GETTING an investment handle on the tourist industry is tough. Most overseas visitors will be splurging in sidewalk cafes, gaping at the Sydney Harbour bridge, tottering around the tasting facilities of vineyards and stretched out on the beaches. Many will stay with relatives, and the younger set will be headed to backpacker hostels. The overall economy will certainly benefit. Foreign tourism earns Australia over US$10 billion a year, accounts for 15 per cent of “export” dollars, and employs more than 300,000 people.But, apart from Fosters, and some listed hotel companies, there are few ways to play the story.The best idea might be Qantas, whose share price is steadily gaining altitude at $3.90 The shares dived from a high of $5.05 when competitors Virgin Blue and Impulse Airlines showed up, and they have been as low as $3.07. The company was winged by the high cost of fuel, although its hedging policy is second to none, and the weak dollar discouraged Australian travellers.Worries about the “dog fight” on domestic routes are overblown. As fares tumble, there will eventually be a major upsurge in air travel within Australia.Anyway, about 70 per cent of Qantas earnings come from international travel. It carries more than one third of all passengers flying to and from Australia. Interim figures out this month should show the group is on track to top last year’s $435 million profits. The shares offer a fully franked dividend, just shy of 6 per cent.Stockbrokers Solomon Smith Barney reckon the stock is worth $4.60 in the medium term and Goldman Sachs has hung up a 12-month target of $5.70.A continued recovery in the local currency and some relief on oil prices would be the two necessary drivers.The wild card would be changes to the law which restricts overseas ownership of the carrier to 49 per cent. British Airways already has 25 per cent and total offshore ownership is now 45.5 per cent. Margaret Jackson, who now chairs Qantas, is confident the government will agree to loosen the shackles to give the airline greater flexibility in raising equity capital offshore.New CEO Geoff Dixon is taking over from James Strong this week and former Ansett boss Rod Eddington, who now heads BA, is arriving in the boardroom soon to represent its interests. This is a formidable team to have at the controls and they should give Qantas shareholders a safe journey.
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