Qantas Airways Limited · ASX:QAN
Qantas Airways — Investor Day (November 2019)
138 slides from Qantas Airways's investor day presentation, Nov 19, 2019
Slide 1: Investor Day 19 November 2019
Investor Day 19 November 2019 ASX: QAN US OTC: QABSY
Slide 2: Building on our sustainable competitive advantage
Building on our sustainable competitive advantage
Slide 3: Safety is always our first priority
Safety is always our first priority ‒ Strong risk reporting culture underpinned by a ‘Just Culture’ framework ‒ Continued focus on improving the safety and wellbeing of our people ‒ Strong relationships with safety regulators, key industry bodies ‒ Leading business resilience and crisis management f
Slide 4: 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 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% pa +2.0% pa +4.0% pa
Slide 5: 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 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 influence forces Recent devel
Slide 6: The Group is uniquely positioned through its key competitive advantages
The Group is uniquely positioned through its key competitive advantages 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 7: The Group's integrated portfolio of mutually reinforcing businesses
The Group’s integrated portfolio of mutually reinforcing businesses will ensure its ongoing success ‒ 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 Qantas and Jetstar to fly i
Slide 8: The Group's strategy will build on its sustainable competitive advantages
The Group’s strategy will build on its sustainable competitive advantages 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 climate change influence Cl
Slide 9: Positioned to deliver higher domestic operating margins
Positioned to deliver higher domestic operating margins ‒ 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 and operating platform
Slide 10: Building a resilient Qantas International
Building a resilient Qantas International ‒ 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 technology for further
Slide 11: Playing to competitive advantages to align with Asia's growth
Playing to competitive advantages to align with Asia’s growth ‒ 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 – world’s 4th largest air
Slide 12: Investing to drive superior customer experiences
Investing to drive superior customer experiences ‒ 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 ‒ Strengthening customer re
Slide 13: Diversification and growth of Qantas Loyalty earnings
Diversification and growth of Qantas Loyalty earnings ‒ 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 experience ‒ Deepening
Slide 14: Enabling our people to be their best
Enabling our people to be their best ‒ Our employee value proposition is unique and differentiated ‒ Our culture promotes diversity and keeps our people energised ‒ Our training is aligned with required capabilities ‒ Leveraging technology to allow our people to deliver superior customer service ‒ G
Slide 15: Transformation will continue to drive valuable outcomes across the business
Transformation will continue to drive valuable outcomes across the business 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 principles still governing
Slide 16: Looking forward, in FY24 we will measure our success by
Looking forward, in FY24 we will measure our success by 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 Targeting $500-600m Target
Slide 17: Ensuring our sustainability for the next 100 years
Ensuring our sustainability for the next 100 years There when needed 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 contribution $25b1 Co
Slide 18: Acting responsibly
Acting responsibly Qantas Investor Day 2019 | 18
Slide 19: The National Carrier is committed to acting responsibly
The National Carrier is committed to acting responsibly, respecting our social licence to operate topics There when needed today Community partnerships Reducing our carbon footprint Customers Employees Social Community licence to Industry operate Reconciliation Action Plan Investing in a circular ec
Slide 20: Global movement to further improve carbon emission targets
Global movement to further improve carbon emission targets to limit the impact of climate change 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 movement to aspire to limit
Slide 21: Aviation is 2% of global carbon emissions but must lead
Aviation is 2%1 of global carbon emissions but must lead in acting to reach net zero by 2050 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 Variable electricity 12% •
Slide 22: CORSIA is an encouraging start, but does not go far enough
