Qantas Airways Ltd

The dominant risk theme in 2026 was the Middle East conflict's impact on jet fuel costs and demand: L1 Capital reported its fund fell nearly 8% in a month on Qantas's exposure to higher fuel costs and softer demand, with the airline cutting domestic flights to manage a fuel bill that could rise by up to $800 million; Pendal Group quantified a potential $500 million net PBT hit in FY26 from elevated fuel costs partly offset by revenue gains. L1 Capital and Equity Trustees also flagged unhedged oil refining margins as a residual headwind even after oil prices normalised. Equity Trustees separately noted governance concerns (a remuneration STI downward adjustment following a cyber incident) and highlighted market concern that a weaker Australian consumer could eventually hit demand, alongside softness in select international markets and at the leisure end of US routes (per Pendal). ALC Capital held a short position as a hedge against Middle East escalation. Sage Capital cautioned near-term earnings pressure from elevated jet fuel despite resilient demand. Most significantly, Blackwattle Investment Partners exited its position in July 2026, citing a combination of pressures: continuing unhedged jet fuel refining margin exposure, softening discretionary domestic travel demand, airport and regulatory costs escalating faster than inflation, and an emerging structural threat to the domestic duopoly from Vietjet's application for an Australian operating licence.