Looking to buy Qantas shares? Here’s what to watch when the airline reports tomorrow

All eyes will be on the Qantas Airways Limited (ASX: QAN) share price tomorrow as the company releases its full-year earnings.

And there’s plenty for investors to watch out for. Some brokers have tipped gains while others warn the airline might suffer on a period of poor service.

Qantas shares are currently swapping hands for $4.585, 0.77% higher than their previous closing price. For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.51% right now.

Let’s take a look at what the market might be expecting to impact the stock.

Qantas shares will be in focus tomorrow…

The Qantas share price could be in for a big day tomorrow. The company’s full-year underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) is expected to come in at between $205 million and $305 million.

That considers the company’s guidance of between $450 million and $550 million of underlying EBITDA for the second half and its first-half underlying EBITDA loss of $245 million.

Meanwhile, Bell Potter predicts the airline will report a net profit after tax (NPAT) loss of $1.35 billion. Broker consensus sits at a $1.2 billion loss.

And broker Citi is bearish. It expects Qantas’ FY23 guidance to be muted after a tricky start to the period. It also expects the airline’s costs to lift. The broker reportedly placed a ‘sell’ rating and a $4.28 price target on Qantas shares.

More than 54% of Qantas flights departed late in July. Meanwhile, the carrier cancelled 5.6% of its services, the Bureau of Infrastructure and Transport Research Economic found. Over at its budget leg Jetstar, more than 52% of flights departed late and 8.8% were cancelled.

The airline has been open about such performance issues. It offered frequent flyers a $50 voucher and other goodies as a token of apology over the weekend.

But Transport Workers Union national secretary Michael Kaine said such incentives likely wouldn’t be enough to convince travellers – who generally pay a premium to fly Qantas – to return to the airline:

The thousands of passengers who’ve spent hours in call centre queues following cancelled flights, delays, and lost luggage won’t want to waste more of their time attempting to cash in a voucher to buy themselves more of the same chaos.

If Qantas management or indeed [CEO Alan Joyce] really cared about customers, the right thing to do would be to appoint a new CEO with the business acumen to bring back higher trained, experienced workers and treat them with respect.  

Citi also believes improvements in its performance will come down to staffing. Though, it thinks that will bring higher costs than the market expects.

But not everyone is so bearish. UBS has slapped Qantas’ shares with a ‘buy’ rating and a $6.55 price target, my Fool colleague Tristan reports.

The post Looking to buy Qantas shares? Here’s what to watch when the airline reports tomorrow appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper 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 Scott Phillips.

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