CORSIA is an encouraging start, but industry target of 50% reduction in net emissions does not go far enough Carbon Offsetting and Reduction Scheme for International Airlines (CORSIA) ‒ The airline industry mechanism to reduce global emissions, adopted in 2016 by the International Civil Aviation Org
Slide 23: Many airlines are already pushing beyond CORSIA
Many airlines are already pushing beyond CORSIA1 to make aviation sustainable 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 emissions emissions fro
Slide 24: 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 every $1 spent offsetting QFP grows to over 30 partners, including Australia Post Industry-wide climate Announced waste targets adopted reduction project Qantas Group Qant
Slide 25: Qantas has set the most ambitious emissions targets of any airline
Qantas has set the most ambitious emissions targets of any airline Capping Group Investing $50m Net zero emissions by emissions at 2050 2020 in Sustainable Aviation levels Fuels Qantas Investor Day 2019 | 25
Slide 26: Most ambitious carbon emissions target for any airline group
Qantas has now set itself the most ambitious carbon emissions target for any airline group globally Our targets Our actions ‒ Zero net carbon emissions by 2050 ‒ Increase carbon offsetting ‒ Capping of net emissions at 2020 level • Qantas Points incentives Offset • Match customer offsets dollar for
Slide 27: Multiple potential pathways to meeting targets
Multiple potential pathways to meeting targets, partly dependent on technological developments Potential drivers of increases in relative contributions Qantas Group net emissions Substitute ‒ Government incentives and major private investments in Substitute sustainable fuel for all transport industr
Slide 28: The Qantas Group is committed to transparency in reporting and disclosures
The Qantas Group is committed to transparency in reporting and disclosures 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 our strategy, laying fo
Slide 29: 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 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 recycling and ‒ Worki
Slide 30: 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 economy representing 0.7% of total Gross Domestic Product1 Total economic contribution1 to the Australian econom
Slide 31: Qantas supports regional Australia
Qantas supports regional Australia Regional fares Regional grants Drought initiative ‒ Taken action to make travel more accessible ‒ $5m commitment over five years ‒ Partnering with Rural Aid to help fund hay bales, for residents of remote and regional Australia ‒ 1,200+ submissions received from ac
Slide 32: The opportunity for leadership
The opportunity for leadership ‒ The Qantas Group plans to capture and consolidate its position as a leader. This means leadership in sustainable aviation, supporting and standing up for regional Australia and continuing to engage on critical social and economic issues ‒ The world in which we operat
Slide 33: Disciplined application of our Financial Framework
Disciplined application of our Financial Framework
Slide 34: Delivering against our Financial Framework
Delivering against our Financial Framework 1 2 3 Maintaining an optimal capital structure ROIC > WACC2 through the cycle Disciplined allocation of capital Net Debt1 profile FY15 to FY19 ($B) Return on Invested Capital Capital allocation split FY15 to FY19 ($B) 7 6 Target 22.7% 21.4% 0.3 20.1% 18.4%
Slide 35: Extended tenor and smoothed profile resulting in minimal refinancing risk
Extended tenor and smoothed profile resulting in minimal refinancing risk 1 Debt maturity profile as at 30 June 2019 ($M)1 Optimal capital structure A$M 1,000 ‒ Net Debt target = 2.0x – 2.5x ROIC EBITDAR where EBITDAR achieves a fixed 10% ROIC Debt structure 250 ‒ Diverse funding sources – new marke
Slide 36: Qantas is one of the least leveraged network carriers
Qantas is one of the least leveraged network carriers of Moody’s rated airlines 1 7 6 5 Moody's Debt to EBITDA 1 Investment grade rated airlines 4 Baa2 Baa3 Baa3 Baa3 3 Baa3 Baa2 Baa1 2 A3 1 0 Passenger airlines rated by Moody’s Qantas Airways Limited Network carrier Low cost carrier 1. Moody’s Debt
Slide 37: Quality of earnings remains strong
Quality of earnings remains strong 2 Qantas Group’s sustainable competitive advantages provide a stable earnings base Earnings ($M) stable and trend will continue Leading Dual Brand domestic position Stable earnings ‒ Sound market structure Operating cash flow Statutory EBITDA $ ‒ Successful Dual Br
Slide 38: Maintaining earnings despite fuel price volatility
Maintaining earnings despite fuel price volatility 2 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 MONTHS 24 c/ASK $/bbl 16.
