Qantas has made a triumphant return as a top 50 Australian company.
In a rebalancing of ASX indexes, S&P Dow Jones Indices announced today that the airline would be in included in the ASX 50 from March 18.
The airline joins the major banks including the biggest, the Commonwealth, and the world’s biggest miner, BHP Billiton. It replaces billionaire James Packer’s Crown Resorts, which is taking a hit in revenue from its casinos in Macau, on the ASX 50 index.
The move comes after Moody’s Investors Service upgraded the rating for Qantas, ending the airline’s two years as junk-rated credit.
Qantas returned to full year profit last year, reversing the previous year’s record $2.8 billion loss with an underlying profit of $975 million. Last month Qantas posted a 239% increase in half year profit to $688 million.
Its shares have quadrupled since a low of 95 cents in December 2013. They closed yesterday at $3.86, giving the national airline a market capitalisation of almost $8 billion.
And there’s more expected.
Qantas is benefiting from a substantial drop in fuel prices and from an ongoing transformation program which aims to strip out $2 billion in costs.
Moody’s says the fall in fuel prices is expected to reduce the fuel charge by more than $1 billion in 2016, compared to 2014.
The company has achieved $1.36 billion of its $2 billion cost savings target to be realized by 2017.
Qantas is also benefiting from an end of a seat war with Virgin Australia, meaning better profit margins per customer.
The flying Kangaroo has also seen impressive growth in the value of its brand. The Australian national airline is now ranking 17th in the world, up from 21, with a 64% increase in its brand value over 12 months to $US2.18 billion, according to the Brand Finance’s global index.