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The Qantas share price has just been given a Trump bump

Brendon Lau
Qantas

The Qantas Airways Limited (ASX: QAN) is taking off today and outperforming the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index – and we may have US President Donald Trump to thank for that.

The QAN share price jumped 1.5% to $5.51 ahead of the close when the ASX 200 has only managed a 0.4% gain as falls by big miners BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) held the market back.  

It’s not often that Trump does ASX-listed companies any favours given how he’s been blamed for dragging down global growth with his one-man trade war crusade against several countries.

Qantas on Team America

Who would have thought he would come out batting for Qantas? Trump is reported to be considering overturning a block imposed by former President Obama on a joint venture arrangement between the flying kangaroo and American Airlines, according to the Australian Financial Review.

The Obama administration stopped the tie-up due to worries that consumers would suffer from a potential lessening in competition on the trans-Pacific route.

The AFR reports that the alliance between Qantas and American Airlines have been granted tentative approval by US regulators and a final decision is expected within weeks even though the US Department of Transportation had reservations about the impact on competition.

Blue sky savings for passengers?

There was no such doubt in Qantas’ and American Airlines’ minds. They believe consumers will be US$310 million ($443 million) better off with US$89 million of this coming from lower ticket prices.

It is reported that the partnership will allow the airlines to launch new routes that neither carrier currently serve, including Brisbane to Chicago and Brisbane to San Francisco.

They also claim that the alliance will provide an extra 180,000 additional passenger trips a year and consumers can look forward to improved schedules, connections and reduced travel times.

I guess they would say that, although it is worth nothing that there’s already lower competition on the Australia-US route as Virgin Australia Holdings Ltd (ASX: VAH) has a partnership with Delta and Air New Zealand Limited (ASX: AIZ) has an alliance with United.

Not all is Trump

But you shouldn’t give Trump all the credit for Qantas’ share price outperformance today. The crash in the overnight oil price is also giving the stock a boost.

Oil is now in a bear market (which is defined by a peak-to-trough fall of 20% of more) and some experts believe there is further downside risk to crude prices.

I am not sure how much that would benefit Qantas though as it’s better hedged against fuel price fluctuations than most of its rivals.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019