Slide 39: Diverse enough to manage currency fluctuations
Our business and strategy is diverse enough to manage currency fluctuations 2 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 for outbound internati
Slide 40: Capital allocation linked to earnings, balance sheet strength a priority
Capital allocation linked to earnings, balance sheet strength a priority 3 Net Debt ‒ 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 month forward ‒ Expand
Slide 41: 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 Replace aircraft Maintain aircraft life and keep product relevant Select right aircraft and build scale quickly Identify technology t
Slide 42: Target $2b reinvestment per annum will deliver a sustainable fleet
Target $2b reinvestment per annum will deliver a sustainable fleet 3 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 1.5 ‒ Under this scenari
Slide 43: 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 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 advantage to key comp
Slide 44: Financial Framework is a proven success and will continue to guide decisions
Financial Framework is a proven success and will continue to guide our capital decisions 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 a Net Debt range of $5
Slide 45: Transformation: Past, present and future
Transformation: Past, present and future
Slide 46: Transformation journey
Transformation journey 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 strategic procurement
Slide 47: Transformation sources (FY18-FY19)
Transformation sources (FY18-FY19) 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 ‒ Fuel burn reduction ‒ Re
Slide 48: Case Study: Qantas Group Engineering
Case Study: Qantas Group Engineering Base maintenance Supply chain ‒ 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% reduction in 737 turn time ‒ I
Slide 49: 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 real-time satellite using state-of-the-art NBN satellites Cost reductions for flight deck messaging • Significantly reduced communications cost • Real-time aircraft informati
Slide 50: Established principles still governing transformation
Established principles still governing transformation 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 meetings Embedded Cost c
Slide 51: Ongoing transformation themes
Ongoing transformation themes 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 route and cabin Digital
Slide 52: Transformation pipeline
Transformation pipeline 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 optimisation APU2 usage GSE3 tele
Slide 53: Case study: Frontline empowerment
Case study: Frontline empowerment Above the Wing Below the Wing ‒ Integrated operations app directly links frontline to Ops Centre ‒ Airport mapping system integrates Ground Services Equipment increasing situational awareness telemetry with operations status ‒ Empowers frontline for best customer se
Slide 54: Case study: Revenue management technology
Case study: Revenue management technology ‒ 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 learning) • Scalability
Slide 55: Case study: Biometrics
Case study: Biometrics Trials to date Future benefits ‒ 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 feedback from • Fewer mis
Slide 56: Enablers going forward
Enablers going forward 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. Qantas Investor Day
Slide 57: Transformation summary
Transformation summary 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 governing transformat
Slide 58: Building on our leading domestic position
Building on our leading domestic position Qantas Investor Day 2019 | 58
Slide 59: Structural advantage in the Australian domestic market
Structural advantage in the Australian domestic market Market dynamics and stability Domestic market capacity evolution (ASK) 4 ‒ Australian economy stable and resilient over the long term ‒ Population concentrated in large cities separated by large distances ‒ Two airline groups have 98% capacity s
Slide 60: Growing the domestic contribution
Growing the domestic contribution Domestic market EBIT evolution ($B) 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 advantage Profit share Margin
Slide 61: Building on our success
Building on our success 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 ~18% for Qantas Domes
Slide 62: Continuously evolving our uniquely integrated network advantage
Continuously evolving our uniquely integrated network advantage 1 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 Queensland Leading leisure pr
Slide 63: Customer focus strengthening our leadership across all core segments
Customer focus strengthening our leadership across all core segments 2 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, NPS advantage (e.g. Wi-F
Slide 64: 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 A320/A321 737s and A330s redeployed All domestic markets internationally (Jetstar) A330 737 A320s redeployed Trunk markets into resources routes (Qantas) 717 Turboprops Regional mark
Slide 65: Rigorous and rational capacity management
Rigorous and rational capacity management 3 Domestic market dynamic and capacity FY20 position ‒ 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 flat market capacity g
