Well I guess it depends how you compare the charts. QAN has gone...

Well I guess it depends how you compare the charts. QAN has gone from being worth around 2 VBA shares during most of 2005, to being worth 4 VBA shares now.

When it first listed, a VBA share was worth 0.7x a Qantas share. Its been mostly downhill for VBA relentlessly since then, a VBA share is now worth only 0.25 x a Qantas share.

That looks like a relative underperformance to me.

Over the course of time, high fuel prices are going to affect all airlines in a broadly similar way. Fuel prices won't influence relative share price trends much, smart or lucky management and a sustainable competitive and pricing advantage will.

Qantas has been more sucessful that I expected them to be in using Jetstar to undercut Virgin's initial low cost advantage. It was my opinion that Qantas's two brand strategy would be a mistake, but I was wrong.

Now Virgin's move into USA/Australia flights will be great for the consumer, more flights, lower prices. Its not clear that either airline will profit much from it though. Remember airlines make more money from an absence of effective competition.


Now right now, I would accept the argument that VBA is oversold. It may rebound from being worth a measly 0.2x a Qantas share back to being 0.3x a Qantas share. However I don't see any rabbits in the hat of Virgin which would cause a long term reversal of their profit and shareprice performance. Except some major fiasco at Qantas.