Qantas Airways (ASX:QAN) has the financial capability, including capital expenditure flexibility, to see through any near-term volatility, Jarden said in a Wednesday note.
The airline has demonstrated capabilities to reprice and lower capacity, which is a rational response in a higher fuel environment, Jarden said. The broader airline industry response has seen capacity fall and pricing increase, which indicates a reinforced post-COVID-19 industry rationality.
Qantas provided an around AU$700 million increase to its fiscal 2026 second half fuel cost guidance from AU$2.5 billion to a range of AU$3.1 billion to AU$3.3 billion. This new guidance range considers a AU$200 per barrel fuel price, which Jarden considers optimistic. It anticipates that fiscal 2026 fourth quarter and fiscal 2027 first quarter capacity reductions will likely be considerable.
It reflects a net fuel cost headwind to group profit before tax post revenue⁄capacity offset of AU$200 million per month, lowering its core earnings-per-share forecasts by around 24% in fiscal 2026 and fiscal 2027.
The investment firm retained its buy rating on Qantas and slashed the price target to AU$11.25 from AU$12.70.
Qantas Airways' shares gained 1% in recent Thursday trade.