Qantas Group (ASX:QAN): Why This Stock Remains on the Radar of Australian Investors

Sonal Goyal

24 September 2026 10:04 PM AEST

Qantas Group (ASX:QAN): Why This Stock Remains on the Radar of Australian Investors

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Highlights

• Underlying PBT of $2.06 billion and statutory NPAT of $1.29 billion for FY26, despite a net $420 million Middle East conflict impact.

• EPS up 3% to 96 cents per share; final Shareholder Dividend of 19.8 cents per share declared.

• 17 new aircraft delivered in FY26, with up to 31 more arriving in FY27 as the largest fleet renewal in Qantas history continues.

• Domestic EBIT of $1.44 billion and International EBIT of $650 million; Jetstar Domestic Earnings up 15%.

Qantas Airways Limited (ASX:QAN) is Australia's national carrier and one of the world's most iconic aviation brands, operating domestic and international passenger services through its Qantas and Jetstar brands, freight operations, and the Qantas Loyalty program. The Group's dual Brand strategy — Qantas targeting premium and full-service travellers, Jetstar targeting value-conscious leisure travellers — provides broad market coverage across domestic and international routes. Qantas has been executing the largest fleet renewal in its history, introducing next-generation aircraft to improve customer experience, operational performance, and fuel efficiency.

Recent Development

Released on 27 August 2026, Qantas reported FY26 underlying PBT of $2.06 billion (down $330 million on FY25), statutory NPAT of $1.29 billion (down $316 million), and EPS of 96 cents per share (up 3%). The results were shaped by two distinct operating environments: a strong first half with robust Demand growth across domestic and international, followed by a significantly more challenging second half as Middle East conflict escalation caused fuel cost increases, reduced Business travel confidence, and demand disruption.

The Middle East conflict had a net $420 million impact on earnings (on a $610 million fuel bill increase), with mitigations including fare and capacity adjustments and the redeployment of aircraft from Middle Eastern to European routes (London, Paris, Rome seat factors reaching 90%+ in Q4). Group Domestic delivered underlying EBIT of $1.44 billion, with Jetstar Domestic up 15%. International underlying EBIT was $650 million, below prior year due to fuel costs. Qantas Loyalty delivered double-digit earnings growth. 17 new aircraft arrived in FY26, with up to 31 more arriving in FY27. Final dividend of 19.8 cents per share was declared. Customer Net Promoter Score improved — Qantas up 7 points and Jetstar up 1 point. Record NPS in a decade was achieved for Qantas.

Sector Context

Australian aviation is a concentrated market with Qantas and Jetstar holding the dominant domestic market position against Virgin Australia, with minimal new-entrant competition. Internationally, Qantas leverages its premium brand and oneworld alliance membership to compete with global full-service carriers. The fleet renewal (787s, A350s, A321XLRs, A220s) is structurally significant — newer aircraft are more fuel-efficient (reducing fuel cost per seat), offer better customer experience (driving premium cabin Revenue growth), and enable new route opportunities (including Project Sunrise direct Sydney-London service in October via the first A350-1000ULR delivery in April 2027). The loyalty business provides a highly profitable recurring earnings stream that is somewhat insulated from airline cyclicality.

Risks and Uncertainties

The Middle East conflict's ongoing impact is the primary near-term risk — any escalation could further increase fuel costs, reduce business travel confidence, and disrupt international routing. Fuel price Volatility remains inherent to airline Economics — a $610 million fuel bill increase in FY26 demonstrates the earnings sensitivity. Fleet renewal involves operational complexity as new aircraft types enter service (A321XLR, A220 already in service; A350-1000ULR arriving April 2027). The decision to phase out the A380 from 2028 requires careful capacity management across the international network during the transition period. Labour cost Inflation and airport charge increases are persistent cost headwinds.

Catalysts to Watch

The first A350-1000ULR arriving in April 2027 and the commencement of direct Sydney-London Project Sunrise flights in October 2027 are landmark milestones that could attract significant premium demand and media attention. Any improvement in Middle East geopolitical conditions would reduce fuel cost headwinds and restore international demand confidence. Progress on converting 20 existing purchase right Options to firm orders from 2030 (Airbus and Boeing discussions) would signal long-term fleet capacity confidence. Qantas Loyalty's continued double-digit earnings growth represents a valuable, high-margin earnings stream that could eventually attract separate investor valuation scrutiny.

Final Thoughts

Qantas Group (ASX:QAN) demonstrated genuine resilience in FY26, managing a $420 million Middle East impact through operational agility and keeping EPS growth positive at +3%. With the largest fleet renewal in Qantas history underway, record customer satisfaction scores, and Project Sunrise approaching, the long-term Investment case for Qantas as a premium aviation brand remains compelling — with Middle East geopolitics the primary near-term variable.

FAQs

Q: What was the Middle East impact on Qantas FY26 earnings?

A: The Middle East conflict had a net $420 million negative impact on Qantas FY26 earnings. The gross fuel cost increase was $610 million, with approximately $190 million in mitigations achieved through fare and capacity adjustments, aircraft redeployment to European routes (demand surged as passengers avoided Middle Eastern routing), and cost management. The conflict also reduced business travel demand from government and large corporate customers in Q4.

Q: What is Project Sunrise and when does it launch?

A: Project Sunrise refers to Qantas's plan to operate ultra-long-haul direct non-stop services from Sydney to London, New York, and other major global cities, enabled by the A350-1000ULR (ultra-long range) aircraft. The first A350-1000ULR arrives in April 2027, and the first non-stop Sydney-London flight is planned for October 2027. Project Sunrise represents a transformational product that Qantas expects to significantly improve International earnings and margins from FY32.

Q: What happened to Jetstar Asia and Jetstar Japan?

A: Jetstar Asia ceased operations in July 2025 (outside the FY26 period). Jetstar Japan's minority shareholding is being divested, with the transaction expected to complete by end of June 2027. These moves represent the rationalisation of Qantas's portfolio of international Jetstar ventures, allowing the Group to focus on the more profitable Qantas and Jetstar Australia/New Zealand operations while maintaining international reach through alliance partnerships.

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