, they are looking to have non-stop flights between Sydney-London, Brisbane-Paris and Melbourne-New York by 2022. To do this, they have challenged Boeing and Airbus to deliver an aircraft capable of flying the long hours.

If Boeing or Airbus live up to the challenge, this could mean an important win for Qantas and make it one of the best investments for that year.

If you would like to find out more about the three best investments this year in the ASX, click here.

By Selva Freigedo

Money Morning

Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up close many of the economic phenomena that worry Fat Tail Investment Research readers, like hyperinflation, bank bail-ins and governments burdened with so much debt it cannot possibly be repaid.

Every week, she goes through each article, research note and recommendation produced by our experts around the world to give you information on how to build and protect your wealth. Selva packages the week’s best ideas into one easy to read report: Port Phillip Insider Extra.

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