Investing

Just before the June long weekend Qantas shares were hammered on the sharemarket. They fell 30 per cent in one day to below $1 which valued Australia’s national carrier at around $1 billion… even though it has $3 billion in the bank.

The market dumped Qantas shares because of concerns about its restructuring, flat profits and the losses from the international business.

The airline business is certainly risky. Things like oil prices, terrorist scares, safety concerns and a massive level of competition (often subsidised by foreign Governments) make it a tough business.

But Qantas is one of the best run airlines in the world. Sure it has some tough decisions to make, and ownership restrictions need to eased, but when a strong company like Qantas with a great brand and money in the bank gets hammered it can present a good buying opportunity.

Qantas didn’t stay under $1 for long.

It’s a good lesson to be on the lookout for ugly ducklings with a strong brand and business when they fall out favour with the market.