Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Porter Five Forces focuses on - how Qantas Airways Limited can build a sustainable competitive advantage in Transportation industry. Managers at Qantas Airways Limited can not only use Porter Five Forces to develop a strategic position with in Transportation industry but also can explore profitable opportunities in whole Transportation sector.
Industry is mature and poised for slow growth. Qantas has excellent market share and continues to grow. A competitive advantage may exist with their iconic brand.
Shareholder returns have been good and forecasted to continue. Valuations show that the company is not trading at a discount. Seeking Alpha is proud to welcome Austin Koster as a new contributor.
Since then, the company has announced aggressive cost-cutting plans and is now 3 years into this revival. Over the past 5 years, the industry has seen steady declines in revenue, this is predominately due to the price war that Qantas and Virgin engaged in which has since ended.
However, many firms have been able to cut cost through layoffs, wage freezes, maintenance changes, and enjoying lower prices for jet fuel.
This has resulted in higher margins and increased profits despite declining revenues. Over the next 5 years, the industry can expect slow growth as domestic tourism is expected to increase as well as international trips to Australia.
Margins may also continue to increase as planes, such as the Boeing Dreamline become more fuel efficient. This growth is very minimal, estimated at 1. Comparing financial ratios with Qantas and other companies in the industry makes Qantas look appealing. Here I compared it to some of the other very large airlines in the United States and Singapore.
B took a position in all 4. Created by myself using data from Bloomberg Investment Thesis The reasons to invest in Qantas are rather simple, they have a massive market share of Market Share Their large market share is a huge advantage, since their next largest competitor, Virgin Australia, only has Despite being so large, Qantas has been able to grow faster than the industry in several metrics.
Qantas grew Available Seat Miles 2. They have also managed to grow their fleet of planes substantially at 3. Even with such a large market share, their earnings have been anything but steady, suffering losses inbut turning around in the past 3 years.
Macquarie Research, February The Brand: One of the well-recognized competitive advantages is the power of a brand.
They are also listed as one of the top 10 companies to work for in Australia despite issues with labor several years ago. Furthermore, the dual brand strategy of Qantas and Jetstar allows for price discrimination to take place between wealthier and business-oriented passengers and more economical, tourists type passengers.
No doubt, the Qantas brand is extremely strong in Australia and may offer a competitive advantage that would be difficult for a competitor to steal away from them. It would be very easy for a passenger to choose a flight with competitor Virgin Australia if the price is better, timing is better, or the route is better no layover.
Shareholder Returns Along with the cost-cutting initiative taken 3 years ago, Qantas management has worked hard to increase shareholder returns. Management has said this trend will continue, hoping to buy back shares in the upcoming years and increase their payout of dividends.
Macquarie Research, February Valuations To value the company, I completed 3 separate valuation models and took a weighted average.
The growth rates are low and reasonable because the industry growth will be low as well. I confess a DDM is not the best, knowing that the dividend has been anything but consistent in the past, yet I expect it to increase in the future and wanted to model that in the value. The stock is also well above the and day moving averages.
Bloomberg Terminal Conclusion In summary, I think Qantas is a good business that will earn profits for years to come. However, the valuation is not compelling, and the recent price appreciation may mean that the train has left the station.
There is a considerable risk buying an airline as the industry is sensitive to fuel cost, labor cost, and fierce competition. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article.Qantas Airways Limited provides passenger and freight air transportation services in Australia and internationally.
empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings. Company and market share data provide a detailed look at the financial position of Qantas Airways Ltd, while in-depth qualitative analysis will help you understand the brand strategy and growth prospects of Qantas Airways Ltd.
This is SWOT analysis of Qantas Airlines. Qantas Airlines is the official airline of Australia and is also the biggest player in the country. The official flag carrier of the country Qantas operates flights from Australia to almost 85 top international destinations through a fleet size of aircraft.
The support centre provides IT, human resources and financial services to the six companies owned by Qantas, namely Qantas Link, Australian Airlines, the new arrival Jetstar (Qantas's low-cost domestic carrier), Qantas Flight Catering, Qantas Freight and Qantas Holidays (Qantas Airways Limited ).
Qantas Airways Limited is a Public Company that is ranked number 20 out of the top companies in Australia. The company generates the majority of its income from the Air and Space Transport in Australia industry.
In the company generated total revenue of $16,,, including sales and other revenue. The Qantas Airways Limited has the mission statement to achieve the purpose of them as the best airline of the world. According to Aviation.