Alliance Aviation Services Ltd (ASX: AQZ) will fly from Brisbane to Proserpine four times a week. The Queensland state government announced the deal in an effort to revive tourism in the area. There is also the option to increase daily flights if warranted by demand.

QLD Premier, Annastacia Palaszczuk said: “Tourism supports one in three jobs in the Whitsundays. We know how crucial this industry is to the livelihoods of people in this region.”

These flights can be booked from today and will begin on 22 June.

Whitsunday Coast Airport COO, Craig Turner said, “These flights present the opportunity for WCA to develop a partnership with Alliance Airlines through this challenging period and beyond.”

Alliance Airlines, the nation’s workhorse

The move further cements Alliance Airlines as a reliable travel partner. The company’s core offering is fly-in-fly-out services for resource projects across the country. These flights increased during the coronavirus pandemic to maintain social distancing. 

The swift and agile approach from the company allowed them to not only increase flights but to also win new resource clients during the pandemic. On 20 March the company also reported a large increase in charter revenue, driven by both social distancing and the lack of operating alternatives. 

The company is one of the unsung heroes of the COVID-19 period through its support of resource projects. In a recent market update, Alliance provided guidance of a likely $40 million dollar profit.

This is in stark contrast to small airline competitor, Regional Express Holdings Ltd (ASX: REX) who entered the pandemic demanding money from state governments of Western Australia and Queensland. 

Year-to-date performance

With a share price that is up by 8.7% year-to-date, Alliance Airlines has outperformed the aviation sector. It has a price-to-earnings ratio (P/E) that is 4 points higher than its 8-year average. In 2019, Qantas Airways Limited (ASX: QAN) took a 19.9% interest in Alliance, make it the airlines largest shareholder. 

This acquisition is currently under investigation by the ACCC. They have raised issues about purchasing such a large stake in an “important and growing competitor”. I agree fully with this as the airline’s strength has come from its independence and agility.

Foolish takeaway

Alliance Airlines is continuing to win both work and favour across the country, it has been a rock-solid partner for the resources sector throughout the pandemic. I believe its ability to deliver continued service has set up this organisation for sustained incremental performance. 

More reading

• Is the Qantas share price a buy?
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• ASX 200 up 0.6%: NAB charges higher, ACCC investigates Qantas acquisition
• Why the price of these ASX travel shares soared over 30% since mid-May
• Qantas share price lower on ACCC investigation

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Qantas Airways Limited (ASX: QAN) share price has fallen nearly 38% since the start of the year. Unsurprisingly, this is predominantly due to the COVID-19 pandemic and the resulting restrictions on air travel.

However, Qantas shares have soared 117% from their March lows. This performance exceeds the recovery of the S&P/ASX200 index (ASX:XJO) which has rebounded around 35% since its lowest point.

Let’s first look at two reasons the Qantas share price may still offer compelling value at today’s price of $4.42. Then, we’ll consider what Qantas CEO, Alan Joyce, had to say about the company’s outlook. 

Reason 1: strong brand name

According to Airline Ratings, Qantas has been named the safest airline in the world for 2020. I think it’s fair to say that when travelling by plane, passengers value their safety above everything else. A reputation for absolute safety could definitely be seen as a ‘moat’ or competitive advantage for Qantas. As restrictions continue to ease and plane travel resumes, it’s possible passengers will be prepared to pay a premium for safety. This could be good news for the Qantas share price.

In an ASX media release on 5 May, Qantas reported that is Frequent Flyer program has continued to perform well during the pandemic. The program has enabled some revenues to keep flowing from partnerships with companies such as Woolworths Group Ltd (ASX: WOW).

Also, a survey of Qantas Frequent Flyer members showed 85% were planning to fly as soon as conditions returned to normal. This is another positive sign for the Qantas share price.

Reason 2: strong financial position 

Qantas has secured a further $550 million in debt funding to help it survive the coronavirus crisis.  This was facilitated by borrowing against three of its wholly-owned Boeing 787-9 aircraft. Likewise, $1.05 billion was raised in March against seven 787-9 aircraft. Pleasingly, the group has no significant debt maturities until June 2021. 

