Qantas Sets Sights on Improved Second Half As Australian Borders Reopen

We maintain our AUD 5.40 fair value estimate for shares in no-moat Qantas following the release of its interim fiscal 2022 earnings. The underlying pretax loss of AUD 1.3 billion was 30% worse than the AUD 1.0 billion loss in the prior corresponding period, or pcp. Persistent lockdowns weighed heavily on air travel during the period, exacerbated by continued international and domestic border restrictions. While we lower our near-term forecasts for the airline, our longer-term forecasts remain broadly intact. We think Australia's overwhelmingly vaccinated population means a likely end to wide-ranging lockdowns, and with borders progressively reopening and restrictions loosening, the worst is now behind Qantas.