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Qantas Airways Limited1H14 Results
27 February 2014
2
OverviewImmediatepriorities,longtermcompetitiveness
1H14earningsdeteriorationinverydifficultoperatingenvironment
Currentchallenges:
Capacitygrowthaheadofdemandpressuringyields
Distortedaviation
marketplace
Uncompetitivecostbaseandworkpractices
HighAUDfuelcosts,mixedeconomicconditions
Immediatepriorities:
Earningsrecoverythroughacceleratedbusinesstransformation
Rightsizingfleetandnetwork
Capitalexpenditure(capex)alignedwithfinancialperformance
STRENGTHENINGOURCOREBUSINESSFORLONGTERMCOMPETITIVENESS
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1H14FinancialResults
1H14UnderlyingPBT1 lossof$252minlinewithguidance;StatutoryLossAfterTax$235m
Revenuedeclinefromyieldandloadpressure,recordfuelcost
Strongliquidity
position
$3b2
Capex weightedto1H14 $0.9b,(2H14:$0.3b)
Nointerimdividenddeclared
KEYGROUPFINANCIALMETRICS 1H14 1H13 VLY3
Revenue($M) 7,903 8,242 4%
YieldexcludingFX(c/RPK) 10.10 10.43 3%
Comparable
Unit
Cost4
(c/ASK) 5.04 5.13 2%Netfreecashflow5 ($M) (358) 205 >(100)%
1. Underlying Profit Before Tax (PBT) is a non statutory measure and is the primary reporting measure used by the Qantas Groups chief operating decision making bodies, being the Chief ExecutiveOfficer, Group Management Committee and the Board of Directors, for the purpose of assessing the performance of the Group. All line items in the 1H14 Results Presentation are reported on anUnderlying basis . Refer to Supplementary Slide 4 for a reconciliation of Underlying to Statutory PBT. 2. Includes cash and cash equivalents and $630m undrawn revolver facility at 31 December 2013.3. Variance to last year. Favourable variances are reported in green. 4. Comparable Unit Cost is calculated as Underlying PBT less passenger revenue and fuel per ASK adjusted for the impact of theBoeing settlement (1H13), B767 phased fleet retirement, share of the Groups associate losses, change in FX rates and movements in average sector length. Refer to Supplementary Slide 9 for furtherdetail. 5. Net free cash flow is operating cash flows less investing cash flows. Free cash flow is a measure of the amount of operating cash flows that are available (i.e. after investing activities) to fundreductions in net debt or payments to shareholders.
4
220
(252)
190
(125)
(90) (10)
(138)
(187)
(112)
1H14FinancialResults
UNDERLYINGLOSSBEFORETAX($M)
1H13Underlying
PBT
Yield
Costbaseimprovement1
1H14Underlying
PBT
Boeingsettlement
in1H13Load
1. Cost base improvement includes Qantas Transformation benefits (excluding passenger revenue initiatives) as well as other cost and efficiency improvements in Jetstar Group, Loyalty, QantasFreight and Corporate. 2. Company estimate. Includes wage inflation.
FuelpriceandFX
Associatelosses
CPI2
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UnderlyingIncomeStatementSummary
$M 1H141 1H131,3 VLY%
Netpassengerrevenue2 6,786 7,042 (4) Sustainedaggressivecompetitoractivityimpactingyieldandload
Netfreightrevenue 500 475 5 ConsolidationofAustralianairExpress4;reducedinternationalcapacity
Otherrevenue2 617 725 (15) 1H13Boeingsettlement$125m
Revenue 7,903 8,242 (4)
Operatingexpenses(excludingfuel) 4,797 4,770 (1) QantasTransformationinitiatives;0.7%capacitygrowth
Fuel 2,255 2,181 (3) 9%increaseinaverageAUDfuelpricebeforehedging;offsetby3%fuelefficiency5 improvements
Depreciationandamortisation 746 719 (4) Netincreaseof7ownedaircraft
Noncancellableaircraftoperatingleaserentals
261 265 2 Netreductionof2aircraftleases
UnderlyingEBIT (156) 307 >(100)
Underlyingnetfinancecosts (96) (87) (10) Increaseinnetdebt
UnderlyingPBT1 (252) 220 >(100)
1. All line items presented on an Underlying basis. Refer to Supplementary Slide 4 for a reconciliation of Underlying PBT to Statutory PBT. 2. Net passenger revenue has been adjusted in 1H14 to includerevenue from charter operations previously reported in Other revenue. 1H13 Net passenger revenue and Other revenue have been restated accordingly. These items remain excluded from thecalculation of yield. 3. 1H13 has been restated for the impact of the mandatory application of the revised Accounting Standard AASB 119: Employee Benefits . 4. Following acquisition in November 2012.5. Fuel efficiency measured as litres per Available Seat Kilometre (ASK).