In addition, Qantas has sufficient liquidity to continue operating under current conditions until at least December 2021.

As of 4 May 2020, Qantas had short-term liquidity of $3.5 billion which includes a $1 billion undrawn facility. The group expects a cash burn rate of $40 million per week by the end of this month.  

Fuel is a significant expense for airlines and the strategy Qantas takes to keep its fuel costs under control is hedging. Essentially, hedging helps minimise the risk and uncertainty created by oil price fluctuations. 

Unfortunately, as demand for travel significantly declined, the group experienced hedging losses due to the drop in oil prices. These losses, together with the impact of foreign exchange, will result in a $145 million cash outflow by the end of September.

Nevertheless, the Aussie airline stated that there will be no risk of further hedging losses. This should assist the company to retain its strong cash position and help boost the chances of continued growth in the Qantas share price. 

CEO comments

On a further positive note, Qantas Group CEO Alan Joyce said in the 5 May media release:

“Our cash balance shows that we’re in a very strong position, which under the circumstances we absolutely have to be. We don’t know how long domestic and international travel restrictions will last or what demand will look like as they’re gradually lifted.

Our ability to withstand this crisis and its aftermath is only possible because we’re tapping into a balance sheet that has taken years to build”.

Foolish takeaway

Qantas has a reputation of being the safest airline in the world as reinforced by its rating for 2020. Furthermore, the company’s financial position is strong considering the current circumstances. As such, I feel the current Qantas share price may present a buying opportunity. Whilst uncertainty still remains surrounding demand once restrictions ease, an indication that 85% of Qantas Frequent Flyer members will fly once they are permitted to is positive in my view.

More reading

• Alliance Airlines continuing to surge
• 3 large cap shares beating the ASX 200 this year
• Why the Nufarm share price is crashing lower today
• Should you be an ASX bull or bear right now?
• Top brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the Qantas share price a buy? appeared first on Motley Fool Australia.

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If you don’t have enough funds to build a truly diverse portfolio, a quick way to add some diversity is with exchange traded funds (ETFs).

Through just a single investment, ETFs give investors exposure to whole indices, industries, and even themes.

There are a large number of ETFs for investors to choose from, but three that I rate highly right now are listed below. Here’s why I like them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

I think the BetaShares Asia Technology Tigers ETF would be a great option for investors. This exchange traded fund provides investors with exposure to a number of exciting tech shares in the Asian market. These include the likes of ecommerce giant Alibaba, search engine company Baidu, and new Afterpay Ltd (ASX: APT) shareholder and WeChat owner, Tencent. These companies are revolutionising the lives of billions of people in the region and look very well-positioned to profit from it over the next decade.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another option you can use to diversify is the BetaShares NASDAQ 100 ETF. It provides investors with exposure to the 100 largest non-financial shares on the NASDAQ index. This includes giants such as Amazon, Facebook, Microsoft, and Starbucks. I believe many of these companies have the potential to grow at a quicker rate than the global economy over the next decade. This could lead to the BetaShares NASDAQ 100 ETF providing stronger returns than the ASX 200 for the foreseeable future.

iShares Global Healthcare ETF (ASX: IXJ)

Another option for investors to consider is the iShares Global Healthcare ETF. I believe it could be a quality option for investors due to the increasing demand for healthcare services globally. This exchange traded fund provides exposure to companies across a range of sectors including biotechnology, pharmaceutical, and medical devices. This includes many of the world’s biggest healthcare companies such as CSL Ltd (ASX: CSL), Johnson & Johnson, Novartis, and Pfizer.

More reading

• Are Megaport shares the ones to buy and hold beyond 2030?
• Why I would buy these outstanding ASX 50 shares right now
• Where to invest $2,000 in cheap shares
• Why the shares of Afterpay rival Openpay are up 840% since March
• 3 of the best ASX shares to buy with $3,000 right now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and CSL Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and BetaShares Asia Technology Tigers ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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