Is the Qantas Airways (ASX: QAN) share price a buy?
What is Qantas Airways?
Qantas is Australia’s most popular airline. It was founded in the Queensland outback in 1920, the Qantas name was originally Queensland and Northern Territory Aerial Services. The company operates two main airlines – Qantas and Jetstar – and subsidiary businesses including other airlines, businesses in specialist markets such as Q Catering, Qantas Freight Enterprises and the popular Qantas Frequent Flyer program. It employs some 30,000 people with around 93 per cent of them based within Australia.
Is the Qantas Airways share price a buy?
A lot has gone on this year. Air travel has almost completely disappeared which is obviously bad for Qantas.
But Qantas is doing much better through this period than rival Virgin Australia
(ASX: VAH). Whilst both businesses have seen a large drop in revenue, Virgin Australia’s weaker balance sheet has caused it to go into voluntary administration.
The thing is that Qantas will emerge from this period in a much stronger position than its rival, whatever ends up happening with Virgin.
The crazy oil prices will also help Qantas build up its store at a very
cheap price.
It also recently completed a new round of debt facilities for just over $1 billion at an interest rate of just 2.75% for up to 10 years.
If Australian domestic air travel can return fairly quickly then Qantas could see more of a V-shaped recovery rather than an L-shaped one.
Qantas won’t see passengers return significantly in the next few months. But I think things are more positive for Qantas than a few weeks ago. Brave investors may do quite well in two or three years (or less). But it’s not something I’d want to hold for a long time.
I’d prefer to buy these technology shares with great growth instead, with easier paths to success:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