6
OtherItemsNotIncludedinUnderlyingPBT1
$M 1H14 1H13
Statutory(loss)/profitbeforeincometaxexpense (305) 148
AASB139marktomarketmovementsrelatingtootherreportingperiods
(54) (34)
Redundancies,restructuringandothertransformationcosts
59 68 OngoingQantasTransformationinitiativesincludingconsolidationof
AvalonHeavyMaintenanceandclosureofAdelaideCateringfacility
Netimpairmentofproperty,plantandequipment 23 62 B763retirement
Netprofitondisposalofinvestmentinjointlycontrolledentity
(30)
B7878introductioncosts 9
Other 16 6
TotalItemsnotincludedinUnderlyingPBT 53 72
UnderlyingPBT (252) 220
1. Items which are identified by Management and reported to the Qantas Groups chief operating decision making bodies as not representing the underlying performance of the business are notincluded in Underlying PBT. The determination of these items is made after consideration of their nature and materiality and is applied consistently from period to period. Items not included inUnderlying PBT primarily result from revenues and expenses relating to business activities in other reporting periods, major transformational/restructuring initiatives, transactions involving investmentsand impairments of assets outside the ordinary course of business.
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CashFlowandDebtPosition
DEBTPOSITIONANDGEARING
1H14 2H134 VLY%
Netonbalancesheetdebt2 ($M) 3,829 3,226 (19)
Gearingratio3 49:51 46:54 (3)pts
SUMMARISEDCASHFLOW
$M 1H14 1H13 VLY%
Cashgeneratedfromoperations 692 788 (12) 1H13Boeingsettlementpartiallyoffsetby1H14improvementin
forwardbookingsdrivenbystrategicpartnershipsincludingEmirates
Otheroperating
cash
flows1 (111) (8) >(100) 1H13redundancycostsoffsetbyStarTrackExpressdividendsaspartofsaletransaction
Investingcashflows (939) (575) (63) Capexweightedto1H14vs2H14;1H13includesproceedsfromsale
ofStarTrackExpress
Freecashflow(NetOperating&Investing) (358) 205 >(100)
Financingcashflows (82) (547) 85 SaleandleasebackofB787sandB738s;1H13repaymentof
borrowings
Netchangeincashheld (440) (342) (29)
EffectsofFXoncash 6 2 >100
Cashatendofperiod 2,395 3,058 (22) Maintainingstrongliquidityposition
1. Includes total of cash payments to employees for redundancies, interest received, interest paid, dividends received from investments in entitles accounted for using the equity method, and income taxespaid. 2. Net on balance sheet debt includes interest bearing liabilities and the fair value of hedges related to debt less cash, cash equivalents and aircraft security deposits. 3. Gearing ratio is net debtincluding operating lease liability to net debt including operating lease liability and equity (excluding hedge reserve). The gearing ratio is used by Management to represent the Qantas Groups debtobligation including obligations under operating leases. 4. 2H13 restated for the impact of the mandatory application of the revised accounting standard AASB119: Employee Benefits. 7
8
CapitalManagementandTreasury
Strongliquidity$3b1
Cash$2.4b
$630mundrawndebtfacilities
Nomajor
unsecured
maturity
until
April
2015
~30%oftotalpassengerfleetdebtfree
31newunencumberedaircraftsinceFY10
7 unencumberedaircraftadded1H14
20midlifeaircraftbecomedebtfreeinFY14
Youngaveragefleetage7.6years2
Majorityofhedgingeffectiveatcurrentrates3
UNSECUREDDEBTMATURITYPROFILE$M
1.Includescashandcashequivalentsand$630mundrawnrevolverfacilityat31December2013. 2.AveragefleetageoftheGroupsscheduledpassengerfleetbasedonmanufacturingdate. 3.Asat25February2014
0
200
400
600
800
1000
FY14 FY15 FY16 FY17 FY18 FY19 FY20
SyndicatedLoanFacility Drawn
Bonds
2H14EXPOSURE3 %HEDGED
Fuelcosts 98
Operatingforeignexchange 88
FLEETAGE2(YRS)
7.0
7.5
8.0
8.5
9.0
9.5
10.0
FY08 FY09 FY10 FY11 FY12 FY13 1H14
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1H14 Segment Results
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QantasDomestic
UnderlyingEBIT$57m
1H14demandbelowmarketcapacitygrowth
Resourcessectorsoftening(QLDandWA)
Corporateaccount
pricing
pressure
UnfavourablefuelpriceandFX$40m
ComparableUnitCostimprovement1%1
1H14 1H13 VLY%
Revenue $M 3,086 3,220 (4)
UnderlyingEBIT $M 57 218 (74)
ASKs M 19,227 19,187 0.2
Seatfactor % 74.9 76.9 (2.0)pts
1. Comparable Unit Cost is calculated as Underlying EBIT less passenger revenue and fuel per ASK adjusted for Boeing settlement (1H13), B767 phased fleet retirement, change in FX rates andmovements in average sector length. 2. Source: Monthly BITRE data January 2009December 2013.
