Qantas Airways Limited · ASX:QAN
Qantas Airways — H1 2015 Earnings Presentation
29 slides from Qantas Airways's earnings presentation, Feb 26, 2015
Slide 1: Qantas Airways Limited 1H15 Results
For personal use only Qantas Airways Limited 1H15 Results 26 February 2015
Slide 2: Overview: A Strong Foundation for Sustainable Growth
Overview A Strong Foundation for Sustainable Growth For personal use only • Delivering against strategy to drive earnings recovery, build long-term shareholder value • All operating segments profitable1 with Qantas Transformation well advanced – Turnaround of Qantas International – Strong momentum i
Slide 3: 1H15 Financial Results
1H15 Financial Results For personal use only • 1H15 Underlying PBT1 of $367m; Statutory Profit After Tax $206m – Revenue up 2.1% on yield and load improvement across the Group – Comparable unit cost2 improvement 4.8% on flat capacity • Total liquidity $3.6b3 including $2.9b cash • Net free cash flow
Slide 4: Underlying Profit Before Tax bridge
1H15 Financial Results For personal use only UNDERLYING PROFIT BEFORE TAX ($M) 14 Net Loyalty (104) financing Discount 162 costs rate Carbon Net CPI2 (37) change3 1H15 tax Underlying (65) (25) Transformation 59 RASK1 PBT benefits 33 Other AUD fuel price 374 367 1H14 Underlying PBT (252) 208 Other in
Slide 5: Underlying Income Statement Summary
Underlying Income Statement Summary For personal use only $M 1H151 1H141 VLY % Improved yields and loads driven by network optimisation and Net passenger revenue 6,960 6,786 2.6 capacity moderation in domestic and international markets Reduced freighter capacity following removal of B747 freighter N
Slide 6: Other Items Not Included in Underlying PBT
Other Items Not Included in Underlying PBT1 For personal use only $M 1H15 1H14 AASB 9 mark-to-market movements relating to other 31 (54) reporting periods Redundancy and restructuring costs relating to workforce changes Redundancies, restructuring and other transformation costs 42 59 as part of the
Slide 7: Cash Flow
Cash Flow For personal use only SUMMARISED CASH FLOW $M 1H15 1H14 VLY % Cash earnings improved rapidly with yield and load improvement, Underlying EBITDA1 1,038 590 75.9 benefits delivered through Qantas Transformation Non-cash items and working capital movements (36) 102 >(100) Cash generated from
Slide 8: Capital Management and Treasury
Capital Management and Treasury Robust liquidity; significant unencumbered aircraft pool For personal use only DEBT MATURITY PROFILE AS AT 31 DEC 2014 (A$M) • Cash $2.9b1 plus $720m undrawn facilities Excluding Operating Leases − Including new unsecured 5 year $90m RCF2 1,200 Weighted average debt m
Slide 9: Group Capex Outlook
Group Capex Outlook Supporting strong positive free cash flow from 1H15 onward For personal use only • Modest FY15, FY16 capex pipeline supporting strong net free cash flow1 generation FY15-FY16 NET CAPEX2 AND LEASE INVESTMENT3 ($B) FY15 FY16 Mvmt in Lease Mvmt in Lease (0.1) Liabilities3 (0.2) 0.2
Slide 10: 1H15 Segment Results
For personal use only 1H15 Segment Results 10
Slide 11: Qantas Domestic
Qantas Domestic For personal use only • Improvement of $170m delivering Underlying EBIT 1H15 1H14 VLY % of $227m Revenue $M 3,007 3,086 (2.6) – Transformation benefits of $127m Underlying EBIT $M 227 57 >100 – Increased passenger revenue on reduced capacity (2.5% RASK1 improvement) ASKs M 18,765 19,
Slide 12: Qantas International
Qantas International For personal use only • Turnaround of $321m delivering Underlying EBIT 1H15 1H14 VLY % of $59m Revenue $M 2,748 2,621 4.8 – Transformation benefits of $159m Underlying EBIT $M 59 (262) >100 – 4.8% revenue growth on reduced capacity ASKs M 29,580 29,863 (0.9) – $100m reduction in
Slide 13: Jetstar Group
Jetstar Group For personal use only • Improvement of $97m delivering Underlying EBIT 1H15 1H14 VLY % of $81m Revenue $M 1,786 1,671 6.9 – Domestic Australia EBIT of $63m driven by cost management and RASK improvement Underlying EBIT $M 81 (16) >100 – Strong Jetstar International earnings (LHI, SHI,
Slide 14: Qantas Loyalty
Qantas Loyalty For personal use only • Record Underlying EBIT1 $160m 1H15 1H14 VLY % – Continued growth of QFF2 members and Underlying EBIT $M 160 146 9.6 partners driving engagement Billings $M 700 662 5.7 – Billings3 up 6%, external billings up 7% Deferred Revenue $M 68 59 15.3 Growth6 • Strong fi
Slide 15: Qantas Freight
