qan up up up.., page-16

OPEC is maintaining their current production level with the hope that falling oil price will wipe out US oil producers. Market will then drive up oil price even stronger.

An interesting analysis by comsec about QAN benefit from low oil price as follows:
"A falling AUD usually signals more expensive fuel (all else equal). However, since 30 June the AUD price of jet fuel has fallen 12.5% due to a 28% fall in USD crude (Brent), which has been only partly offset by the falling AUD (down 8%) and the rising refining margin (up 87%). We estimate a A$1 fall in the price of jet fuel (about 1%) adds about $35m to underlying PBT if the fall is sustained for a full year and not passed on as lower airfares. However, hedging means fuel cost savings can take six months to flow through to PBT."


comsec also expects a profit of $159m in FY15:
"We have upgraded to an Overweight recommendation with a higher price target of $2.25ps. The combination of falling operating costs, falling fuel costs and stable to rising yields could see Qantas quickly exceed its guidance of breakeven profitability in 1H15. The competiveness of the global aviation market should ultimately see yields follow fuel costs down, but in the short term we expect these conditions to help push Qantas towards an improved ROA. Our UPBT forecasts have increased 100% to $159m in FY15, 45% to $639m in FY16 and 27% to $954m in FY17. Our price target is up 36% to $2.25. We upgrade our recommendation to Overweight. QAN has made considerable progress in reducing operating costs, and AUD jet fuel cost have also fallen materially. If revenue conditions stabilise, as we expect, this should result in material increases in underlying earnings. We forecast QAN will resume paying dividends in FY16 (4cps)."

http://emailing.commsec.com.au/download/files/i/44379/Wrap/141114_RWrap.pdf

Using the analysis above, the $5 drop last night would have saved $175 mil ( = 5*35). Thus easily exceeding FY15 forecast ($155 mil) ??? It is then hard to predict the share price target???