Qantas Airways Limited · ASX:QAN
Qantas Airways — Investor Day (November 2019)
139 slides from Qantas Airways's investor day presentation, Nov 19, 2019
Slide 1: Qantas Investor Day Presentation 2019
For personal use only 19 November 2019 Companies Announcement Office Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Qantas Investor Day Presentation 2019 Attached is the Presentation to be given at the Qantas Investor Day today. Yours faithfully Andrew Finch Company S
Slide 2: Investor Day 19 November 2019
For personal use only Investor Day 19 November 2019 ASX: QAN US OTC: QABSY
Slide 3: Building on our sustainable competitive advantage
For personal use only Building on our sustainable competitive advantage
Slide 4: Safety is always our first priority
Safety is always our first priority ‒ Strong risk reporting culture underpinned by a ‘Just Culture’ For personal use only framework ‒ Continued focus on improving the safety and wellbeing of our people ‒ Strong relationships with safety regulators, key industry bodies ‒ Leading business resilience a
Slide 5: The long-term outlook for global passenger growth remains robust
The long-term outlook for global passenger growth remains robust Global airline profit1 in 2019F and 20-year passenger2 forecasts For personal use only North America Europe Middle East 2019F profit: $15b 2019F profit: $8.1b 2019F profit: -$1.1b 20yr pax growth: 20yr pax growth: 20yr pax growth: +2.4
Slide 6: The Group's strategy is responding to long term global forces and recent developments
The Group’s strategy is responding to long term global forces and recent developments For personal use only New centres of customer Rapid digitalisation and Shifting customer and Resource constraints demand and geopolitical the rise of big data workforce preferences and climate change Global influen
Slide 7: The Group is uniquely positioned through its key competitive advantages
The Group is uniquely positioned through its key competitive advantages For personal use only Home market Dual Brand Customer loyalty People and Trust in brand strength know-how and insights Culture Financial and balance sheet strength Qantas Investor Day 2019 | 6
Slide 8: The Group's integrated portfolio of mutually reinforcing businesses will ensure its ongoing success
The Group’s integrated portfolio of mutually reinforcing businesses will ensure its ongoing success For personal use only ‒ Domestic Dual Brand strategy allows each airline to play to their strengths to focus on customer segments and sustain leading margins ‒ Local distribution strength allows Qanta
Slide 9: The Group's strategy will build on its sustainable competitive advantages
The Group’s strategy will build on its sustainable competitive advantages For personal use only Understanding the long-term context New centres of customer Rapid digitalisation and Shifting customer and Resource constraints demand and geopolitical the rise of big data workforce preferences and clima
Slide 10: Positioned to deliver higher domestic operating margins
Positioned to deliver higher domestic operating margins For personal use only ‒ Sound market structure ‒ Stable operating environment and growing economy ‒ Each Group brand has a sustainable competitive advantage ‒ Sophisticated Dual Brand strategy magnifies advantages ‒ Flexibility in fleet, brand
Slide 11: Building a resilient Qantas International
Building a resilient Qantas International For personal use only ‒ Transforming into a fit and competitive business ‒ Home market distribution strength ‒ Playing to our strengths flying where premium customers want to go ‒ Leveraging partnerships to extend the network ‒ Already harnessing new fleet t
Slide 12: Playing to competitive advantages to align with Asia's growth
Playing to competitive advantages to align with Asia’s growth For personal use only ‒ Both brands fly where Australians want to go ‒ Connectivity with own networks and partners ‒ Exporting low cost and Dual Brand know-how ‒ Leveraging local strengths for inbound market ‒ Strong position in Japan – w
Slide 13: Investing to drive superior customer experiences
Investing to drive superior customer experiences For personal use only ‒ Customers are always at the centre of our thinking ‒ The brands are a key source of competitive advantage ‒ Centenary program will drive further brand equity ‒ Continuing to invest in both physical and digital experiences ‒ Str
Slide 14: Diversification and growth of Qantas Loyalty earnings
Diversification and growth of Qantas Loyalty earnings For personal use only ‒ Qantas Loyalty is uniquely advantaged locally and globally ‒ Evolved from a frequent flyer program to a consumer loyalty ecosystem ‒ Business with a track record of growth, innovation and resilience ‒ Investing in member e
Slide 15: Enabling our people to be their best
Enabling our people to be their best ‒ Our employee value proposition is unique and differentiated For personal use only ‒ Our culture promotes diversity and keeps our people energised ‒ Our training is aligned with required capabilities ‒ Leveraging technology to allow our people to deliver superio
Slide 16: Transformation will continue to drive valuable outcomes across the business
Transformation will continue to drive valuable outcomes across the business For personal use only FY20 focus ‒ Transformation delivered $3b benefits in FY15-FY19 ‒ Now embedded and delivering Operational minimum $400m in new benefits p.a. efficiency Digitalisation Fleet & Network ‒ Established princ
Slide 17: Looking forward, in FY24 we will measure our success by
Looking forward, in FY24 we will measure our success by For personal use only Qantas Jetstar Qantas Jetstar International Qantas Loyalty Domestic Domestic International Relative competitive Stable earnings growth Relative margin advantage Relative margin advantage Lowest cost position advantage Targ
Slide 18: Ensuring our sustainability for the next years
