QAN Shareholder, my statistics are from BITRE, which are more accurate than the QF reports that continue to hide the fact that passengers flying domestically in Australia and NZ are being counted as Jetstar International passengers (something that inflates the Jetstar Intl figures by almost 100%) ...... something that Ben Sandilands finally got out of them months ago.
The JP Morgan report that London Sloop alluded to is even more crystal clear.
* Qantas January operating stats show the strong recovery in International is continuing (loads were 84.2% in Jan vs 83% in the pcp and an 80.7% long-run average)
* Mainline International was again the stand-out with January loads up 2% to 86.5% (from 84.5% in the pcp) despite discounting in the prior period
* Positively higher international loads have coincided with yield growth, up 11.1% YTD (pre currency). Domestic yield growth slowed in January, now up 0.1% YTD (pre-currency) due to strong domestic capacity additions
* Domestic loads of 75.2% in January (77.8% in the pcp) were impacted by the Queensland floods
* We estimate that Qantas generated ~$100m in additional revenue in January relative to the pcp (pre currency) despite the impact of the QLD floods
* Hedging update - Qantas' fuel requirements for FY11 are now 96% hedged at a worst-case crude oil price of ~$94.50/bbl (assuming $5 option premium). Fuel costs for 2H11 are expected to be ~$2bn (in line with previous guidance). In FY12 ~35% of fuel requirements are hedged at a worst case oil price of ~$101/bbl (assuming $5 option premium)
Detail:
* International remains the stand-out for Qantas and we continue to believe this will be the key driver of earnings growth in FY11
* Qantas continues to act rationally in terms of international capacity adding 3% FY11 YTD (excl Jetstar Asia). We believe this has been a key driver of yield and load strength (although the A380 outage has also resulted in reduced capacity on the European and US routes)
* The impact of the Queensland floods makes it difficult to assess the Domestic load stats. However slowing yield growth is not unexpected and coincides with the BITRE airfare index (yield pressure is primarily in the leisure segment)
* Qantas has added 11% in new domestic capacity YTD. Of this growth 46% is attributable to Mainline and QantasLink which we view positively as Business and Full economy fares continue to improve relative to the pcp
* We retain our Overweight recommendation for Qantas
* International yields remain well above pcp levels and January loads were also stronger than anticipated. However we flag that the growth trajectory of yields may slow in the second half as they begin to track stronger comps