Maintained>80%ofcorporateaccountsbyrevenue
Fleetrenewalimprovingeconomics
B734fleetexitcompletedFebruary2014,9xB763retiredinlast2years
Recordcustomeradvocacylevels
Superiorontimeperformance(OTP)2 5th yearrunning,includingunprecedented
12outof12monthsin2013
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QantasInternational
UnderlyingEBITlossof$262m
Competitorcapacitygrowthof9%1
Europe,South
East
Asia
yields
most
pressured
UnfavourablefuelpriceandFX$47m
StrongComparableUnitCostimprovement4%2
ReducedB747heavymaintenancecosts
~5%increaseinfleetutilisation
Improvedeconomicsfromreconfigurations
Customer
advocacy
continues
at
record
levels
3
Enhancedcodesharenetwork,seamlesscustomerproposition
throughEmiratesalliancedrivingpositivesentiment
1. Source: BITRE (July 2013November 2013). 2. Comparable Unit Cost is calculated as Underlying EBIT less passenger revenue and fuel per ASK adjusted for the impact of the Boeing settlement (1H13),change in FX rates and movements in average sector length. 3. Since recording commenced in February 2003.
1H14 1H13 VLY%
Revenue $M 2,621 2,818 (7)
UnderlyingEBIT $M (262) (91) >(100)
ASKs M 29,863 29,625 0.8
Seatfactor % 80.8 82.7 (1.9)pts
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JetstarGroup
UnderlyingEBITlossof$16m
DomesticAustraliaprofitable
Associatelosses$29mduringstartupphase
Competitiveenvironment
impacting
yields,
inparticularSouthEastAsia
UnfavourablefuelpriceandFX$31m
LowCostCarrier(LCC)businessfundamentalsremainstrong
2%ControllableUnitCost1 improvement
1H14 1H13 VLY%
Revenue $M 1,671 1,757 (5)
UnderlyingEBIT $M (16) 128 >(100)
ASKs M 22,754 22,562 0.9
Seatfactor % 78.5 79.0 (0.5)pts
1%ancillaryrevenueperpassenger2 improvement
IntroductionofB787intolonghaulbusinesstoimproveunitcost,customerbenefits
Recordcustomer
advocacy
levels
StrongandgrowingbrandpresenceacrossAsiaPacific
1. Controllable Unit Cost is calculated as total underlying expenses excluding fuel, carbon tax, Jetstar Asia and share of associate losses, adjusted for change in FX rates and movements in averagesector length per ASK. 2. Ancillary revenue per passenger is calculated in local currency and excludes management and branding fee revenue, adjusted for change in customer mix.
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RecordUnderlyingEBIT1 $146m,up7%
Up10%excludingnewbusinessstartupcosts2
Billings3 up9%,
double
digit
credit
card
point
sales
8 newQFFpartnersdrivingmorewaystoearn
Sustainedrecordcustomeradvocacylevels
9.8m4 membersandgrowing; FY14target10m
3millionawardsredeemed,up11%
Growth initiatives exceedingexpectations
QantasCash over200,000activations4
AQUIRE ~25,000SMEspreregistered;morethan10
keypartnersincorecategories;31Marchlaunchdate
QantasLoyalty
1H14 1H13 VLY%
UnderlyingEBIT $M 146 137 7
Billings $M 662 607 9
DeferredRevenue Growth5
$M 59 45 31
Members M 9.7 9.0 8
1.RecordUnderlyingEBITresultcomparedtopriorperiodsnormalisedforchangesinaccountingestimatesofthefairvalueofpointsandbreakageexpectationseffective1January2009.2.QantasCashandAQUIREstartupcosts. 3.Billingsrepresentpointsalestopartners.4.AsatFebruary2014. 5.Deferredrevenuegrowthfrom1July2013 and1July2012respectively.