Ensuring our sustainability for the next 100 years There when needed For personal use only Community partnerships Reducing our carbon footprint Customers Employees Social Community licence to Industry operate Reconciliation Action Plan Investing in a circular economy Government Shareholders Economic
Slide 19: Acting responsibly
For personal use only Acting responsibly Qantas Investor Day 2019 | 18
Slide 20: The National Carrier is committed to acting responsibly, respecting our social licence to operate
The National Carrier is committed to acting responsibly, respecting our social licence to operate For personal use only topics There when needed today Community partnerships Reducing our carbon footprint Customers Employees Social Community licence to Industry operate Reconciliation Action Plan Inve
Slide 21: Global movement to further improve carbon emission targets
Global movement to further improve carbon emission targets to limit the impact of climate change For personal use only 1.5 degrees warming and net zero emissions are the new focus globally The Paris Accord 2015 IPCC1 Report 2018 ‒ 195 countries agreed to limit global warming ‒ Emerging global moveme
Slide 22: Aviation is 2% of global carbon emissions but must lead in acting
Aviation is 2%1 of global carbon emissions but must lead in acting to reach net zero by 2050 For personal use only Aviation Long-distance road transport 2% Shipping ‒ As other sectors de-carbonise, aviation risks becoming a much 1% 3% higher proportion of emissions if it does not act decisively Vari
Slide 23: CORSIA is an encouraging start, but industry target does not go far enough
CORSIA is an encouraging start, but industry target of 50% reduction in net emissions does not go far enough For personal use only Carbon Offsetting and Reduction Scheme for International Airlines (CORSIA) ‒ The airline industry mechanism to reduce global emissions, adopted in 2016 by the Internatio
Slide 24: Many airlines are already pushing beyond CORSIA
Many airlines are already pushing beyond CORSIA1 to make aviation sustainable For personal use only Offering offsets or buying SAF1 All-electric seaplane fleet in the 2020's Offsetting all flights from 2019 International Airlines Group Net zero emissions by 2050 Offsetting domestic offset domestic e
Slide 25: Qantas has long been a leader in addressing carbon emissions
Qantas has long been a leader in addressing carbon emissions and other environmental impacts Customers earn 10 Qantas Points For personal use only for every $1 spent offsetting QFP grows to over 30 partners, including Australia Post Industry-wide climate Announced waste targets adopted reduction pro
Slide 26: Qantas has set the most ambitious emissions targets of any airline
Qantas has set the most ambitious emissions targets of any airline For personal use only Capping Group Investing $50m Net zero emissions by emissions at 2050 2020 in Sustainable Aviation levels Fuels Qantas Investor Day 2019 | 25
Slide 27: Qantas has now set itself the most ambitious carbon emissions target
Qantas has now set itself the most ambitious carbon emissions target for any airline group globally Our targets Our actions For personal use only ‒ Zero net carbon emissions by 2050 ‒ Increase carbon offsetting ‒ Capping of net emissions at 2020 level • Qantas Points incentives Offset • Match custom
Slide 28: Multiple potential pathways to meeting targets
Multiple potential pathways to meeting targets, partly dependent on technological developments For personal use only Potential drivers of increases in relative contributions Qantas Group net emissions Substitute ‒ Government incentives and major private investments in Substitute sustainable fuel for
Slide 29: The Qantas Group is committed to transparency in reporting and disclosures
The Qantas Group is committed to transparency in reporting and disclosures For personal use only Sample report from Qantas sustainability portal1 Environment metrics FY17 to FY19 ‒ We report transparently to demonstrate how we're creating Metric Unit FY19 FY18 FY17 shareholder value, delivering on o
Slide 30: The Qantas Group is leading the aviation industry in the transition to a circular economy
The Qantas Group is leading the aviation industry in the transition to a circular economy For personal use only Reduce 100m single-use plastics by the end of 2020 Reduce waste to landfill by 75% by the end of 2021 ‒ We have removed approximately 16 million unnecessary plastics from our ‒ Introducing
Slide 31: A century on, Qantas continues to be of considerable importance to Australia
A century on, Qantas continues to be “of considerable importance to Australia generally” Fergus McMaster, 1921 AGM. The National Carrier continues to be a strong performer for Australia’s For personal use only economy representing 0.7% of total Gross Domestic Product1 Total economic contribution1 to
Slide 32: Qantas supports regional Australia
Qantas supports regional Australia Regional fares Regional grants Drought initiative For personal use only ‒ Taken action to make travel more accessible ‒ $5m commitment over five years ‒ Partnering with Rural Aid to help fund hay bales, for residents of remote and regional Australia ‒ 1,200+ submis
Slide 33: The opportunity for leadership
The opportunity for leadership For personal use only ‒ The Qantas Group plans to capture and consolidate its position as a leader. This means leadership in sustainable aviation, supporting and standing up for regional Australia and continuing to engage on critical social and economic issues ‒ The wo
Slide 34: Disciplined application of our Financial Framework
For personal use only Disciplined application of our Financial Framework
Slide 35: Delivering against our Financial Framework
Delivering against our Financial Framework For personal use only 1 2 3 Maintaining an optimal capital structure ROIC > WACC2 through the cycle Disciplined allocation of capital Net Debt1 profile FY15 to FY19 ($B) Return on Invested Capital Capital allocation split FY15 to FY19 ($B) 7 6 Target 22.7%
