Flight Club

Hey Superheroes,

It looks like global markets have decided to take a breather after a long climb up.  The Fear and Greed Index, which uses indicators like market momentum and the VIX,  is now trending at “Extreme Fear” levels. Analysts speculate macroeconomic indicators and government policies to be contributors to falling markets. 

Speaking of policies, remember earlier this month when U.S. President Donald Trump announced his plan to impose tariffs on Canadian, Mexican and Chinese goods? Well, he’s just confirmed after a month-long pause that they really are going live. Guess we’ll have front row seats to how that plays out. 

Meanwhile, Aussie half-year earnings season is coming to a close. Let’s take a look at the news that moved markets. 

Qantas’ rebound after years of turbulence

Qantas has come roaring back with its half-year results, reporting higher numbers in the first half of FY25 compared to in FY24.

Qantas shares jumped up to a high of ~7% yesterday after earnings release, before ending the day up 5.8%.

✈️ Qantas’ impressive turnaround

The airline’s strong performance comes after years of belt-tightening and restructuring. Some of the key numbers from the report include:

• Revenue: A$12.1B (up 9% from H1 FY24)
• Net income: A$923M (up 6% from H1 FY24)
• Dividend per share: 26.4 cents (includes special dividend; first dividend in six years)

The airline’s profitability is underpinned by several factors including an increase in business travel, strong demand and an ongoing recovery in international markets.

In addition to the stronger financial performance, Qantas also noted higher net promoter scores across both Qantas and Jetstar customers. 

Qantas Loyalty, the airline’s loyalty program segment, saw an 11% increase in active members compared to last year.

Virgin Australia spreading its wings

On the same day as Qantas’ earnings was released, Virgin came out with big news of its own.

After months of talks, the Australian Government has finally given Virgin the green light for its partnership with Qatar Airways.

The latter will be acquiring a 25% stake in Virgin, while Virgin passengers will soon have access to Qatar’s extensive global network. This would mark Virgin’s first return to long-haul international flights since COVID-19.

P.S. Did you know Qantas and Qatar Airways also have an existing frequent flyer partnership? 

🌍 Time to try again

Straight after the news, Virgin’s CEO Jayne Hrdlicka was quoted saying that the airline is now ready to relist on the ASX.

Virgin Australia was a publicly-listed company for 17 years before it collapsed into administration in 2020. U.S. private equity firm later bought Virgin out, turning it into a privately-owned company and delisted from the ASX.

There had previously been talks of Bain preparing to relist Virgin, however these plans had been delayed.

The challenge travel agencies are facing

While the two airlines clunk their champagne glasses, not all in the tourism industry could share good news.

Travel agencies Flight Centre and Helloworld both posted weak earnings results, stating that cost-of-living pressures and lower airfares have impacted their bottom lines.

Flight Centre shares fell 10% while Helloworld shares fell 19% on the days each released their results.

👀 Still paying dividends

While Flight Centre actually reported a 7% increase in underlying pre-tax profit (A$117M) this was still 8% lower than market expectations. Despite the lower-than-expected performance, Flight Center will be paying out a dividend of 11¢ per share.

Meanwhile, Helloworld’s net profit for the first half dropped by 32% (down to $10.8 million) as transaction volumes fell 7%. Similarly however, the travel company will be rewarding shareholders with a dividend of 8¢ per share.

🔦  Some other things we’re shining the Spotlight on:

STAR LOST ITS SHINE: Star Entertainment called for a trading halt earlier today after the delayed release of its half-year results. Trading resumed after The Star revealed it could only release its half-year report if it secures a financial lifeline by the end of today, amid growing concerns of a potential collapse. The company’s shares fell 15% today.

ZIP IT UP: Zip’s stock surged to a high of 18% on Tuesday after posting record cash earnings, signalling strong growth in the BNPL space. Despite ongoing economic pressures, Zip continues to expand its market share and positioning itself as a leader in the evolving BNPL landscape.

DOMINO EFFECT: ASX-listed Domino’s Pizza has posted a A$22M loss in H1 FY 2025, its first loss in 20 years, following a series of store closures. This setback raises questions about the company’s ability to maintain its competitive edge in the fast food sector. Its shares are down nearly 12% over the last week.

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