QAN +2.65%: the flying kangaroo hosted an investor day today to set the scene for the next few years as they prepare for the exit of CEO Alan Joyce. Qantas has exited the COVID disruption as a leaner business with better margins, aiming for 18% in the domestic business vs ~13% in FY19. The International business is expected to jump from mid-single digits in FY17-19 to the low double digits (10-12% targeted in the medium term), while Jetstar is expected to return to the ~15% pre-COVID margins from FY24. Their loyalty business is on track to hit $425-450m in EBIT this year, up ~15% on FY19, before doubling by FY30. Trading on ~6.5x PE, it is well below the long-term average given fears around a significant near-term CAPEX spend to revitalize its fleet and lounges, however, today’s presentation allayed some of those fears, continuing to target 2-2.5x Net Debt to EBITDA with FY24 CAPEX guidance of $3-3.2b. Key to their execution will be reducing costs in line with the expected normalization of airfare prices.
MM is neutral QAN
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