Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2015 Earnings Presentation
30 slides from Qantas Airways's earnings presentation, Aug 20, 2015
Slide 1: Qantas Airways Limited FY15 Results Supplementary Slides
For personal use only Qantas Airways Limited FY15 Results Supplementary Slides 20 August 2015 ASX: QAN US OTC: QABSY
Slide 2: Group Performance
For personal use only Group Performance
Slide 3: Underlying Income Statement Summary
Underlying Income Statement Summary For personal use only $M FY15 FY14 VLY2 % Improved yields and loads driven by network optimisation and Net passenger revenue 13,667 13,242 3.2 capacity moderation in domestic and international markets Reduced freighter capacity following the removal of one B747 Ne
Slide 4: Other Items Not Included in Underlying PBT
Other Items Not Included in Underlying PBT1 For personal use only $M FY15 FY14 AASB 9 mark-to-market movements relating to other 39 (72) reporting periods Reduction in redundancy and restructuring costs relating to Redundancies, restructuring and other transformation costs 80 428 workforce changes a
Slide 5: Reconciliation to Statutory PBT
Reconciliation to Statutory PBT For personal use only $M FY15 FY14 Underlying1 Ineffectiveness Other items Statutory Underlying1 Ineffectiveness Other items Statutory relating to not included in relating to not included in other reporting Underlying PBT other reporting Underlying PBT periods periods
Slide 6: Revenue Detail
Revenue Detail For personal use only Revenue ($B) Net passenger revenue up 3% 15.4 15.8 3% • Group yield (excluding FX) up 1% and load improvement of 1.7 pts driven by network optimisation and moderation in market capacity Net freight revenue down 2% • Reduction in freighter aircraft Frequent flyer
Slide 7: Expenditure Detail
Expenditure Detail For personal use only Fuel costs down 13% • 12% reduction in effective AUD fuel price1 Expenditure ($B) • Improvement in fuel efficiency from Qantas Transformation fuel initiatives 15.8 (8)% 14.6 Manpower and staff-related down 4% • 4,000 FTE reduction (since January 2014) as part
Slide 8: Cash Flow and Debt Position
Cash Flow and Debt Position For personal use only $M FY15 FY14 VLY % • $1,060m increase in cash generated from operations • Net cash capital expenditure $944m vs $0.9b guidance Underlying EBITDA1 2,329 982 >100 Non-cash items and working • $1,104m net free cash flow 163 450 (64) capital movements •
Slide 9: Performance Against Financial Framework
Performance Against Financial Framework For personal use only $M FY15 FY14 1. Optimal Capital Structure FFO1/net debt (S&P)2 46% 17% Profit turnaround; EBITDA up $1.3b FFO1 up $1.4b Debt/Adjusted EBITDA (Moody’s)3 2.9 5.1 $1b debt reduction completed in FY15 2. ROIC performance ROIC EBIT $1,476m $(1
Slide 10: Invested Capital Calculation
Invested Capital Calculation For personal use only Invested Capital ($M) FY15 FY14 Receivables (current and non-current) 1,093 1,354 Inventories 322 317 Other assets (current and non-current) 424 374 Investments accounted for using the equity method 134 143 Property, plant and equipment 10,715 10,50
Slide 11: Net Debt Reconciliation
Net Debt Reconciliation For personal use only Net Debt Calculation- Previous Methodology ($M) FY15 FY14 FY131 Interest bearing liabilities 5,562 6,483 6,080 Cash and cash equivalents (2,908) (3,001) (2,829) Aircraft security deposits (36) (34) (21) Fair value of hedges relating to debt (60) 7 (4) Ne
Slide 12: Continuing Unit Cost Improvement
Continuing Unit Cost Improvement For personal use only • Comparable unit cost1 improvement of 5.1% C/ASK FY15 FY14 VLY % Unit Cost2 7.54 8.35 9.7 Excluding: • Fuel (2.74) (3.17) Net Underlying Unit Cost3 4.80 5.18 7.3 • Qantas International fleet write-down (0.14) • Impact of changes in the discount
Slide 13: Continued Delivery of Business Transformation
Continued Delivery of Business Transformation For personal use only Target $2 billion 5,000 FTEs by FY17 gross benefits $500-600 million of $2 billion 2,200 4,0001 5,000 ($380m)1 1,800 ($500m+) Result $1.098b over 18 1,000 benefits months to end realised FY15 by FY15 FY14 Exited FY15 Exited FY15 FTE
Slide 14: Group Operational Information
Group Operational Information For personal use only
Slide 15: Fleet at June 2015
Fleet at 30 June 2015 For personal use only Aircraft Type FY15 FY14 Change • Net reduction of 9 aircraft during FY15 A380-800 12 12 - B747-400 6 7 (1) – 12 aircraft deliveries5: B747-400ER 6 6 - 5 x B737-800, 4 x B787-8, 1 x Q400, A330-200 17 1 13 4 1 x A320-2002, 1 x F100 A330-300 10 10 - – 18 airc
