(AUSTRALIA) – Alan Joyce’s 15-year tenure as CEO of Qantas saw the airline’s shares rise by 215.5%, including reinvested dividends, from late November 2008 until his retirement in 2023.
This increase in share price under Joyce’s leadership, while significant, lagged behind the broader S&P/ASX 200 Accumulated Index, which saw total returns of approximately 266.8% during the same period.
It’s worth noting that Qantas, under Joyce’s leadership, experienced significant fluctuations in profitability, often swinging from losses to profits.
These fluctuations impacted the airline’s ability to pay regular dividends, unlike many other companies on the S&P/ASX 200, which typically yield around 4% annually through dividends.
Some investment experts, like Steve Johnson, founder of Forager Funds Management, argue that the last decade’s performance of Qantas might not have been significantly different under a different CEO.
A look at share price performance
Johnson emphasizes that the airline operates in a duopoly or near-monopoly domestic market, which provides a strong foundation for profitability.
In terms of share price appreciation, Qantas achieved a 143% gain during Joyce’s leadership, with shares rising from $2.37 to $5.75 upon his retirement.
This outperformed the S&P/ASX 200’s return of 94.4%, excluding dividends.
While Joyce guided the airline through challenging times, including the global financial crisis and the COVID-19 pandemic, the international airline landscape saw varying degrees of share price growth for competitors.
For instance, United Airlines in North America saw a 242% increase in share price since November 2008, British Airways rose 130%, Singapore Airlines gained 59.6%, and Lufthansa in Germany saw a 44.4% increase.
Qantas’ annualized return during Joyce’s leadership was 6.2%, or 8.1% when including dividends, compared to the S&P/ASX 200’s annualized return of 4.6%, or 9.2% when including dividends.
Going forward, Qantas faces competition from global carriers and the ongoing challenge of managing labor relations.
The airline’s debt levels have fluctuated significantly during Joyce’s tenure, reaching $5.6 billion in 2016 before decreasing to $2.9 billion in 2023.
Despite these challenges, broker UBS rates Qantas as a buy with a price target of $8.15, and it expects adjusted profit before tax to remain flat in the next financial year, with earnings per share forecasted to grow around 7% due to a $1 billion share buyback program extending into 2024.
Qantas shares reached $5.75 but closed at $5.64 on the day of Alan Joyce’s retirement.