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QantasFreight
1.Saleof50%stakeinStarTrackExpresstoAustraliaPostandacquisitionof100%ofAustraliaairExpresscompleted13November2012.
UnderlyingEBIT$11m
SaleofStarTrackExpressandacquisitionof
AustraliaairExpressduring1H131
Challengingairfreightmarkets
Internationalcapacityreductions
AustraliaairExpress1 integrationcompleted
Fullrunratebenefitsfrom2H14
Exitof1B747freighterin2H14
Focusoncostreductionandservice
improvementthroughtechnology
1H14 1H13 VLY%
Revenue $M 568 531 7
UnderlyingEBIT $M 11 22 (50)
Capacity
(InternationalAFTKs) B 1.8 2.0 (8.2)
Load(International) % 53.9 55.9 (2.0)pts
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Group Strategy Update
16
GroupStrategyUpdate
1. Marketconditions
2. TrackrecordofdeliveringTransformation
3. Immediatepriorities
AcceleratingQantasTransformation
Rightsizingfleetandnetwork
Deliveringforcustomers
Ourpeople
Realigningcapex withfinancialperformance
4. Structuralreview
update
5. Longtermcompetitiveness
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1.MarketConditions InternationalCompetitorcapacitygrowthconstrainingyields
CompetitorcapacitygrowthintoAustralia
runningatdoubleglobalaverage:
46%increase
since
FY09,
vs
global
growthof21%from200920131
Liberalaviationpolicy,attractiveAUD
Growthledbystateownedairlines
FY14marketcapacityforecasttogrow9%
Shiftingglobalaviationlandscape,new
alliances battleamonghubcarriers
TotalMarket
+9%
FY14INTERNATIONALCAPACITYGROWTH2
UK/Europe&
MiddleEast
+8%
Singapore/
Malaysia
+24% China+4%
USA3 +2%
Tasman +4%Tasman+4%
1.BITREandIATACarrierTrackerdataforindustryASKgrowth.2.GrowthpercentagesbasedonseatnumbersvsFY13.AlldatasourcedfromBITREexceptFY14Q2Q4whichisbasedonFY13seatsadjustedfordaysinFY14Q2Q4andcarriermarketannouncementsasatthe31December2013.3.DoesnotincludeHawaii.
18
1.MarketConditions DomesticCapacityoversupplyexacerbatingweakunderlyingdemand
CompetitorgrowthhasoutpacedQantas
GroupsincebeginningofFY12
4.5bASKsaddedbyVirginAustralia
Group1,2 vs4.3bASKsbyQantasGroup3
Demandimpactedbyresourcessectorsoftening,cautiousbusinessenvironment,
lowconsumerconfidence
Growthaheadofmarketdemandhas
compressedyieldsacrossallsegments
Domesticprofitpoolreducedfrom
>$700minFY12to
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QANTAS VIRGIN
ShareRegister
Ownership Restrictions
Singleforeignshareholder Max25%1 Nocap AirNZapprovedfor26% holding4
Totalforeignownership Max49%1 Nocapondomesticbusiness ~75%foreignowned
Totalforeignairlineownership Max35%1 Nocap 64%ownedby3stateownedforeignairlines
StateownedForeignAirlines
Govtownership
OwnershipinVAH3
Etihad 100% 19.9%
SIA2 56% 19.8%
AirNZ2 51% 24.5%
1.MarketConditions DomesticUnevenplayingfielddistortingmarketplace
Stateowned
ForeignAirlines
Institutions
&Other
Virgin
Group
Cashinjections:
Nov12 $105mshare
placementtoSIA
Nov13 $350mequity
raisingunderwrittenbyairline
shareholders
Institutions
Other
1.AspertheQantasSaleAct1992. 2.SingaporeAirlines,AirNewZealand 3.EtihadandSingaporeAirlines holdafurther1.34% economicinteresteach,heldviaanequityswap,subjecttoForeignInvestmentReviewBoardapproval. 4.ApprovalfromForeignInvestmentReviewBoard.
20
1.MarketConditions Conclusions
Competitiveintensityincoremarketstopersistinshortterm
Revenuewillremainunderpressure
AUD
fuel
to
remain
high
Distortedaviationmarketplace
Inresponsetounprecedentedchallenges,wemuststrengthenourcorebusinessand
driveearningsrecoverythroughacceleratedbusinessandcostbasetransformation.