Slide 16: Segments
For personal use only Segments
Slide 17: Qantas Domestic
Qantas Domestic For personal use only • Qantas Domestic has the flexibility to adapt to changing FY15 FY14 VLY % market conditions, resources slow down ASKs M 36,638 37,824 (3.1) • Spread of gauges to increase and decrease capacity across routes as demand changes RPKs M 27,180 27,715 (1.9) Passenger
Slide 18: Qantas International
Qantas International For personal use only • RASK1 recovery as market adjusts after five years of above- FY15 FY14 VLY % trend market capacity growth ASKs M 59,263 59,173 0.2 – Dynamic scheduling initiatives to actively match capacity with demand, more seasonal flying RPKs M 48,299 47,112 2.5 Passen
Slide 19: Qantas International: Enhanced connectivity with partners
Qantas International Enhanced connectivity with partners For personal use only AMERICAN AIRLINES EMIRATES • Significant expansion of alliance with American • Premier one-stop customer proposition to Europe, Airlines (AA) announced on 10 June 20151 Middle East and Northern Africa: • Revenue sharing a
Slide 20: Growing Jetstar Footprint
Growing Jetstar Footprint For personal use only JETSTAR GROUP – GROWING NETWORK OF ROUTES1 5 151 129 130 109 115 96 98 82 59 67 2 31 39 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 6 4 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT ❶Jetstar Australia 100% 2004 50 x A320s/A321s ❷Jetstar Internati
Slide 21: Jetstar Domestic
Jetstar Domestic For personal use only • Continued cost transformation and yield recovery Jetstar Domestic FY15 FY14 VLY % – 6% RASK1 increase, maintained premium to Tigerair ASKs M 18,215 17,885 1.8 – Unit cost advantage maintained RPKs M 15,042 14,584 3.1 – Asset utilisation increased 3%2 Passenge
Slide 22: Jetstar International
Jetstar International For personal use only • Record earnings performance in FY151 Jetstar International FY15 FY14 VLY % (excl. Jetstar Asia & New Zealand Domestic) – Transition from A330 to B787-8 driving cost reduction and ASKs M 18,317 17,514 4.6 enhanced customer experience, complete September 2
Slide 23: Jetstar Asia (Singapore)
Jetstar Asia (Singapore) For personal use only • Return to profit1 despite challenging market conditions Jetstar Asia FY15 FY14 VLY % ─ 2% RASK2 improvement, maintained premium to Tigerair ASKs M 8,431 7,894 6.8 ─ 6% controllable unit cost improvement3 RPKs M 6,562 6,188 6.0 • Increased network conn
Slide 24: Jetstar Japan
Jetstar Japan For personal use only • Significantly improved financial performance amid weaker JPY Jetstar Japan FY15 FY14 VLY % and aggressive competitor activity ASKs M 5,179 3,759 38 ─ RASK1 up 5% on 38% capacity growth RPKs M 3,932 2,894 36 ─ Ancillary revenue up 14%2 Passengers ‘000 4,517 3,308
Slide 25: Jetstar Pacific (Vietnam)
Jetstar Pacific (Vietnam) For personal use only • Business profitable1 for 2H15 in tough market conditions Jetstar Pacific FY15 FY14 VLY % ─ Continued cost discipline ASKs M 2,787 2,152 30 ─ Benefit of scale, increasing fleet from 7 to 11 RPKs M 2,425 1,925 26 ─ Domestic yield pressure driven by int
Slide 26: Qantas Loyalty
Qantas Loyalty Core Innovations and Breakout Growth Reinforcing Coalition Program For personal use only COALITION LOYALTY • Upgrade redemptions to premium cabins on Qantas services – double digit growth • Activity with 35+ airline partners, including Emirates and oneworld affiliates – up 6% • Points
Slide 27: Qantas Loyalty: Red Planet: New digital marketing business
Qantas Loyalty Red Planet: New digital marketing business For personal use only • Integrated media, analytics and research services • Directly and individually targets customers leveraging the unique strengths of Qantas Loyalty: – Unparalleled reach in market – Rich proprietary data from 27 years 2
Slide 28: New Coalition Partners
New Coalition Partners For personal use only QANTAS ONLINE MALL AQUIRE QANTAS FREQUENT FLYER 28
Slide 29: Overview of Qantas Frequent Flyer Cash Flow and Accounting Treatment
Overview of Qantas Frequent Flyer Cash Flow and Accounting Treatment For personal use only Points Earned Life of a Point Points Redeemed for Award; or Points Flow by Spending ~2 years Points Expire (Breakage)1 Gross Billings Redemption Gross Billings Cost Cash Flow Cash Interest 1 Breakage Redemptio
Slide 30: Disclaimer & ASIC Guidance
Disclaimer & ASIC Guidance For personal use only This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). Summary information This Presentation contains summary information about Qantas and its subsidiaries (Qantas Group) and their activities current as at 20 Augu