From McBank today...
Earnings revisions
QAN: financial year 2009 +21%; financial year 2010 -2%; financial year 2011 -9%.
VBA: financial year 2009 +68%; financial year 2010 +71%; financial year 2011 +14%, albeit off mainly negative earnings.
Price catalyst
We expect QAN's November operating traffic data to provide a further indication of yield and load factor trends, although further guidance from management may only be forthcoming at the interim results for QAN on 19 February and for VBA on 23 February.
Action and recommendation
We remain cautious on the airline sector, although the negative news flow for both carriers appears to be mainly priced in.
We believe VBA's earnings, while not inspiring in the short term, are the most positively leveraged to a recovery in consumer sentiment, with the stock still looking cheap at 0.4x price/book value. Outperform.
QAN by contrast has significant exposure to declining international premium traffic, and greater exposure to declines in cargo volumes and leisure travel. We believe a better entry point should exist for QAN in second half 2009 - first half 2010. Neutral."