The Net Profit before Tax (NPBT) for FY19 was $32.8m so a NPBT...

The Net Profit before Tax (NPBT) for FY19 was $32.8m so a NPBT of “in excess of $40m” for FY20 is a significant lift. Dissecting the FY19 result AQZ had a NPBT of $14.1m for the first half and $18.7m for the second half. Given the first half of FY20 had a NPBT of $15.5m, this leaves the second half with a forecast NPBT in excess of $24.5m. In other words, profit in the current six months is up by at least a third on last year.

The term “in excess of” leaves some room to over deliver on the $40m NPBT. With 6 weeks still to run, I assume there is a conservatism factor built in.

The announcement also notes that a significant number of new clients have used the company’s charter services and the increased demand is expected to continue through FY21. This bodes really well for the future ongoing growth in this sector, rather than this uplift in flying (and profitability) being short term. AQZ has a further five aircraft that can be easily taken out of storage to meet increased demand. Presumably increased flying from aircraft already owned will significantly add to profitability.

Short term there is some upside hinging on a revitalised Virgin getting back in the air with a renewed vigour.

It will be interesting to see QAN’s reaction. Is their 19% stake finding its way onto the market or does AQZ management’s continued outstanding performance give them even more reason to hang in there (subject to the ACCC) not forcing a sale.