Slide 66: Delivering higher operating margins
Delivering higher operating margins 4 Operating Margin Trajectories (%) 1 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 strategies in execution across
Slide 67: 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 ‒ 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 CASK than A320ceo • In
Slide 68: Qantas driving revenue premiums and cost transformation
Qantas driving revenue premiums and operationally-enabled cost transformation 4 Cost focus Revenue focus ‒ Dedicated focus on transforming operations to best practice ‒ Pursuing industry leading models across: • Digital integration • Distribution • Asset utilisation • Personalisation • Fuel efficien
Slide 69: Priorities and 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? Protecting and extending dual brand network ‒ Market capacity is aligned to demand 1 advantage environment, fuel and FX movement
Slide 70: Qantas International: Building sustainable advantage
Qantas International: Building sustainable advantage
Slide 71: Qantas International: A business transforming
Qantas International: A business transforming A business in need of transformation A fit and competitive Qantas International ‒ High cost base ‒ >$1b1 in transformation benefits ‒ Over-exposed to challenged loss-making markets using Asia ‒ Halved exposure to Europe and made flying profitable as a re
Slide 72: Leverage strengths for sustainable competitive advantage
Leverage strengths for sustainable competitive advantage 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 73: Home market distribution strength
Home market distribution strength 1 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 Australia’s most comp
Slide 74: 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 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 Tokyo 7 7 2 San Francis
Slide 75: Home market distribution strength: Operate to play to our strengths
Home market distribution strength: Operate to play to our strengths 1 Project Sunrise (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 complement with partnersh
Slide 76: Leverage partnerships for competitive advantage
Leverage partnerships for competitive advantage 2 Qantas selling Qantas revenue driven Depth of integration onto partners1 by partnerships2 Joint Business Agreements $1.1b 30 Codeshare partners $1.5b $1.1b Codeshare partnerships $0.3b 130 Interline partners Interline partnerships Relationship maturi
Slide 77: Leverage partnerships: Joint business partners
Leverage partnerships for competitive advantage: Joint business partners 2 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-partnership ‒ Provides im
Slide 78: Leverage technology for further advantage
Leverage technology for further advantage 2 ‒ 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 ‒ Increasing frequency on Lo
Slide 79: Case study: Leverage technology on Perth-London
Case study: Leverage technology for further advantage on Perth-London 3 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 hubs Europe non-stop
Slide 80: Leverage technology: Project Sunrise
Leverage technology for further advantage: Project Sunrise 3 Continues profit-maximising strategy ‒ 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 flexibility in deployment a
Slide 81: Qantas International in transition: From now to December 2020
Qantas International in transition: From now to December 2020 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 revenue reconfigured re
Slide 82: Aligning Qantas and Jetstar with Asia's growth
Aligning Qantas and Jetstar with Asia’s growth
Slide 83: By 2030 Asia features prominently in the 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 US 1 China 1 China 2 US 2 UK 3 India 3 Japan 4 Indonesia 4 Spain 5 UK 5 Germany 6 Japan 6 India 7 Spai
Slide 84: Asian inbound traffic is growing at double the rate of other segments
Asian inbound traffic is growing at double the rate of other segments 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 Pacific 24% 50% 54% 80% of i
Slide 85: The Group will play to its competitive advantages to align with Asia
The Group will play to its competitive advantages to align with Asia’s growth 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 know-how to inbound a
Slide 86: Asia-Australia traffic requires tailored strategies
Asia-Australia traffic has directionality and market characteristics requiring tailored strategies 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 Philippines India Japan Singapo
Slide 87: 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 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 distribution model on o
Slide 88: 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 ‒ Offers bundle of food, entertainment and through- checked baggage ‒ Top connections from London to Kuala Lumpur, Bangkok, Bali and Phuke
Slide 89: Partners serve India via Singapore hub
Partners serve India via Singapore hub ‒ Fastest growing inbound market to Australia +53% in 3 years1 ‒ 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, Australian based aircraft coul