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2.TrackRecordofDeliveringTransformation
SinceFY09,Qantashasfacedincreasinglychallengingenvironment:
Groupyieldsdown11%1 (~$1.2bimpactonrevenue)
Adverseimpact
of
fuel
price
and
FX
of
>$500m
(FY13
vs
FY09)
Domesticcarbontaxunrecovered($106minFY13)
FromFY09FY13,pressuresweremitigatedbytransformationinitiatives:
ComparableUnitCost2 reducedby19%,(21%reduction1H09to1H14)
Significantinroadsintolegacycostbaseandworkplacepractices
Includingmajorinitiatives:
ACTION TIMEFRAME TOTALBENEFIT
Heavy maintenance Consolidated3basesto1 FY10toFY13 $110m
Commercial Alliances,codeshare
Cost ofsale
FY10toFY13 $280m
Network Exitunderperforming routes
Utilisationandscheduling
FY10 toFY13 $250m
1. Adjusted for movements in average sector length. 2. Comparable Unit Cost is adjusted to aid comparability between reporting periods. Comparable Unit Cost is calculated as net expenditure(Underlying PBT less passenger revenue and fuel) per ASK adjusted for the items listed in the table on slide 22.
22
FTEs FY08 FY13 %change
QantasBrands 29,736 27,384 (8)
Jetstar 2,735 5,201 90
QantasGroup 34,295 33,265 (3)
ASKs(B) 127 140 10
Passengers(M) 39 48 23
2008 2013
2.TrackRecordofDeliveringTransformationSignificantinroadsintolegacycostbaseandworkplacepractices
IMPROVEDFTE2 EFFICIENCY19%UNITCOSTREDUCTIONFY09TOFY13,
21%UNITCOSTREDUCTION1H09TO1H14
GroupFTE/Passengerdown22%
1. Comparable Unit Cost is adjusted to aid comparability between reporting periods. Comparable Unit Cost is calculated as net expenditure (Underlying PBT less passenger revenue and fuel) per ASKadjusted for the items listed in the table above. 2. Full Time Equivalent employee
UnitCost 1H09 1H14
NetExpenditure(excludingfuel) 3,767 3,754
ASKs(B) 64 72
UnderlyingUnitCost(c/ASK) 5.90 5.23
1H14B767phasedfleetretirement (0.03)
1H14 Associatelosses (0.04)
1H14ImpactofCarbonTax (0.08)
CumulativeFX 0.09
SectorLength (0.50)
ComparableUnitCost1 (c/ASK) 5.90 4.67
21%reduction
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3.ImmediatePrioritiesOurguidingstrategicprinciplesareconsistent
Safetyisalwaysourfirstpriority
Thefirstchoiceforcustomersineverymarketweserve
Maintainingdualbrandstrengthindomesticmarket
ReshapingQantasInternationaltoremaincompetitive
MaintainingtheJetstaropportunityinAsia
BroadeningQantasLoyaltyforstrong,diversifiedearnings
Drivingefficiency
and
productivity
24
3.ImmediatePrioritiesButwehavetochangeandaccelerateimplementation
EARNINGSRECOVERYTHROUGHBUSINESSTRANSFORMATION
STRENGTHENINGOURCOREBUSINESS
Acceleratingcostreduction
Rightsizingfleetandnetwork
Workingexistingassetsharder
Deferringgrowth
Aligningcapex tofinancialperformance
Acceleratingsimplification
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3.AcceleratingQantasTransformationExtensiverestructuringincompressedtimeframe
TARGET:$2BCOSTSAVINGSBYFY17
Productivity
$600m
Rightsizing
(FleetandNetwork)
$600m
Technology
$200m
Supplier
$150m
Consolidation
$450m
RightsizingFleetandnetworkchanges
ProductivityImprovingefficiencyandutilisation
ConsolidationRationalisationofactivities
TechnologyEnhancingefficiencywithtechnology
SupplierImprovedtermswithsuppliers
26
