Can Qantas stock take-off ?

Qantas CEO, Alan Joyce’s recent address at an industry event didn’t give me any incentive to keep digging through the company’s numbers to determine whether the business was worthy of investment.

Mr Joyce’s used the upcoming Australian election as a reason for the conservatism in spending money on flights but once the election is over, he “hopes” confidence will be restored.

The industry in Australia has had extra capacity and this has slowly fallen, yet Mr  Joyce says that they will not rule out adding capacity to the domestic market, basically in order to help them increase their market share. ???&$Y*@#$*@#!)

In a domestic market that is practically a duopoly and where international flights are inter-continental and wrapped up in code shares agreement together with the cost cutting measures conducted over the past few years such as self check-in and outsourcing of maintenance, Qantas still can’t post a net profit.

In fact, Qantas’ stock price has declined 46% since Mr Joyce took over in November 2008, compared to the ASX 200 Index rising 55% over the same time.

Maybe Qantas is a stock worth looking at, after all. Comparing its current valuations to other airlines isn’t inspiring but with a stock price nearing its all-time low, you may need to look at it from the perspective of where the company and it’s figures are going to be, rather than where it currently is.

To start with, imagine what the stock price would do, if Mr Joyce was replaced?