Slide 90: Participating only where 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 advantage • Service Australia premium customer demand to Shanghai and Hong Kong • Niche freight provider on the Australia/China/USA triangle and into Macau ‒
Slide 91: Vietnam has substantial growth but challenging market dynamics
Vietnam has substantial growth but very challenging market dynamics 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 increasing propensity to
Slide 92: The Group is very well positioned in the Japanese market
The Group is very well positioned in the Japanese market 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 Jetstar Asia ‒ Qantas and
Slide 93: 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 Japan-Australia capacity by carrier2 to Australia (faster than China) NH Qantas JL Group CAGR ‒ Also #1 fastest growing North Asia market outbound for Australians
Slide 94: Japan Domestic – Competitively advantaged position
Japan Domestic – Competitively advantaged position in world’s fifth largest aviation market ‒ Stable, highly profitable Japan domestic market Jetstar Japan A320 aircraft 35 ‒ Jetstar Japan is the #1 domestic low cost carrier 28 • First mover advantage, in the market since 2012 25 21 22 • Scale advan
Slide 95: Significant growth potential in Asia region from Japan
Significant growth potential in Asia region from Japan 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 Japan to Asia routes
Slide 96: Korea – new inbound Asia leisure market for Jetstar
Korea – new inbound Asia leisure market for Jetstar International trips per capita2 • 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 Korea 0.10 0.02 • Low c
Slide 97: Jetstar fleet strategy underpins profitable growth in Asian markets
Jetstar fleet strategy underpins profitable growth in Asian markets 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 utilisation Deepen existing i
Slide 98: Playing where we can win in Asia
Playing where we can win in Asia 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 brands to inbound and ou
Slide 99: Investing in Customer, Brand, Data and Digital
Investing in Customer, Brand, Data and Digital to continue to deliver a sustainable competitive advantage Qantas Investor Day 2019 | 99
Slide 100: Strength of Qantas' brands is 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 Jetstar (Australia & New Zealand) Jetstar Asia Jetstar Japan Jetstar Pacific Premium business and 13m QFF members Low fares price sensitive premium leisure travel segment 2
Slide 101: Customers are at the centre of our thinking
Customers are at the centre of our thinking 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 Qantas Frequent Flyer: Sign
Slide 102: Qantas 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 70% 65% 63% 60% 53%-56% 55% 50% 45% 38%-42% 40% 32%-37% 35% 30% Qantas Group Supermarkets/ Telecommunications, Banks, insurance other full service airlines re
Slide 103: Focussing on listening to our customers and responding
Focussing on listening to our customers and responding 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 Successful resolution of o
Slide 104: Our strategic customer pillars are our competitive advantage
Our strategic customer pillars are our competitive advantage Qantas QantasInvestor InvestorDay Day2019 2019 | | 104 104
Slide 105: Continued investment in our product and service
Continued investment in our product and service on the ground and in the air 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 investments: 95% of Qanta
Slide 106: Digital success lies in the strength of our own channels
Digital success lies in the strength of our own channels 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 (+21%2) app users (+14
Slide 107: Case study: Jetstar Ancillary revenue growth
Case study: Jetstar Ancillary revenue growth 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 growth +3kg carry-on bag
Slide 108: "Know me" framework
“Know me” framework: Working together to drive greater value PERSONALISATION REVENUE DISTRIBUTION MANAGEMENT Qantas Investor Day 2019 | 108
Slide 109: 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 Customer led offers over 2x revenue return versus Speed to market through product led target in the last quarter increased offer output PERSONALISATION Overall satisfaction with Agility to
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 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 distribution change via
Slide 111: Case study: Disruption management and servicing
Case study: Disruption management and servicing 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 to deliver exceptional
Slide 112: Evolving our operating model to create customers for life
Evolving our operating model to create customers for life Qantas Investor Day 2019 | 112
Slide 113: The Qantas Loyalty roadmap to FY22
The Qantas Loyalty roadmap to FY22: Accelerating towards $500-600m Qantas Investor Day 2019 | 113
Slide 114: Qantas Loyalty is uniquely advantaged
Qantas Loyalty is uniquely advantaged compared to local and global loyalty programs 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 across Australian pop
Slide 115: Evolved to a sophisticated consumer loyalty ecosystem