Slide 36: Extended tenor and smoothed profile resulting in minimal refinancing risk
Extended tenor and smoothed profile resulting in minimal refinancing risk 1 For personal use only Debt maturity profile as at 30 June 2019 ($M)1 Optimal capital structure A$M 1,000 ‒ Net Debt target = 2.0x – 2.5x ROIC EBITDAR where EBITDAR achieves a fixed 10% ROIC Debt structure 250 ‒ Diverse fundi
Slide 37: Qantas is one of the least leveraged network carriers of Moody's rated airlines
Qantas is one of the least leveraged network carriers of Moody’s rated airlines 1 For personal use only 7 6 5 Moody's Debt to EBITDA 1 Investment grade rated airlines 4 Baa2 Baa3 Baa3 Baa3 3 Baa3 Baa2 Baa1 2 A3 1 0 Passenger airlines rated by Moody’s Qantas Airways Limited Network carrier Low cost c
Slide 38: Quality of earnings remains strong
Quality of earnings remains strong 2 Qantas Group’s sustainable competitive advantages For personal use only provide a stable earnings base Earnings ($M) stable and trend will continue Leading Dual Brand domestic position Stable earnings ‒ Sound market structure Operating cash flow Statutory EBITDA
Slide 39: Maintaining earnings despite fuel price volatility
Maintaining earnings despite fuel price volatility 2 For personal use only Reducing cash flow volatility in the short term through disciplined hedging program to allow for implementation of operational levers Capacity discipline has delivered revenue increases in line with fuel price increases 0 MON
Slide 40: Our business and strategy is diverse enough to manage currency fluctuations
Our business and strategy is diverse enough to manage currency fluctuations 2 For personal use only 0.50 0.75 1.00 Average long term AUDUSD rate ‒ Weaker demand environment ‒ Stronger demand environment ‒ Lower fuel ‒ Higher fuel ‒ Demand reduces for outbound international travel ‒ Demand increases
Slide 41: Capital allocation linked to earnings, balance sheet strength a priority
Capital allocation linked to earnings, balance sheet strength a priority 3 Net Debt For personal use only ‒ Balance sheet strength ‒ Lowest cost of capital ‒ Net debt target 2.0x-2.5x EBITDAR with ROIC at 10% Remaining surplus capital EBITDA outlook Growth capex Shareholder distributions ‒ 6 and 12
Slide 42: The Qantas fleet is 'fit for purpose'
The Qantas fleet is ‘fit for purpose’ 3 Adopting next generation Evaluating future Exit fading technology1 Mainstream fleet (fit for purpose)2 technology3 technology4 For personal use only Replace aircraft Maintain aircraft life and keep product relevant Select right aircraft and build scale quickly
Slide 43: Target $2b reinvestment per annum will deliver a sustainable fleet
Target $2b reinvestment per annum will deliver a sustainable fleet 3 For personal use only Illustrative example only Current planned investment Annual fleet investment scenarios1 2.5 Target $2b 2.0 reinvestment ‒ Average $2b1 reinvestment per annum, subject to escalation and currency fluctuations 1.
Slide 44: Qantas was strong leading into the last GFC – now it's even stronger
Qantas was strong leading into the last GFC – now it’s even stronger For personal use only Comparison to FY08 Market fundamentals Financial performance — Leading domestic position with Jetstar 2.5x larger — Operating cash flow $700m higher — Rational domestic market capacity growth expected — Margin
Slide 45: Financial Framework is a proven success and will continue to guide our capital decisions
Financial Framework is a proven success and will continue to guide our capital decisions For personal use only 1 2 3 Maintaining an optimal capital structure ROIC > WACC2 Disciplined allocation of capital through the cycle Minimise cost of capital by targeting Grow invested capital with disciplined
Slide 46: Transformation: Past, present and future
Transformation: For personal use only Past, present and future
Slide 47: Transformation journey
Transformation journey For personal use only FY15 - 17 FY18 FY19 FY20+ $2.1b $463m $452m $400m+ ‒ 767/747 retirements ‒ Engineering base ‒ Ground service equipment ‒ New fleet technology maintenance turnaround telemetry ‒ 747 base closure ‒ Digitalisation step change ‒ Single engine taxi ‒ IT Group
Slide 48: Transformation sources (FY18-FY19)
Transformation sources (FY18-FY19) For personal use only Continuous Technology Supplier Utilisation Indirect costs Group initiatives improvement Target ~$100m ~$75m ~$75m ~$75m ~$25m ~$50m $400m Average $455m ~$90m ~$95m ~$85m ~$130m ~$30m ~$25m ‒ 787-9 roll out ‒ Group supplier ‒ Fleet changes ‒ Fu
Slide 49: Case Study: Qantas Group Engineering
Case Study: Qantas Group Engineering Base maintenance Supply chain For personal use only ‒ Improve Brisbane facility efficiency by ‒ Reduce delays due to part availability optimising for narrowbody types — while also reducing cost across the Qantas 737 and Jetstar A320 Qantas Group ‒ 20-30% reductio
Slide 50: Case Study: Wi-Fi flight deck connectivity/aircraft e-enablement
Case Study: Wi-Fi flight deck connectivity/aircraft e-enablement ‒ Switched cockpit communications from legacy radio-based to For personal use only real-time satellite using state-of-the-art NBN satellites Cost reductions for flight deck messaging • Significantly reduced communications cost • Real-t
Slide 51: Established principles still governing transformation
Established principles still governing transformation For personal use only Ownership Business Unit ownership, centrally supported Alignment Working together towards a common goal Linkage Direct line of sight to bottom line/strategic objectives Institutionalised cadence of coordination Engagement me
Slide 52: Ongoing transformation themes
Ongoing transformation themes For personal use only Digitalisation Fleet & Network Data enablement: ‒ Increasing utilisation ‒ Common architecture and standards ‒ Reducing fleet complexity ‒ Central data repository/lakes ‒ Better matching capacity to demand ‒ Extraction layer for legacy systems by r
