From another financial newsletter in Australia...
If nothing else, it makes me wonder about Qantas Airway Ltd’s [ASX:QAN] future. It’s likely going to face continual cost pressure on wages. Not only that, it’ll have to contend with higher fuel bills if oil continues to stay at this level or go higher.One note I saw suggests that Qantas could see a $700 million negative shift in fuel costs over this financial year at around the current spot price of oil. The next financial year could be even worse if the trends in oil I’m tracking play out as expected.This could prove to be a massive problem for Qantas.
But there’s more…
Qantas’ fleet of planes is now older than at the previous peak in 2009.That means the company is going to need to spend a lot of money replacing these planes — if they can even get the aircraft. There’s hot demand all over the world for new planes. And delivery times are lengthening. Qantas is also on track to start paying tax again and has finished its recent stock buyback.For now, the market appears unworried about any of this. The outlook for the Aussie economy is good. That drives a lot of Qantas’ earnings.Let’s wait for the next set of numbers to see how the market reacts.
There could be a very good shorting opportunity setting up here. At the very least, it’s a stock probably best avoided.
Stay tuned for more on this.
Net out the JQ fleet and Qantas fleet age is closing on 11 years, which is at the higher end.
Jetstar sits at 8. Curiously little napoleon has committed to JQ fleet renewal (remember the fanfare order for 110 A320?)
Having spent over $1.75 billion pumping their own pockets full of options bloated with buy back leverage...
As the tide goes out, imagine the wrinkled carcass of Mr Leigh Clifford and little napoleon swimming around naked..What is seen cannot be unseen.
Qantas need a new management