Qantas Freight For personal use only • Improvement of $43m delivering Underlying 1H15 1H14 VLY % EBIT of $54m Revenue $M 550 568 (3.2) − Best half-year result since FY07 Underlying EBIT $M 54 11 >100 − Transformation benefits of $16m Capacity B 1.6 1.8 (11.1) (International AFTKs)2 − Improved yield1
Slide 16: Group Strategy Update & 2H15 Outlook
For personal use only Group Strategy Update & 2H15 Outlook 16
Slide 17: A Strong Foundation for Sustainable Growth
A Strong Foundation for Sustainable Growth Creating long-term shareholder value For personal use only Ingrained safety culture from 94 years of experience Investing in our customers and people to remain first choice in every market we serve Unrivalled dual-brand strength and market position in domes
Slide 18: Market Conditions – Domestic
Market Conditions – Domestic For personal use only • Capacity moderation has improved TOTAL MARKET DOMESTIC CAPACITY GROWTH2 supply-demand imbalance 16.0% Market Growth − Further market capacity 14.0% Average Market Growth contraction forecast for 2H151 12.0% 10.0% FY13 Average +7.5% • Demand enviro
Slide 19: Market Conditions – International
Market Conditions – International For personal use only • Competitor growth moderated significantly FY14 INTERNATIONAL CAPACITY GROWTH2 from CAGR1 of 7% in 5 yrs to FY14 – Economic factors including lower AUD and excess market capacity have led to a Competitor reduction in pace of competitor growth
Slide 20: Qantas Transformation: Immediate Strategic Priorities Being Delivered
Qantas Transformation Immediate Strategic Priorities Being Delivered For personal use only Immediate Priorities set in Dec-2013 Milestones achieved by Dec-2014 Accelerated cost reduction All transformation targets met or exceeded Right-sizing fleet & network Network restructure, accelerated fleet re
Slide 21: Qantas Transformation Targets
Qantas Transformation Targets Driving earnings recovery, deleveraging the balance sheet For personal use only $2B BENEFITS REALISED BY FY17 >$1B DEBT REDUCTION BY FY15 • $374m benefits realised in 1H151 • Net debt reduced by further $306m in 1H153 • Operating expense, fuel efficiency, and revenue −
Slide 22: Rapid progress against FTE reduction target
Qantas Transformation Rapid progress against FTE reduction target For personal use only 3,800 OF 5,000 FTE1 REDUCTION TARGET 1,000 1,200 (4,000) (5,000) 1,600 200 1,000 Management & Operational Actioned2 to To action by FY15 FTE FY16-FY17 FY17 FTE Non-operational date in FY15 the end of reduction re
Slide 23: Realising benefits ahead of targets
Qantas Transformation Realising benefits ahead of targets For personal use only TARGET: >$875M TOTAL BENEFITS TO BE REALISED BY END OF FY15 $2b Qantas Transformation Pipeline Development phase • FY15 targeted benefits raised to Development phase $600m $675m from initial target of >$600m $900m • Incr
Slide 24: Measuring Progress: Scorecard to FY17
Measuring Progress Scorecard to FY17 For personal use only Target PROGRESS TO DATE Metric Timeframe $2b gross benefits Realised benefits to date = $578m ACCELERATED FY17 TRANSFORMATION >10% ex-fuel expenditure reduction1 Ex-fuel expenditure reduced by 5%2 BENEFITS 5,000 FTE reduction FY17 3,800 FTE
Slide 25: Delivering for Customers
Delivering for Customers The first choice for our customers in every market we serve For personal use only • Commitment to our customers through ongoing product enhancements and service innovation – Fleet reconfigurations with best-in-class A330 Business Suites – LAX Business & First Lounge opening
Slide 26: Our People
Our People For personal use only • Our people were instrumental in Qantas navigating the immediate challenges faced over 2014 – Strong emphasis on collaboration as we transform our business and the way we work • Our people continue to deliver excellent service for our customers – Investment in train
Slide 27: Outlook
Outlook For personal use only • The Group’s 2H15 operating environment outlook has improved: – Overall demand stable, domestic Australia demand remains mixed – Domestic and international market capacity moderating – Yield and load factors stabilised and in early stages of recovery • Current operatin
Slide 28: Summary
Summary For personal use only • All Qantas Transformation milestones being met or exceeded • Strong momentum into 2H15 with cost and revenue initiatives • Continuing to invest in our customers and engage our people • Operating environment stable with market capacity moderating • 2H15 benefit from lo
Slide 29: 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 26 Febr