Slide 53: Transformation pipeline
Transformation pipeline For personal use only Fleet & Network Ways of Working Digitalisation AI1 AUTOMATION DATA Flight Pulse Slot/schedule 747 retirement Cabin Crew iPads Disruption management optimisation A380 reconfiguration Single engine taxiing Engineering iPads Flight planning Crew optimisatio
Slide 54: Case study: Frontline empowerment
Case study: Frontline empowerment Above the Wing Below the Wing For personal use only ‒ Integrated operations app directly links frontline to Ops Centre ‒ Airport mapping system integrates Ground Services Equipment increasing situational awareness telemetry with operations status ‒ Empowers frontlin
Slide 55: Case study: Revenue management technology
Case study: Revenue management technology For personal use only ‒ Better decisions to recommend the right price at the right time ‒ Internal application developed utilising Qantas expertise and relationships with leading universities: • Leveraging datasets • Opportunities unlocked via AI1 (machine l
Slide 56: Case study: Biometrics
Case study: Biometrics Future benefits For personal use only Trials to date ‒ Successful trials at SYD1, BNE2 and LAX3 ‒ Customer • Customers enrol at kiosk or mobile app • Seamless personalised customer • Face recognised at bag drop, lounge, journeys gate • Enhanced security ‒ Positive customer fee
Slide 57: Enablers going forward
Enablers going forward For personal use only Group data and architecture foundation Cloud based technology mindset Mobile enabled frontline Digitally oriented and capable workforce Cyber and privacy risk culture Appropriate AI1 ethics and governance Agile tailored approach 1. Artificial Intelligence
Slide 58: Transformation summary
Transformation summary For personal use only FY20 focus ‒ Proven track record of delivery ‒ Robust transformation pipeline and emerging areas for benefit realisation Operational efficiency ‒ Clear link to outcomes and strategic objectives Digitalisation Fleet & Network ‒ Established principles still
Slide 59: Building on our leading domestic position
Building on our leading For personal use only domestic position Qantas Investor Day 2019 | 58
Slide 60: Structural advantage in the Australian domestic market
Structural advantage in the Australian domestic market Market dynamics and stability Domestic market capacity evolution (ASK) 4 For personal use only ‒ Australian economy stable and resilient over the long term ‒ Population concentrated in large cities separated by large distances ‒ Two airline grou
Slide 61: Growing the domestic contribution
Growing the domestic contribution Domestic market EBIT evolution ($B) For personal use only Qantas Group1 Others2 1.3 0.2 1.1 1.0 0.9 0.1 0.2 0.1 0.7 0.1 1.1 1.0 0.8 0.9 0.6 FY15 FY16 FY17 FY18 FY19 Improved leadership position on key success measures Customer satisfaction Net Promoter Score advanta
Slide 62: Building on our success
Building on our success For personal use only 1 2 3 4 Protecting and extending Maintaining customer focus Ensuring rigorous and Delivering higher operating dual brand network and expanding segment rational capacity margins; clear cost and advantage leadership management revenue strategies to achieve
Slide 63: Continuously evolving our uniquely integrated network advantage
Continuously evolving our uniquely integrated network advantage 1 For personal use only Leading business proposition ‒ Best frequency and schedule, including peak and super-peak hours ‒ Strongest domestic and international connectivity ‒ Most resource sector services in Western Australia and Queensl
Slide 64: Customer focus strengthening our leadership across all core segments
Customer focus strengthening our leadership across all core segments 2 For personal use only Corporate SME Premium Leisure Revenue proportion: ~30%1 Revenue proportion: ~30%1 Revenue proportion: ~40%1 Market revenue share: 80% Market revenue share: 50% Customer experience via product and service, NP
Slide 65: Our fleet composition provides flexibility for market demand
Our fleet composition provides flexibility for market demand 3 Primary mission of fleet Flexible utilisation of fleet For personal use only A320/A321 737s and A330s redeployed All domestic markets internationally (Jetstar) A330 737 A320s redeployed Trunk markets into resources routes (Qantas) 717 Tu
Slide 66: Rigorous and rational capacity management
Rigorous and rational capacity management 3 Domestic market dynamic and capacity FY20 position For personal use only ‒ Highly sophisticated management ‒ Current market softness warrants ongoing discipline of dual brand capacity settings ‒ We expect both Qantas Group and Virgin Group to operate near
Slide 67: Delivering higher operating margins
Delivering higher operating margins 4 Operating Margin Trajectories (%) 1 For personal use only Jetstar Domestic Qantas Domestic Virgin Domestic Tigerair Australia 20% 16 14 15% 13 12 10% 9 13 12 11 10 8 5% 6 5 3 3 0% 3 0 -5% (3) (4) -10% (7) (8) FY15 FY16 FY17 FY18 FY19 FY24+ Clear margin strategie
Slide 68: Jetstar's relentless focus on low costs and revenue growth
Jetstar’s relentless focus on low costs and revenue growth 4 Cost focus Revenue focus For personal use only ‒ A321LR introduction ‒ Customer experience improvement on A321LR • ~23% fuel savings per seat than A320ceo • Improved seats • ~25% more seats than A320ceo • Larger overhead bins • ~12% lower
Slide 69: Qantas driving revenue premiums and operationally-enabled cost transformation
Qantas driving revenue premiums and operationally-enabled cost transformation 4 Cost focus Revenue focus For personal use only ‒ Dedicated focus on transforming operations to best practice ‒ Pursuing industry leading models across: • Digital integration • Distribution • Asset utilisation • Personali
Slide 70: Our priorities combined with the right market fundamentals will enable substantial earnings growth