3.AcceleratingQantasTransformationExtensiverestructuringincompressedtimeframe
~250INITIATIVESACROSSQANTASGROUPTOREMOVE$2BCOSTSBYFY17
MajorInitiatives
Outcome Rightsizing Productivity Consolidation Technology Supplier
Benefit($m) 600 600 450 200 150
Definition Fleet,utilisationand
networkchanges
Improvingefficienciesand
utilisation
Rationalisationof
activitiestocease
costs
Enhancingefficiency
withtechnology
Improved termswith
suppliers
Topinitiatives 1. Domesticfleet
utilisation
2. International
network
optimisationand
fleetutilisation
3. Acceleratedfleet
retirement(non
reconfiguredB747,
B767)
1. Aligninglabourand
equipment
requirementsto
demand(including
LMO1 changes)
2. Fuel burnreduction
programs
3. SYD2 andnational
airportstaffing
improvements
1. Headofficeand
management
restructure
2. Heavy
Maintenance:
closureofAvalon
3. SupplyChain:
transformation&
procurement
benefits
4. Catering:ADL3
closure
1. B787rollout
2. Freight:Supply
chain/terminal
improvement
program
3. Application
rationalisation
4. NextGencheckin
1. Renegotiate
commercial
contractsacross
business
2. Vendor
management
3. ITsupportand
infrastructure
1.LineMaintenanceOperations.2.Sydney3.Adelaide
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FY14F FY17F
3.AcceleratingQantasTransformationStepchangeinlabourproductivity
LABOURCOSTGROSSREDUCTIONS($M)
$500600m
reduction
FTEstoreduceby5,000byFY17
4,000headcountreductionbyFY15
30%reductioninmanagementand
nonoperationalroles(~1500FTEs)
Rightsizing,Productivity,Consolidation
andTechnologytoreducelabouracross
business
TotalFY14andFY15redundancycosts
~$500m
Wageinflationmitigation wagefreeze
untilcompanymakesFYunderlyingprofit:
Ongoingforexecutives
Immediatefor
open
EBAs
ProposedforotherEBAcoveredstaff
28
3.RightsizingFleetandNetwork
1.SydneyMelbourneBrisbane 2.MelbourneLondon3.Sydney,BrisbaneSingapore. 4.PerthSingapore.
Increasedomesticnarrowbodyutilisationthroughreducedturnaroundtimes,schedule
redesign,fleetsimplification
QantasDomestictofocuswidebody aircraft onEastWest,peakTriangle1 servicesonly
A330sfreeduptoenterQantasInternational asreplacementaircraft
IncreaseA380utilisationthroughretimesandnaturalgroundtimemaintenance
MELLHR2 serviceretimedtoincreaseutilisation,improverevenue
Rightaircraft,rightroute
SYD,BNESIN3 toA330(fromB747),1QFY15
EvaluatingoptionsfordeploymentofA380to befreedupfromutilisationincrease
Exitunderperforming routes
Qantas International:PERSIN4,1QFY15
Accelerateretirementofoldestaircraft
B767fleet,nonreconfiguredB747s
Leveragingflexibilitytomanagefleetrequirements
Suspendinggrowth at JetstarAsia(Singapore),beddingdownotherAsiaventures
A380:Deferred
remaining 8
aircraft
with
ongoing
review
of
delivery
dates
to
meet
potentialfuturerequirements
B7878:Deferredfinal3of14aircraftonfirmorder
A320:Restructureoforderbook
Working
existingassets
harder
Rightsizing
fleetand
network
Deferringgrowth
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A332
B737800B737800
A320
3.RightsizingFleetandNetworkAcceleratedfleetsimplificationtounderpinunitcostimprovements
FY131 11FleetTypes
A380
B747
(nonreconfig)
A333
B767
A332
A330
B747(reconfig) FY162 7FleetTypes
A320
B787
A380
B747
(reconfig)
