downtrend break, page-83

according to Fosters.....

Qantas Airways Ltd (QAN.ASX, $1.30/sh, Mkt Cap $2.8b) – Price weakness, presents buying opportunity - TRADING BUY

•QAN stock price has been oversold in our opinion, on the back of trading commentary by management in the recent AGM highlighting the impacts of a competitive operating environment that was placing pressure on yields. These are expected to be down 2-3% in 1HCY13.

•While the drop in yields continues to highlight the challenging conditions, we believe material signs of a recovery, both in relation to QAN’s operating environment and the broader economy, will be reflected in 2HFY14 as the benefits of increased consumer and business confidence flow through to increase in demand for both domestic and international travel.

•QAN have been proactive in reducing domestic capacity growth with guidance of 1.5-2.5% for 1HFY14 provided in the FY13 Results. We believe this stance will also be followed by VAH to support earnings growth and the results should start to be reflected in 2HFY14. Therefore growth in yields we view to be a 2HFY14 proposition

•Management have also successfully executed on a rationalisation program, which has resulted in $171m in benefits and targeting to reach $300m in cumulative benefits in FY14. QAN is also largely through its capex replacement cycle and with a leaner cost base provides significant operating leverage to a recovery.

•We continue to retain our bullish view on QAN and are encouraged by the tangible results management have achieved in restructuring the business. With the company now largely through its replacement capex hump, we expect to see FCF growing which can be used towards retiring debt and possibly reinstating a dividend in FY14.

•We believe the recent weakness in the share price represents a buying opportunity. TRADING BUY
http://www.fostock.com.au/announcements/qantas-airways-ltd-qan-asx