The two big listed airlines, Qantas (ASX:QAN) and Virgin (ASX:VGN), emerged as clear winners on Monday following a -5% drop in oil prices over the weekend on the back of U.S.-Iran peace talk headlines.
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At time of writing, Virgin’s up over +6.5% to $2.61/sh while Qantas isn’t far behind, up +5% to $9.10sh. The big catalyst here is that lower oil prices mean less expensive jet fuel, meaning – all cards in order – better margins for the flight providers.
Pain for both stocks through the latest US-Iran war crisis is still evident when one looks at YTD returns for both companies. Even after today’s lift, Qantas is still down over -12% YTD, whereas Virgin, since Jan 1, is down more than -25%.
Still, despite the fact that we’ve repeatedly heard the U.S.-Iran war is about to come to an end, the market is hungry for good news and, clearly, many investors see VGN and QAN as a solid buy opportunity on Monday.
Air New Zealand (ASX:AIZ), for its part, missed out on the gains hitting the two majors on Monday. It was still trading flat at 35cps as at lunchtime, but after the company suspended FY26 guidance, that perhaps isn’t too surprising.
Air New Zealand’s poor tidings do shed further light on why VGN and QAN are having such a good day. If we are to take AIZ’s word for it, the cost of jet fuel is ultimately why the latter’s been forced to pull guidance.
“The scale and speed of recent movements in jet fuel prices and refining margins have created a material external shock for the global aviation sector,” AIZ wrote earlier this month. “The airline has moved quickly to mitigate the impact of higher fuel costs to protect earnings and preserve liquidity.”
Last month, Qantas suspended a slew of flight paths, including multiple domestic regional routes, which went down about as well as you’d expect. Last week, Virgin did the same, including flights between Perth and Tasmania.
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