Could the Qantas Airways Limited (ASX: QAN) share price be worth looking at as more borders open?
The airline has been making numerous moves to capitalise on the border changes that are happening.
For example, Qantas is bringing all of its Australian-based employees back to work by early December 2021, which is happening half a year earlier than expected.
Flights from Sydney to Singapore, Bangkok, Phuket, Johannesburg, and Fiji are resuming ahead of schedule.
Qantas is looking to launch an Australia to India route on 6 December 2021, flying from Sydney with three return flights per week, increasing to daily flights by the end of the year.
The reopening of flights between Sydney and Melbourne (with no quarantine) is another positive that Qantas points to. This route was one of the busiest in the world before the pandemic. The airline is hoping to operate 37 return flights per day by the end of the year.
Qantas CEO Alan Joyce noted how strongly international ticket sales are currently going:
In recent weeks, sales on international flights to and from Sydney have outstripped sales on domestic flights, which shows how important certainty is to people when making travel plans.
While these flights will initially be for Australians and their families, we expect tourists from Singapore, South Africa and India to take advantage of these flights once borders reopen to international visits, which is great news for the industry.
Asset sale to improve the balance sheet
Qantas announced last month it was selling 13.8 hectares of land in Mascot for $802 million to a consortium led by LOGOS Property Group. Settlement of the vast majority of the lots is expected in the first half of FY22, with the funds being used to reduce debt and accelerate the airline's recovery.
Qantas has also entered into discussions with LOGOS about potential future development options for the sites being acquired, including the creation of a dedicated precinct for the airline, as well as the sale of an additional 3 hectares of land that adjoins some of the lots being sold. Qantas expects to complete the evaluation of these proposals in early 2022, and if an agreement is reached, this has the potential to raise the total value of the deal to more than $1 billion.
The precinct would take several years to deliver if it decides to go for it. The airline would need it to drive efficiencies in how it operates and make a material contribution towards lowering its emissions footprint.
Qantas will lease back portions of the land for a period of time while arrangements are made to relocate some of the functions that the land is currently used for and while LOGOS progresses its border development plans.
Is the Qantas share price a buy?
The broker UBS thinks so, with a price target of $6.40. UBS thinks the land sale is a good sale to help the company's balance sheet during this period of difficulty for its profit.
Citi also thinks Qantas is a buy, though the price target is only $5.93.
Based on UBS projections, the Qantas share price is valued at less than 12x FY23's estimated earnings.