Our priorities combined with the right market fundamentals will enable substantial earnings growth Our ongoing priorities Market fundamentals; What do you need to believe? For personal use only Protecting and extending dual brand network ‒ Market capacity is aligned to demand 1 advantage environment
Slide 71: Qantas International: Building sustainable advantage
Qantas International: For personal use only Building sustainable advantage
Slide 72: Qantas International: A business transforming
Qantas International: A business transforming A business in need of transformation A fit and competitive Qantas International For personal use only ‒ High cost base ‒ >$1b1 in transformation benefits ‒ Over-exposed to challenged loss-making markets using Asia ‒ Halved exposure to Europe and made fly
Slide 73: Leverage strengths for sustainable competitive advantage
Leverage strengths for sustainable competitive advantage For personal use only 1 Australian market Home market distribution strength 2 Partnerships Leverage partnerships for competitive advantage 3 Technology Leverage technology for further advantage Qantas Investor Day 2019 | 72
Slide 74: Home market distribution strength
Home market distribution strength 1 For personal use only Qantas and codeshare partners serve 88 of the top 100 destinations from Australia Via a unique and hard to replicate proposition… Australia’s leading loyalty program …across all Australia’s leading premium airline customer experience segments
Slide 75: Commonality across key segments reinforces leading network position
Commonality across key segments reinforces leading network position 1 Top destinations on the Qantas International network by segment1 For personal use only Destination Corporate rank SME2 rank Leisure rank Auckland 1 1 1 Singapore 2 2 3 London 3 3 5 Wellington 4 6 9 New York 5 8 7 Hong Kong 6 4 4 T
Slide 76: Home market distribution strength: Operate to play to our strengths
Home market distribution strength: Operate to play to our strengths 1 Project Sunrise For personal use only (New York & London) High North America London via Singapore Hong Kong Tasman London via Perth Southeast Asia Japan Shanghai South America Pacific Islands Relevance Operate in own right and com
Slide 77: Leverage partnerships for competitive advantage
Leverage partnerships for competitive advantage 2 only Qantas selling Qantas revenue driven Depth of integration onto partners1 by partnerships2 Joint Business Agreements For personal use $1.1b 30 Codeshare partners $1.5b $1.1b Codeshare partnerships $0.3b 130 Interline partners Interline partnershi
Slide 78: Leverage partnerships for competitive advantage: Joint business partners
Leverage partnerships for competitive advantage: Joint business partners 2 For personal use only Emirates American Airlines China Eastern ‒ 50 destinations1 across Europe, ‒ 109 destinations1 across North America, on track ‒ 25 destinations1 in China3 the Middle East and Africa2 to double vs pre-par
Slide 79: Leverage technology for further advantage
Leverage technology for further advantage 2 For personal use only ‒ Last two continents to be connected with non-stop flights 787 Perth-London ‒ Key pillar in transforming London from a decade of losses into a profit centre ‒ New routes Brisbane-Chicago and Brisbane-San Francisco 787 Americas ‒ Incr
Slide 80: Case study: Leverage technology on Perth-London
Case study: Leverage technology for further advantage on Perth-London 3 For personal use only 1. UK route challenged 2. 787 facilitates differentiated service 3. Results ‒ Over 20 one-stop competitors to UK, ‒ Perth-London connects Australia to ‒ Average 94% seat factor (99% in Business) all through
Slide 81: Leverage technology for further advantage: Project Sunrise
Leverage technology for further advantage: Project Sunrise 3 Continues profit-maximising strategy For personal use only ‒ Non-stop flying takes customers directly to where they want to go ‒ Increased proportion of premium seats reduces exposure to economy market ‒ Smaller gauge fleet increases flexi
Slide 82: Qantas International in transition
Qantas International in transition: From now to December 2020 For personal use only 14x 787-9s delivered, Quad engine ASK production down from Fuel cost down 25%2 747s retired 78% to 42% of total1 Maintenance cost down 20%2 12x A380s Increased premium configuration enhances ~7% improvement in trip r
Slide 83: Aligning Qantas and Jetstar with Asia's growth
Aligning Qantas For personal use only and Jetstar with Asia’s growth
Slide 84: By 2030 Asia features increasingly prominently in the world's top ten aviation markets
By 2030 Asia features increasingly prominently in the world’s top ten aviation markets The 10 largest air passenger markets over time (ranked by passenger numbers, to/from and within each country)1 For personal use only US 1 China 1 China 2 US 2 UK 3 India 3 Japan 4 Indonesia 4 Spain 5 UK 5 Germany
Slide 85: Asian inbound traffic is growing at double the rate of other segments
Asian inbound traffic is growing at double the rate of other segments For personal use only International travel to/from Australia by FY271 Passenger outlook Australia international (M)1 60 1.6x the growth in international pax (total 60m pax) 29% 37 21% 22% 65-70% of all traffic to be in Asia Pacifi
Slide 86: The Group will play to its competitive advantages to align with Asia's growth
The Group will play to its competitive advantages to align with Asia’s growth For personal use only Brand strength Fly directly where Australians want to go Distribution Leverage partnerships and codeshares to get reach Export low cost model and ability to operate dual brands Low cost and Dual Brand
Slide 87: Asia-Australia traffic has directionality requiring tailored strategies
Asia-Australia traffic has directionality and market characteristics requiring tailored strategies For personal use only Directionality of key Asian markets (%) 100% Case studies 80% Inbound 60% (Visitors to Australia)1 40% 20% Outbound (Australian residents)2 0% Indonesia Thailand Vietnam Philippin
