How To Buy Qantas Shares

Qantas shares are trading at $5.13 each as of March 4 2024, giving the company a market capitalisation of $8.812 billion. The stock is down considerably over the past six months, but is still one of the best performers in its sector and on the ASX over the last two years.

Qantas was one of the biggest casualties of the Covid-19 pandemic, when global travel restrictions forced the company to suddenly shut down services, resulting in its shares sliding from an all-time high of $7.40 on December 19 2019 to a pandemic low of $2.36 on March 20, 2020. But its market value has more than doubled since on the back of a rebound in travel demand.

Qantas shares touched an all-time low of 96.5 cents in December 2013 with the airline issuing a profit warning and losing its investment-grade credit rating at the time.

Are Qantas Shares Dropping?

While Qantas shares have rallied since the pandemic, the recent controversies have certainly weighed on the stock. It is down nearly 20% over the past six months, dropping  to their lowest level since October 2022. Part of this can be attributed to the overall weak sentiment across the Australian stock market as investors worry about the impact of rate hikes by central banks. But much of it is directly related to the political storm, initially over Qantas’ handling of pandemic-era flight credits and poor customer service, then over its role in lobbying the government to block key competitor Qatar Airways over more flights from Australia into Europe.

The final straw came in September when the Australian Competition and Consumer Commission (ACCC) launched legal action seeking record fines to be levied against the airline for illegally selling tickets on more than 8,000 flights it had already decided to cancel. It forced CEO Alan Joyce to depart two months earlier than scheduled, with CEO-designate Vanessa Hudson stepping up to the top job on September 6.

Why Are Qantas Buying Back Shares?

Qantas last paid a dividend prior to the pandemic, so shareholders would be justified in expecting a payout after the airline’s dramatic turnaround. It reported a full-year net profit of $1.74 billion in September of last year, but again opted not to pay any dividend for the year. Instead, the company announced another share buyback up to $500 million, on top of a share buyback worth $1 billion in FY 2023. Similarly, in February this year, Qantas announced a half-year profit of $1.25 billion and offered shareholders a $400 million buyback.

Analysts say part of the reason for not announcing a dividend payment is that Qantas has accumulated massive losses during the pandemic years, and is therefore unable to generate adequate dividend franking credits until it starts paying tax on profits.

It has therefore repeatedly opted for share buybacks, which is another way for a company to return capital to shareholders and bump the share price. Although they directly benefit only participating shareholders, buybacks improve a company’s per share earnings over a longer term.

Another likely reason for Qantas opting for a one-off share buyback instead of a regular dividend payment is the airline’s ambitious capex program. Morningstar analyst Angus Hewitt has forecast capital expenditure of over $15 billion over the next five years to replace Qantas 300-aircraft fleet.

Despite the recent turmoil, Qantas shares are still a popular option among many investors. And with travel demand showing no signs of slowing, analysts expect the national carrier to maintain its strong earnings performance across the remainder of 2024 and into 2025.

According to Market Index, an overwhelming majority of brokers covering Qantas still have a ‘Buy’ rating on the stock. Here are three easy steps if you want to buy shares in the airline:

1. Compare share trading platforms and brokerage services: To buy any shares listed in Australia, including Qantas, you will need to sign up to a broker with access to the ASX. This could be either a full-service brokerage firm (higher brokerage but tailored recommendations) or an online share trading platform (lower fees but requires independent research). Fees, features and customer service differ from provider to provider within these categories, so it’s important to compare numerous options.
2. Open and fund your brokerage account: Once you have selected the platform to invest through, you need to open a brokerage account and transfer money into it to start trading. Most brokerage firms or online trading platforms require some form of identification and a bank account linked to your trading account.
3. Place an order for Qantas shares: Depending on your investment platform, you will simply need to log into your account, select either the number of Qantas shares you would like to purchase or the amount of money you want to invest in the stock and then confirm the trade. You will need to ensure there are enough funds in your linked bank account to cover the trade, as well as brokerage fees.

If you hold or have purchased Qantas shares, deciding when to sell your investment is important. This should always be an individual decision based on your personal circumstances, financial needs and investment strategy.

If you are a long-term investor, it generally pays to avoid getting caught up in the daily volatility of the stock market so that you don’t get tempted into unnecessary buys or panic-selling. Conversely, as a short term investor, you may try to avoid losses or take advantage of any significant price gains.

In either case, it is critical to monitor your investments over time and ensure that the portfolio always aligns with your overall investment strategy. You also need to keep in mind that if you make a profit on the sale of your shares, you will be liable to pay capital gains tax (CGT).

The process of selling your Qantas shares is broadly similar to the process of buying them. You can sell your desired quantity of Qantas shares via your full-service broker or an online share trading platform. Typically, selling your shares will also incur a trading fee. The settlement and ownership transfer will take place two business days after the trade (T+2). Once settled, the funds will be transferred to your bank account.