Qantas Airlines (NASDAQOTH:QUBSF)

CAPS Rating: No stars


Player Avatar TSIF (99.96) Submitted: 5/4/2010 6:43:45 PM : Outperform Start Price: $2.35 QUBSF Score: +5.31

Quantas Airlines is suffering similar to it's peers. First high fuel prices and now a lack of traffic. Quantas, however, like it's peers is beaten down a little to much. It's so bloody, I almost didn't believe this was the real ticker. The PK version on international stocks takes into account the difference in the exchange rate, but it's hard to believe it's sub $3 all year. Still, looking at their financials, the sub $3 share price could be generous! The Austrailian flagship has been cutting back workers and grounding planes as revenue continues to decline. They announced further cuts in last August, but appear to be keeping flights in the air and traffic appears to be up. Sounds like they need to issue some passports to the kangeroos. Joey's fly free if they stay in the pouch. Actually, that could be an extra baggage charge? With 80% of it's 2010 fuel hedged at $89 bbl, Quantas should be seeing some stability and results from the cost cutting. You can't cut your way to profits but Quantas front office appeared to be extemely top heavy. The H1NI and issues with the new A380 compounded losses last year, (it's first in six years), but if the cuts are effective and more seats filled then I believe Quantas can turn a profit and Mr. Market will reward them accordingly. They deferred aircraft orders and are subleasing their excess capacity. Could be a risky play, but I'm confident there is no bankruptcy on the horizon and at this price the sky is the limit! :)

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