(Bloomberg) -- Australia’s flagship carrier Qantas Airways Ltd. is the top-performing airline stock in Asia over the past year, and is seen as set to extend its climb with help from declining fuel prices.
The shares have risen 68% in the past 12 months, beating all Asian peers in a Bloomberg gauge. Analysts have been scrambling to catch up with the stock’s gains after recent results and the drop in oil, with the consensus price target climbing 30% in the past three months, according to Bloomberg-compiled data.
While lower fuel costs have boosted the sector overall, Qantas is benefiting additionally from shrinking competition in Australia. Following a string of scandals, including phony flights and illegal sackings, investors are also applauding the company’s efforts to right the ship since Vanessa Hudson took over as chief executive a little more than a year ago.
Profit dropped in the full year ended June 30, but the results were largely in line with expectations and analysts remain optimistic moving into 2025.
“Recent industry trends coupled with Qantas’ October trading update indicate that trends remain favorable,” Morgan Stanley analysts Andrew Scott and Julianna Sick wrote in a note this week. It’s expected to resume payment of franked dividends in the current fiscal year, an “important milestone” that increases the stock’s attractiveness to income-focused investors and retail investors, they added.
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In the domestic market, Qantas is seen as a beneficiary of the collapse of Rex, at least the fourth regional carrier to fold in as many years. The decreased competition has helped support airfare prices between Australia’s major cities, with Qantas and smaller unlisted rival Virgin Australia Airlines Pty. now carrying 98% of domestic passengers.
--With assistance from Angus Whitley.
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