A333
QANTAS
JETSTAR
Maintainyoungaveragefleet
ageof8yearsinFY16
B747:6nonreconfigured
aircraftretiredby2HFY16
B767:all15retiredby3QFY15
B734:allretiredbyFebruary
2014
B787
B737400
1.Asat30June2013. 2.Byendoffinancialyear20152016
Deferorsellover50aircraft
30
3.DeliveringforCustomersThefirstchoiceforourcustomersineverymarketweserve
Investmentincustomersessentialtomaintaincompetitiveadvantages
A330reconfigurationforbestinclassdomesticandinternationalproduct
ContinuedrolloutofB787;improvedonboardexperience
Newlounges
in
LAX,
HKG,
BNE1 to
add
to
success
of
new
SIN2 lounge
QantasLoyaltycustomerinnovation;QantasCash,AQUIRE,expandingpartners
Technologytoimprovecustomerexperience,increaseefficiency
Ongoingstaffservicetrainingtomaintainrecordcustomeradvocacylevels
1.LosAngeles,HongKong,Brisbane. 2.Singapore
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3.OurPeople
OurpeoplearewellawareofchallengesfacingQantas
Over21,000signaturesforFairgoforQantaspetition
Ourpeoplecontinuetodoagreatjobforourcustomers
Intensivecustomertrainingcontinues
Recordcustomeradvocacyresults1
Scopeofchangerequiredwillbedifficult,andwewillcontinuetoworkcloselywith
ourpeople
Stronginternalcommunications,regularupdates
1. Customer advocacy measured by Net Promoter Score (NPS). NPS 2013/2014 YTD average at record levels.
32
3.FundingQantasTransformation
TransformationtoFY17tobefundedthrough:
Reprioritisationofcapital
FuturefreecashflowasbenefitsfromTransformationrealised;rapidpaybackfrom
immediateinitiatives
Assetsales
TargetingpositivefreecashflowfromFY151
Capex alignedwithfinancialperformance
Flexibilitymaintainedforfurtherreductions
1. Assumes no material adverse change in operating environment.
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3.RealigningCapex withFinancialPerformanceRemoving$1bover2years,maintainingflexibility
1.00.8 0.8
0.4 0.6
FY14F FY15F FY16F
($B) FY14F FY15F FY16F
NetCapex1 1.2 1.0 0.9
Movementinleaseliabilities2 (0.2) (0.2) (0.1)
NetCapex&LeaseInvestment 1.0 0.8 0.8
NETCAPEX1 &LEASEINVESTMENT2 ($B) Deferreddeliveryoffinal8A380sonorder
withongoingreviewofdeliverydatesto
meetpotentialfuturerequirements
Deferredfinal3B7878of14onfirmorder
A320orderbookrestructured
Capex planprovidesforinvestmentin
maintainingcompetitiveadvantages,
preservingflexibilitytoadjustspending
1. Excludes proceeds/payments relating to asset disposals/acquisitions, includes payments for investments in associates. 2. Movement in on and off balance sheet lease debt including the movementin operating lease liabilities (calculated as the present value of minimum lease payments for aircraft operating leases which, in accordance with AASB 117: Leases, is not recognised on balance sheet)and the movement in aircraftrelated Japanese operating leases (with call options) accounted for in financing cash flows.
34
4.StructuralReviewUpdateUnlockingvaluetofundTransformationandstrengthencorebusiness
1. Saleofnoncoreassetstounlockcapital
Brisbaneairportterminalleasereturn:$112m1
DiscussionscontinuewithMelbourneandSydneyairports
2. ReviewhasconfirmedQantasGrouphasvaluableanddesirableassetsacrossa
diversifiedportfolio.Qantaswilltakethenecessarytimetomaketherightstrategic
decisionsforthefuture.
Nofinaldecisionsmadeonotherassets
1. Proceeds from lease return together with related assets.
8/12/2019 Qantas 2013/14 Half-Year Results - Investor Presentation
18/19
35
AUSTRALIASLEADINGAIRLINES
ANDLOYALTYBUSINESS
Qantas
Group
in
FY17
Profitable
Competitivecostbase
Continuedleadingproductand
service
Strongbalancesheet
Improvingcredit
profile
THEFIRSTCHOICEFORCUSTOMERSINTHEMARKETSWESERVE
Growing
froma
stronger
base
5.LongtermCompetitivenessStrengthenedcoreforsustainable,profitablegrowth
SUSTAINABLERETURNSFORSHAREHOLDERS
36
Outlook
TheGroups2H14operatingenvironmentremainsverychallengingandvolatile:
Softunderlyingdomesticdemandcontinuinginseasonallyweakerhalf
DomesticandInternationalyieldsandloadsexpectedtoremaindepressed
CurrentGroupoperatingexpectations:
Groupcapacitytoincreaseby33.5%in2H14comparedto2H13
Groupdomesticcapacitytoincreaseby34%in2H14comparedto2H13,whilst
maintainingflexibility
Underlyingfuelcostsexpectedtobe~$4.6b1 inFY14
NoGroupprofitguidanceprovidedatthistimeduetothemajortransformationbeing
undertakenby
Qantas,
and
the
high
degree
of
volatility
and
uncertainty
in
the
competitiveenvironment,globaleconomicconditions,fuelpricesandFXrates.
1. As at 25 February 2014, excluding carbon tax.
8/12/2019 Qantas 2013/14 Half-Year Results - Investor Presentation
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37
Disclaimer&ASICGuidance
ThisPresentationhasbeenpreparedbyQantasAirwaysLimited(ABN16009661901)(Qantas).
