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Pick of the Week

This week we have been focusing on a new tactical trade idea for Qantas. We are far from long-term buyers of the Airline sector but we think given the economic environment things might start to improve.

A few months ago Qantas finally acknowledged that it has stopped flooding the market with spare capacity to maintain market share. This is positive for the market in general and we can see that load factors are slowly starting to increase month on month out of Sydney and Melbourne.

Second to this, the price of oil has dropped dramatically over the past few months and hence the cost of jet fuel is at its lowest point in 10 years.

The third and final point is that business confidence is improving. This should keep the busy Sydney to Melbourne route lucrative for the group.

Overall we see some capital upside in the Qantas 4.5% 2022 bonds in the next 12 months. Importantly this is a high risk opportunity – not a buy and hold.

These are offered to sophisticated investors in parcels of $20,00 by FIIG.