Qantas Shares Reach 6 Year High Thanks to Fuel Bill Savings
13th May 2015
Australian carrier Qantas has seen its shares rise to the highest level in over six years in Sydney thanks to a world-wide drop in oil prices. This allowed the airline to cut its fuel bill this year.
Right now, Qantas' shares now stand at A$3.56 (US$2.86), after jumping 7.2 per cent. This is the highest since September 2008.
The carrier previously said it will look to spend around A$550 million less on fuel in 2015, after a 36 per cent decrease in fuel prices for planes.
With fuel prices reduced, Qantas is now free to invest the money it saved here somewhere else. According to Qantas Chief Financial Officer Tino La Spina, Qantas can wait before it decides to purchase new aircrafts and could save more money by buying back jet leases.
In the past 12 months, Singapore jet fuel prices dropped 36 per cent.
Qantas CFO La Spina said:
"Getting the fleet within eight to 10 years is fine; it's still very competitive by global standards. We have cash on our balance sheet at the moment which we would consider excess to requirements."
Qantas' fuel bill is expected to be around A$3.92 billion for 2015 and will drop to A$3.87 the year after, according to the company's presentation to investors on Tuesday. If worst comes to pass, the fuel bill should not be higher than A$3.95 for this year and the following.
2 (Out of 3) Hurdles to Buying New Jets Cleared
As Qantas CFO says, two out of three biggest roadblocks to purchasing new jets were nearly cleared. The carrier should have an optimal balance sheet by 30 June this year.
In addition, Qantas' international business is well on track to returning its cost of capital.
Qantas has options to buy 20 Boeing 787s between 2017 and 2020 and rights to purchase another 30 planes of the same model by 2025.
Qantas fleet is 7.2 years old in average.