Qantas Enjoying Sky-High Fares, but Competition to Weigh on Future Profitability

We maintain our AUD 5.90 fair value estimate for shares in Qantas following the release of interim fiscal 2023 results. Underlying pretax profit of AUD 1.4 billion—a record result—is a dramatic turnaround from the AUD 1.3 billion underlying pretax loss in the prior corresponding period, or pcp, which was marred by lockdowns and border restrictions. While air travel capacity remains constrained, demand is strong, leading to expensive tickets, fuller planes, and unprecedented profitability for Qantas.