The Qantas Airways Limited (ASX: QAN) share price has certainly been flying high this year, putting on a gain of 76% since the turn of the year for shareholders.
This has left its shares trading within a whisker of the all-time high they set back in 2007.
Can its shares continue ascending?
In the last two years Qantas has benefited greatly from a combination of low fuel prices, cost-savings, and excellent capacity management.
This ultimately led Qantas to report its second-largest full-year profit in its history last month.
Underlying profit before tax down came in at $1,401 million, just a touch above its full-year guidance range of $1,300 million to $1,400 million.
The star of the show was its Domestic segment which turned a 1.4% decline in revenue into a 12% increase in underlying earnings before interest and tax.
With management cutting its Domestic capacity slightly in the first-half of FY 2018, I expect a similarly strong performance from the segment over the next six months which could potentially drive its share price higher again.
Especially if the company's International segment puts in an improved performance. The segment was arguably the only disappointment in FY 2017, posting a 36% decline in underlying earnings.
Pleasingly, I think new routes into growing Asian markets and the Australian tourism boom should put the segment in a position to return to growth in FY 2018.
Should you invest?
While the airline industry is a notoriously difficult one to invest in, I do feel that things look quite favourable for the industry at present.
With oil prices looking likely to remain where they are for the foreseeable future, global tourism increasing at a quick pace, and planes becoming more economical, I think Qantas is in a solid position to continue to generate high levels of free cash flow.
While most airlines should benefit from these tailwinds, Australia's flag carrier remains my first choice, some distance ahead of Virgin Australia Holdings Ltd (ASX: VAH) and AIR N.Z. FPO NZX (ASX: AIZ).
In light of this, I would suggest investors look to snap up shares on any weakness.