Summaryinformation
ThisPresentationcontainssummaryinformationaboutQantasanditssubsidiaries(QantasGroup)andtheiractivitiescurrentasat27February2014.TheinformationinthisPresentationdoesnotpurporttobecomplete.Itshould
bereadinconjunctionwiththeQantasGroupsotherperiodicandcontinuousdisclosureannouncementslodgedwiththeAustralianSecuritiesExchange,whichareavailableatwww.asx.com.au.
Notfinancialproductadvice
ThisPresentationisforinformationpurposesonlyandisnotfinancialproductorinvestmentadviceorarecommendationtoacquireQantassharesandhasbeenpreparedwithouttakingintoaccounttheobjectives,financial
situationorneedsofindividuals.Beforemakinganinvestmentdecisionprospectiveinvestorsshouldconsidertheappropriatenessoftheinformationhavingregardtotheirownobjectives,financialsituationandneedsandseek
legaland
taxation
advice
appropriate
to
their
jurisdiction.
Qantas
is
not
licensed
to
provide
financial
product
advice
in
respect
of
Qantas
shares.
Cooling
off
rights
do
not
apply
to
the
acquisition
of
Qantas
shares.
Financialdata
AlldollarvaluesareinAustraliandollars(A$)andfinancialdataispresentedwithinthesixmonthsended31December2013unlessotherwise stated.
Futureperformance
Forwardlookingstatements,opinions andestimatesprovidedinthisPresentationarebasedonassumptions andcontingencieswhicharesubjecttochangewithoutnotice,asarestatementsaboutmarketandindustrytrends,
whicharebasedoninterpretations ofcurrentmarketconditions.Forwardlookingstatementsincludingprojections,guidanceonfutureearningsandestimatesareprovidedasageneralguideonlyandshouldnotberelieduponas
anindicationorguaranteeoffutureperformance.
AninvestmentinQantassharesissubjecttoinvestmentandotherknownandunknownrisks,someofwhicharebeyondthecontroloftheQantasGroup,includingpossible delaysinrepaymentandlossofincomeandprincipal
invested.QantasdoesnotguaranteeanyparticularrateofreturnortheperformanceoftheQantasGroupnordoesitguaranteetherepaymentofcapitalfromQantasoranyparticulartaxtreatment.Personsshouldhaveregard
totherisksoutlinedinthisPresentation.
Norepresentationorwarranty,expressorimplied,ismadeastothefairness,accuracy,completeness orcorrectnessoftheinformation, opinions andconclusionscontainedinthisPresentation.Tothemaximumextentpermitted
bylaw,noneofQantas,itsdirectors,employeesoragents,noranyotherpersonacceptsanyliability,including,withoutlimitation,anyliabilityarisingoutoffaultornegligence,foranylossarisingfromtheuseoftheinformation
containedinthisPresentation.Inparticular,norepresentationorwarranty,expressorimpliedisgivenastotheaccuracy, completenessorcorrectness,likelihood ofachievementorreasonablenessofanyforecasts,prospectsor
returnscontainedinthisPresentationnorisanyobligationassumedtoupdatesuchinformation.Suchforecasts,prospectsor returnsarebytheirnaturesubjecttosignificantuncertaintiesandcontingencies.Beforemakingan
investmentdecision,youshouldconsider,withorwithouttheassistanceofafinancialadviser,whetheraninvestmentisappropriateinlightofyourparticularinvestmentneeds,objectivesandfinancialcircumstances.
Pastperformance
Pastperformanceinformation giveninthisPresentationisgivenforillustrativepurposesonlyandshouldnotbereliedupon as (andisnot)anindicationoffutureperformance.
Notanoffer
ThisPresentationisnot,andshouldnotbeconsidered,anofferoraninvitationtoacquireQantassharesoranyotherfinancialproducts.
ASICGUIDANCE
InDecember2011ASICissuedRegulatoryGuide230.TocomplywiththisGuide,Qantasisrequiredtomakeaclearstatementabout whetherinformationdisclosedindocumentsotherthanthefinancialreporthasbeenauditedor
reviewedinaccordancewithAustralianAuditingStandards.Inlinewithpreviousyears,thisPresentationisunaudited.Notwithstanding this,thePresentationcontainsdisclosureswhichareextractedorderivedfromthe
ConsolidatedInterimFinancialReportforthehalfyearended31December2013whichisreviewedbytheGroupsIndependentAuditor.