After its celebrated turnaround, some have been wondering if this is as good as it gets for Qantas
A rocketing share price and a series of buybacks has seen Qantas deliver total shareholders returns of 364 per cent over the past five years - outperforming the ASX200 by 296 per cent.Mark Metcalfe
"However, market dynamics have changed," Bensan said. "Virgin is stretched... with a cost base that has been growing aggressively for years without the revenue growth to support it.Qantas this week made its case to investors as to why it will continue to grow - even as it pulls back on capacity. Not everyone was convinced, with Credit Suisse analyst Paul Butler pointing out those targets translated to a group-wide margin of about 13 per cent - which is twice Qantas' 25-year average."Qantas might get to the margin targets in a lucky year, but the targets are not a sustainable level of performance," Butler said.
As the number of seats available falls, planes should fly with more people on board and airfares will tick higher. The airline also said higher fares were just one part of the plan. It would launch an aggressive drive to keep costs down through "digital integration", fuel efficiency from flight planning tools, and scheduling changes so planes spent more time in the sky and less time on the ground.
Goldman Sachs analyst Owen Birrell said Qantas' new goals were "eminently achievable", as long the economy did not deteriorate and Virgin remained a relatively weak competitor, but warned that five years was a "lifetime" in the airline business."If history is any guide, the year-to-year shifts in both the macro and competitive landscape can and do scuttle even the best laid plans," he said.
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