Slide 88: The Group's dual brands operate key premium and price sensitive routes to Asia
The Group's dual brands operate key premium and price sensitive international routes to Asia For personal use only Qantas serves business and premium leisure passengers Jetstar deploys its low cost position, pan-Asia brand strength leveraging brand and distribution strength in outbound markets and d
Slide 89: The Group is evolving the role of Singapore as a hub
The Group is evolving the role of Singapore as a hub underpinned by strong point to point traffic ‒ Jetstar Asia is the 2nd largest low cost carrier in Singapore For personal use only ‒ Offers bundle of food, entertainment and through- checked baggage ‒ Top connections from London to Kuala Lumpur, B
Slide 90: Partners serve India via Singapore hub
Partners serve India via Singapore hub ‒ Fastest growing inbound market to Australia +53% in 3 years1 For personal use only ‒ Still low volumes, fragmented over many cities and low yield ‒ In short term South East Asian hubs remain best way to service demand ‒ In medium term as yields rise, Australi
Slide 91: The Group participates only where it can be profitable in the Chinese market
The Group participates only where it can be profitable in the Chinese market ‒ Operate Australia-China routes only where Group has competitive For personal use only advantage • Service Australia premium customer demand to Shanghai and Hong Kong • Niche freight provider on the Australia/China/USA tri
Slide 92: Vietnam has substantial growth but very challenging market dynamics
Vietnam has substantial growth but very challenging market dynamics For personal use only Growing substantially Very challenging market ‒ Population 97m with 70% under 35 years of age ‒ Several aggressive, well-funded entrants that are unconstrained by need to protect legacy businesses ‒ Rapidly inc
Slide 93: The Group is very well positioned in the Japanese market
The Group is very well positioned in the Japanese market For personal use only Australia — Japan Japan Domestic Japan — Asia ‒ Qantas Group has #1 Position1 ‒ #1 Position in Low Cost market ‒ Focussed network ‒ 70 years of operation on route ‒ JAL and Jetstar Japan Dual Brand ‒ Jetstar Japan and Jet
Slide 94: Number one position with further growth potential in Australia to Japan
Number one position with further growth potential in Australia to Japan ‒ Japan is the fastest growing North Asian inbound tourism market For personal use only Japan-Australia capacity by carrier2 to Australia (faster than China) NH Qantas JL Group CAGR ‒ Also #1 fastest growing North Asia market ou
Slide 95: Japan Domestic – Competitively advantaged position
Japan Domestic – Competitively advantaged position in world’s fifth largest aviation market ‒ Stable, highly profitable Japan domestic market For personal use only Jetstar Japan A320 aircraft 35 ‒ Jetstar Japan is the #1 domestic low cost carrier 28 • First mover advantage, in the market since 2012
Slide 96: Significant growth potential in Asia region from Japan
Significant growth potential in Asia region from Japan For personal use only A321LR range from NRT ‒ Japan inbound from Asia growing at 27% • China and ASEAN major markets • Post-Tokyo Olympics ‘halo’ expected ‒ Almost 1/3 of world’s population in range of the A321LR from Tokyo • Only cherry-picking
Slide 97: Korea – new inbound Asia leisure market for Jetstar
Korea – new inbound Asia leisure market for Jetstar International trips per capita2 For personal use only • Jetstar will launch 3pw Incheon-Gold Coast in December 2019 0.51 0.45 • Koreans are the most frequent travellers in Asia Pacific 0.18 0.14 • Distribution strength in both Australia and South K
Slide 98: Jetstar fleet strategy underpins profitable growth in Asian markets
Jetstar fleet strategy underpins profitable growth in Asian markets For personal use only A321LRs will unlock lower trip costs and Lower cost 787 redeployment on longer routes A321LR can operate domestic by day and Lower risk international overnight for “free” international growth and higher utilisa
Slide 99: Playing where we can win in Asia
Playing where we can win in Asia For personal use only Directionality of key Asian markets (%) Brand strength Fly directly where Australians want to go Leverage partnerships and codeshares Distribution to get reach Low cost and Dual Brand Export low cost model and ability to operate know-how dual br
Slide 100: Investing in Customer, Brand, Data and Digital
For personal use only Investing in Customer, Brand, Data and Digital to continue to deliver a sustainable competitive advantage Qantas Investor Day 2019 | 99
Slide 101: The strength of Qantas' brands are a key source of competitive advantage
The strength of Qantas’ brands are a key source of competitive advantage Targeted to diverse customer segments and marketplaces For personal use only Jetstar (Australia & New Zealand) Jetstar Asia Jetstar Japan Jetstar Pacific Premium business and 13m QFF members Low fares price sensitive premium le
Slide 102: Customers are at the centre of our thinking
Customers are at the centre of our thinking For personal use only Trust1 ‒ Qantas: Most trusted corporate brand in Australia Insights ‒ Jetstar: Most trusted low cost carrier in Australia ‒ Half of Australians claim Qantas as the #1 business supporting the Australian Community NPS ‒ Qantas and Qanta
Slide 103: Qantas continues to be in a unique position for trust in Australian businesses
Qantas continues to be in a unique position for trust in Australian businesses Trust in the Qantas brand remains a key competitive advantage1 For personal use only 70% 65% 63% 60% 53%-56% 55% 50% 45% 38%-42% 40% 32%-37% 35% 30% Qantas Group Supermarkets/ Telecommunications, Banks, insurance other fu
Slide 104: Focussing on listening to our customers and responding
