The Worst is Now Behind Qantas

We raise our fair value estimate for shares in no-moat Qantas by 4% to AUD 5.40. The increase is principally due to the impact of time value of money and the AUD 802 million sale of an unused parcel of land at Mascot, partially offset by lower near-term earnings from lower international travel assumptions and higher jet fuel expenses following a market update on first-half performance. Qantas has guided to an interim fiscal 2022 EBITDA loss of between AUD 250 million and AUD 300 million in a period marred by extended lockdowns and domestic and international border restrictions. While we continue to expect a significant improvement in the second half, we lower our full-year fiscal 2022 EBITDA forecast to AUD 1.3 billion, from AUD 1.9 billion previously.