Qantas Airways Limited (ASX: QAN) has seen its share price lose 30% of its value in the past few months as the airline faces a number of headwinds.
Oil prices had been rising and are a major cost (see below), international competition has intensified, and weaker than expected demand both internationally and domestically are all buffeting the airline.
From a share price of over $4.00 in April, shares are currently trading at around $3.00, having hit a low of $2.58 last month.
The following chart shows how Qantas has turned around the earnings before interest and tax (EBIT) of its 3 big divisions: Domestic, International and Jetstar over the past 18 months.
This chart shows where Qantas spends its revenues and shows how the falling oil price has translated into big savings.
After generating an underlying profit after tax of $921 million in the first six months of the 2016 financial year from revenues of $8.5 billion, Qantas is on track to resume paying dividends either later this year or early next year.
Foolish takeaway
The rapid rise and subsequent fall in the Qantas share price shows how exposed the airline is to external factors that can impact on its business. It's one reason why Warren Buffett dislikes the sector so much, and why I won't be investing in Qantas shares anytime soon.