Focussing on listening to our customers and responding For personal use only Three pillars: Identification, Prevention and Remediation, Customer Advocacy enable an objective voice when things go wrong or customers are not satisfied Integration of customer and complaints reporting and governance Succ
Slide 105: Our strategic customer pillars are our competitive advantage
Our strategic customer pillars are our competitive advantage For personal use only Qantas QantasInvestor InvestorDay Day2019 2019 | | 104 104
Slide 106: Continued investment in our product and service on the ground and in the air
Continued investment in our product and service on the ground and in the air For personal use only ON THE GROUND IN THE AIR Melbourne Qantas Club and Lounges redesign A380 Refurbishments Additional 787-9s Singapore First Class Lounge Jetstar new A321LR Qantas Project Sunrise Plus upcoming lounge inv
Slide 107: Digital success lies in the strength of our own channels
Digital success lies in the strength of our own channels For personal use only 60% 70% Direct Channel share1 Direct Channel share 235 million 216 million Visits to website and app Visits to website and app per annum (+8%2) per annum (+0.4%2) 1 million 800,000 Monthly active Monthly active app users
Slide 108: Case study: Jetstar Ancillary revenue growth
Case study: Jetstar Ancillary revenue growth For personal use only Ancillary revenue growth enabled through digital website enhancements allowing us to personalise the information we provide our customers and introduce new products and services that better suit their needs Ancillary revenue yield gr
Slide 109: "Know me" framework: Working together to drive greater value
“Know me” framework: Working together to drive greater value For personal use only PERSONALISATION REVENUE DISTRIBUTION MANAGEMENT Qantas Investor Day 2019 | 108
Slide 110: Personalisation and Distribution are seeing momentum and success
Personalisation and Distribution are seeing momentum and success For our customer For our business For our team For personal use only Customer led offers over 2x revenue return versus Speed to market through product led target in the last quarter increased offer output PERSONALISATION Overall satisf
Slide 111: Personalisation and Distribution are seeing momentum and success
Personalisation and Distribution are seeing momentum and success For our customer For our business For our team For personal use only Content innovation for the Compliance and greater Qantas can support multiple customer is at the heart of guardrails on our content distribution models (Direct, our d
Slide 112: Case study: Disruption management and servicing
Case study: Disruption management and servicing For personal use only Unmatched commitment to go above-and-beyond when making things right for our disrupted customers. Focus on building, enhancing and optimising our digital solutions to keep customers informed and empowered and training our people t
Slide 113: Evolving our operating model to create customers for life
Evolving our operating model to create customers for life For personal use only Qantas Investor Day 2019 | 112
Slide 114: The Qantas Loyalty roadmap to FY22
For personal use only The Qantas Loyalty roadmap to FY22: Accelerating towards $500-600m Qantas Investor Day 2019 | 113
Slide 115: Qantas Loyalty is uniquely advantaged compared to local and global loyalty programs
Qantas Loyalty is uniquely advantaged compared to local and global loyalty programs For personal use only Engaged audience Unique assets Quality partners 12.9m1 >30 years Only members, representing ~50% penetration of innovation and loyalty experience, longest loyalty program globally in partnership
Slide 116: Evolved from a frequent flyer program to a consumer loyalty ecosystem
Evolved from a traditional frequent flyer program to a sophisticated consumer loyalty ecosystem For personal use only A mutually-reinforcing ecosystem, driving a network effect by: ‒ Rewarding members across multiple categories ‒ Generating value for partners by driving repeat engagement ‒ Supportin
Slide 117: Business growth through a proven track record of membership growth
Business growth through a proven track record of membership growth, innovation and resilience Qantas Loyalty EBIT evolution and key drivers, $M For personal use only 8%3 3721 374 10% CAGR 369 346 315 286 3452 260 231 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 # Members 8.7M 9.4M 10.1M 10.8M 11.4M 11.8M
Slide 118: We have a clear pathway to deliver the FY22 profit target
We have a clear pathway to deliver the FY22 profit target and core member goals For personal use only Targeting a profitable growth of $500-600m EBIT by FY22 A valued and trusted loyalty ecosystem 1 2 3 New Members Partnerships Businesses Bringing the Dream Trip closer Delivering value for our partn
Slide 119: Investing in member experience to drive program-wide engagement
Investing in member experience to drive program-wide engagement 1 Our program is built around the member at its heart For personal use only Ongoing link between our customers and Rewards that drive strive and the Qantas brand create an emotional connection ‒ Network of Qantas, Jetstar and ‒ Extendin
Slide 120: Investing in member experience to drive program-wide engagement
Investing in member experience to drive program-wide engagement 1 $25m investment to underpin program health and continued member growth For personal use only Member-centric initiatives to Underpinning long-term Strong uplift in member drive engagement business growth engagement2 Biggest program ove
Slide 121: Defending and growing the partnership coalition – the core of our business
Defending and growing the partnership coalition – the core of our business 2 Outperforming market and diversifying our core financial services offerings For personal use only Stable growth in co-branded credit cards instilling confidence ‒ >50 Qantas Points earning credit cards in collaboration with
Slide 122: Defending and growing the partnership coalition – the core of our business
