Qantas (ASX:QAN) share price set to take flight: fund manager

a happy passenger sits in her airplane seat with boarding pass in hand smiling widely at the prospect of travel.

Taking a look back in time, the Qantas Airways Limited (ASX: QAN) share price fared exceptionally well in August.

During the month, the Aussie airline’s shares rose 10.9%. For context, the S&P/ASX 200 Index (ASX: XJO) only managed a gain of 1.5%.

Thankfully for shareholders, the upwards movement left the company’s shares in the best shape they’ve been in since April this year.

Investors appear to be gaining optimism towards Qantas as vaccination rates continue to climb across Australia. More than 77% of Australians over the age of 16 have had at least one dose of a COVID-19 vaccine, as of 28 September 2021.

Meanwhile, Sydney-based Perennial Partners believes Qantas is readying for the reopening.

Getting into shape for the summer

While exact details are sparse, a gradual reopening of international travel is planned once 80% of Australians are double vaccinated. Tourism minister Dan Tehan has expressed the hope of international borders being reopened by Christmas.

It’s likely the uncertainty of when exactly pre-pandemic levels of air travel may resume has weighed on the Qantas share price. However, managers of the Perennial Value Australian Shares Trust have found positives in the company.

In its August report, the fund managers gave their reasoning for a positive sentiment towards Qantas. This largely hinges on the reopening thematic. For instance, Perennial’s fund managers believe that 2021 will mark a significant turning point for the global economy and markets. This is based on the accelerating rollout of COVID-19 vaccines, which should eventuate in the lifting of restrictions in the near future.

In the meantime, Qantas has been slimming down and cutting costs considerably. On 3 August 2021, the company stood down 2,500 crew members in response to the domestic border closures. Additionally, Qantas reportedly delivered $650 million worth of cost benefits in FY21.

However, the savings are expected to increase into FY22, with a target of $850 million in cost savings. As a result, the team at Perennial Partners expects Qantas to emerge from this challenging period in very good shape. Similarly, the fund anticipates the pent-up travel demand to act as a strong tailwind once activities resume.

Qantas share price snapshot

Despite the company’s revenue falling 67% in FY21, the Qantas share price has held up exceptionally well over the past year. To be precise, shares in the airline have rallied an impressive 38.9% during the past 12 months. On the other hand, the benchmark index has returned 25.5%.

Unfortunately, we can not determine a price-to-earnings (P/E) ratio on the company due to it making a loss in FY21. Qantas reported a statutory loss before tax of $2.351 billion.

The post Qantas (ASX:QAN) share price set to take flight: fund manager appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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