Evolved from a traditional frequent flyer program to a sophisticated consumer loyalty ecosystem A mutually-reinforcing ecosystem, driving a network effect by: ‒ Rewarding members across multiple categories ‒ Generating value for partners by driving repeat engagement ‒ Supporting launch and scale of
Slide 116: Business growth through 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 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 12.3M 12.9M 5 6 7 New
Slide 117: Clear pathway to deliver the FY22 profit target
We have a clear pathway to deliver the FY22 profit target and core member goals 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 partners Growing new revenu
Slide 118: 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 Ongoing link between our customers and Rewards that drive strive and the Qantas brand create an emotional connection ‒ Network of Qantas, Jetstar and ‒ Extending recognition of QFF t
Slide 119: Investing in member experience: $25m investment
Investing in member experience to drive program-wide engagement 1 $25m investment to underpin program health and continued member growth Member-centric initiatives to Underpinning long-term Strong uplift in member drive engagement business growth engagement2 Biggest program overhaul in 32 years Incr
Slide 120: Defending and growing the partnership coalition
Defending and growing the partnership coalition – the core of our business 2 Outperforming market and diversifying our core financial services offerings Stable growth in co-branded credit cards instilling confidence ‒ >50 Qantas Points earning credit cards in collaboration with ~20 financial institu
Slide 121: Defending and growing the partnership coalition
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 ‒ Market leading coalition in Australia New ‘everyday earn’ partnerships in FY20 • ~500+ coalition partners1 ‒ Key ‘everyday earn’ p
Slide 122: Growth from diversification into SME with Qantas Business Rewards
Defending and growing the partnership coalition – the core of our business 2 Growth from diversification into SME1 sector with Qantas Business Rewards Rewarding Australian small businesses Qantas Business Rewards member benefits ‒ Qantas’ B2B2 loyalty program that rewards SMEs1 with Qantas Points an
Slide 123: Broader engagement has a multiplier effect
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 Number of Level of Number of Use of loyalty Index of member points earn with initial partner as engagement members members’ loyalty affi
Slide 124: Scale and launch New Businesses
Scale and launch New Businesses 3 Proven track record of developing and scaling new businesses 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 at double the OTA indu
Slide 125: Scale and launch New Businesses: insurance
Scale and launch New Businesses 3 Our latest launch extends our Insurance portfolio Evolution of the Qantas Insurance portfolio Understanding our latest venture Insights Digital Rewards Members Compelling member experience Market differentiated Home insurance — drives effective member proposition dr
Slide 126: 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 ~500-600 7-10%+ p.a. New Businesses1 3 New 369 Businesses 2 Partnerships ‒ Launch proven innovation 1 ‒ Deepen existing extensions to Members financial services and deepe
Slide 127: Unique assets and capabilities enabled diversified sources of value
Unique assets and capabilities have enabled diversified sources of value 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 acquisition Price = c
Slide 128: People and Culture
People and Culture Qantas Investor Day 2019 | 128
Slide 129: 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 and geopolitical influence the rise of Big Data workforce preferences and climate change Mimic customer Asian heritage Digital capabilities Env
Slide 130: We have a diverse and experienced workforce
We have a diverse and experienced workforce 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 Strait Millennials (23 –
Slide 131: Our employee value proposition is unique and differentiated
Our employee value proposition is unique and differentiated 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 Benefits Salary Travel Qan
Slide 132: Nurturing a healthy culture strengthens our business
Nurturing a healthy culture strengthens our business 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 appreciation Qantas Inv
Slide 133: We have mapped out the employee experience
We have mapped out the employee experience, mirroring the customer experience 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 ‒ Leverage frequent p
Slide 134: 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 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 Russia & Central Asia Nort
Slide 135: Enabling our people to do their best work
Enabling our people to do their best work will drive extraordinary outcomes ‒ 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 workforce Qantas Inve
Slide 136: CEO Wrap Up
CEO Wrap Up 100 Years of The Spirit of Australia
Slide 137: Key messages you should take away from today
Key messages you should take away from today 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% We have sufficient p
Slide 138: 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 any in