Defending and growing the partnership coalition – the core of our business 2 Scale and frequency of engagement reinforcing value for our members and coalition partners For personal use only ‒ Market leading coalition in Australia New ‘everyday earn’ partnerships in FY20 • ~500+ coalition partners1 ‒
Slide 123: Defending and growing the partnership coalition – the core of our business
Defending and growing the partnership coalition – the core of our business 2 Growth from diversification into SME1 sector with Qantas Business Rewards For personal use only Rewarding Australian small businesses Qantas Business Rewards member benefits ‒ Qantas’ B2B2 loyalty program that rewards SMEs1
Slide 124: Broader engagement has a multiplier effect for partners and Qantas
Broader engagement has a multiplier effect for partners and Qantas 2 Breadth of program engagement multiplies points on offer Generating an uplift in partner earn1 For personal use only Number of Level of Number of Use of loyalty Index of member points earn with initial partner as engagement members
Slide 125: Scale and launch New Businesses
Scale and launch New Businesses 3 Proven track record of developing and scaling new businesses For personal use only Continued double digit growth in health insurance ‒ #2 for growth in net persons insured for past two years1 Rapid scaling of Qantas Hotels ‒ ~45% growth in FY192 ‒ Continues to grow
Slide 126: Scale and launch New Businesses
Scale and launch New Businesses 3 Our latest launch extends our Insurance portfolio For personal use only Evolution of the Qantas Insurance portfolio Understanding our latest venture Insights Digital Rewards Members Compelling member experience Market differentiated Home insurance — drives effective
Slide 127: We are confident we have the track record and momentum to achieve our FY22 goal
We are confident we have the track record and momentum to achieve our FY22 goal Qantas Loyalty EBIT evolution and key drivers, $M For personal use only ~500-600 7-10%+ p.a. New Businesses1 3 New 369 Businesses 2 Partnerships ‒ Launch proven innovation 1 ‒ Deepen existing extensions to Members financ
Slide 128: Unique assets and capabilities have enabled diversified sources of value
Unique assets and capabilities have enabled diversified sources of value For personal use only Core points sales – generates points margin Margin is only generated on ‘external points’ (unique to other airline loyalty programs) Creating value for our partners Internal ~40% Qantas, Jetstar • Customer
Slide 129: People and Culture
For personal use only People and Culture Qantas Investor Day 2019 | 128
Slide 130: Global forces are shaping our People and Culture strategy
Global forces are shaping our People and Culture strategy New centres of customer demand Rapid digitalisation and Shifting customer and Resource constraints For personal use only and geopolitical influence the rise of Big Data workforce preferences and climate change Mimic customer Asian heritage Di
Slide 131: We have a diverse and experienced workforce
We have a diverse and experienced workforce For personal use only Gender Australia-based By type Male 58% 88% Employees (FTE) 29,000+ Female 42% Contractors 1,600+ Languages spoken Country of birth Employees under EBA 80% 31+ 160+ By age onboard our aircraft1 Gen Z (< 23) 4% Aboriginal and Torres St
Slide 132: Our employee value proposition is unique and differentiated
Our employee value proposition is unique and differentiated For personal use only Connection History Brand and values Purpose Aviation industry Agility and Customer focus Culture Diversity and inclusion flat structures Experiential Balance and flexibility Breadth of business Innovation Products Bene
Slide 133: Nurturing a healthy culture strengthens our business
Nurturing a healthy culture strengthens our business For personal use only Clear Purpose We take the Spirit of Australia further Healthy culture Clear behaviours, goal Strong sense of Investment in leadership Agile, innovative setting and community and and our people ways of working accountability a
Slide 134: We have mapped out the employee experience, mirroring the customer experience
We have mapped out the employee experience, mirroring the customer experience For personal use only Recruitment Consideration 16 2 Book 15 3 Onboarding ‒ Understand the ‘moments that matter’ Pre-airport 14 4 Training ‒ Utilise listening and behavioural data Airport 13 Customer Employee 5 Performance
Slide 135: We are actively pursuing employee growth in areas aligned to global forces
We are actively pursuing employee growth in areas aligned to global forces Global pilot incremental demand1 For personal use only 2019-2038 World Demand: 804,000 ‒ Pilot demand driven by rapid growth in Asia 148,000 27,000 ‒ Increasing competition for talent from other industries 212,000 Europe Russ
Slide 136: Enabling our people to do their best work will drive extraordinary outcomes
Enabling our people to do their best work will drive extraordinary outcomes For personal use only ‒ Right capabilities aligned with needs and growth ‒ Understand ‘moments that matter’ in employee lifecycle ‒ Support with technology, training and leadership ‒ Cost competitive, flexible and productive
Slide 137: CEO Wrap Up
For personal use only CEO Wrap Up 100 Years of The Spirit of Australia
Slide 138: Key messages you should take away from today
Key messages you should take away from today For personal use only Positioned to deliver higher domestic operating Transformation will continue to drive valuable margins $ outcomes across the business Enabling our people to be their best Building a resilient Qantas International delivering ROIC > 10
Slide 139: Disclaimer and ASIC guidance
Disclaimer and ASIC guidance This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). While every effort has been made to check the accuracy of the information in this document, it may not be free from errors and you should make your own enquiries to verify For pe