Qantas Airways Limited · ASX:QAN
Qantas Airways — H1 2024 Earnings Presentation
35 slides from Qantas Airways's earnings presentation, Feb 22, 2024
Slide 1: 1H24 Results Investor Presentation
1H24 Results Investor Presentation Qantas Airways Limited 22 February 2024 ASX:QAN US OTC: QABSY
Slide 2: Disclaimer
Disclaimer Summary information This Presentation is unaudited. Notwithstanding this, the No representation or warranty, express or implied, is made as This Presentation contains summary information about Qantas Presentation contains disclosures which are extracted or to the fairness, accuracy, compl
Slide 3: We've listened closely and we are committed to returning to our best and beyond
We’ve listened closely and we are committed to returning to our best and beyond. Our People Our Customers Thank you for your support while we restore trust and pride in the national carrier. Vanessa Hudson Group CEO Our Shareholders Our Community & Partners 1H24 Results | 3
Slide 4: 1H24 overview
1H24 overview Operating results $1,245m • Qantas Domestic, Qantas International and Jetstar Group delivered strong performance 1H24 Profit Before Tax (PBT) • Qantas Loyalty 2H CY23 earnings of $270m, achieving Underlying EBIT guidance of >$500m for CY23 • Operating cash flow of $1.3b predominantly i
Slide 5: Group 1H24 integrated portfolio earnings
Group 1H24 integrated portfolio earnings • Dual Brand strategy drives segment success and sustainable industry leading margins with leadership positions across all key market segments Portfolio Segment EBIT ($b) Domestic • Current and future fleet provide flexibility, optimise route economics and op
Slide 6: Our Vision – It starts with our people and customers
Our Vision – It starts with our people and customers OUR PEOPLE OUR CUSTOMERS Proud to work for us Proud to fly with us Passionate about our customers and Trust and depend on us to take care empowered to provide great service of you in the moments that matter Work in a safe and inclusive Rely on us
Slide 7: Investing in our People and Culture
Investing in our People and Culture Listening Supporting Inclusion & Diversity Retention Dec-23 Group Attrition3 6.6% Continued to steadily decline over the past 12 months Attraction • Be present with our teams to • Continue to prioritise safety • Roll out inclusive leadership hear experiences direc
Slide 8: Investing in our Customers
Investing in our Customers Exceptional flying experience Seamless digital interactions Performance % flights Domestic On Time Performance 1 85 Qantas Jetstar 80 75 70 65 60 Jul Aug Sep Oct Nov Dec Jan Feb • Lifting operational reliability through • Investing to improve ease, transparency and MTD inv
Slide 9: Investing in our Customers
Investing in our Customers Trusted to recover well Unrivalled reward and recognition Performance Contact centre satisfaction1 % Qantas Jetstar 90 80 70 60 50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb • Better service during disruptions: digital self- • Record number of Classic Rewards
Slide 10: Continuing to deliver value in travel for our customers
Continuing to deliver value in travel for our customers Real average fares1 >35 sales -11% campaigns6 -11% >1.3 million • Discover Australia Sale QAD QAI • Red Tail Sale Qantas Total fares sold3 • Footy Finals Sale 2Q23 2Q24 below $200 in 1H24 • Feels like Christmas Real average fares1 >150 sales -1
Slide 11: Travel intentions have remained consistently strong
Travel intentions have remained consistently strong 1 QFF net spend intentions in the next 6 months1 1 QFF members continuing to prioritise spend on travel1 International travel 27% Domestic travel 21% • Despite reduced spending intentions across most categories, Groceries 8% travel continues to rem
Slide 12: Investing in our Community
Investing in our Community Connecting the regions Supporting Communities First Nations partnerships Qantas and Jetstar partnered with government Supported the Matildas during the Women’s Soccer Ongoing support for recognition of First Nations to provide discounted fares to FNQ post-cyclone World Cup
Slide 13: Investing in Sustainability
Investing in Sustainability Significant progress against 2030 targets and Climate Action Plan Sustainable aviation fuel Sustainable operations • Credible path to meet 2030 target (10% SAF), of $400m Qantas Climate • New efficiency, waste programs linked to STIP2 leveraging wide-body orders and new >
Slide 14: Financial Performance
CANTAS GROUP Financial Performance
Slide 15: 1H24 Group financial metrics
1H24 Group financial metrics Profit metrics Balance Sheet and Cash Flow metrics Key statistics (vs 1H23) $1,245m $1.34b +25.0% Underlying/Statutory profit before tax Operating cash flow ASKs $869m $1.49b +22.5% Statutory profit after tax Net Capital Expenditure RPKs 52c $4.0b (target $4.0b - $5.0b)
Slide 16: 1H24 profit bridge compared to 1H23
1H24 profit bridge compared to 1H23 $m 1H23 1H24 ASKs (m) 55,438 +25% 69,324 Discount rate & FX $ (80) m Associates share of profits (incl. JJP) $ 40 m Net Finance Costs $ 16 m Other $ (1) m 485 Other $ (25) m (576) 1,428 50 (146) 179 (84) 1,245 CPI (186) (25) 154 Industry costs (34) (220) Food & Be
Slide 17: 1H24 movement in Net Debt driven by seasonal RRIA decline, capex and buy-backs
1H24 movement in Net Debt driven by seasonal RRIA decline, capex spend and share buy-backs Lease Buy Outs $ (0.3) b $m Treasury Shares2 $ (0.3) b One Offs $ (0.6) b A/C Acquisition $ (0.8) b Maintenance $ (0.5) b Other $ (0.1) b (565) Net Capex $ (1.5) b (636) 2,202 (1,490) RRIA Seasonality $ (0.4)
Slide 18: Segment Results
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Slide 19: The Group's integrated portfolio builds sustainable long term shareholder value
The Group’s integrated portfolio builds sustainable long term shareholder value • Coordinated Dual Brand strategy with integrated offering across all key customer segments driving industry leading performance, scale in operations and more options for customers in recovery • Home market distribution
Slide 20: Qantas Domestic
Qantas Domestic Strong domestic earnings underpinned by robust demand and transformation 1H24 1H23 Change • Robust Domestic demand with RASK decline of (5%) vs 1H23 as expected as pent-up demand Revenue $M 3,758 3,634 +3% experienced in 1H23 moderated (seat factor and yield) • Leading market share p
Slide 21: Qantas International (including Freight)
Qantas International (including Freight) International yields remain strong despite returning capacity 1H24 1H23 Change • (13%) decline in RASK v 1H23 despite 39% growth in ASK. RASK remains +43% vs 1H19 Revenue $M 4,340 3,802 +14% – Yield and RASK decline largely as expected as pent-up demand moder
Slide 22: Jetstar Group
Jetstar Group Jetstar’s Australian domestic network delivered $175m Underlying EBIT 1H24 1H23 Change • 1H24 Total RASK declined (4%) vs 1H23. Demand environment and intention to travel remains strong Revenue1 $M 2,486 2,096 +19% with fares moderating as expected as capacity returns. Ancillary revenu
Slide 23: Qantas Loyalty
Qantas Loyalty Achieving $501m Underlying EBIT in CY23 (2H23 : $231m; 1H24 $270m) 1H24 1H23 Change • Consumer spending patterns and QFF travel spending intentions remain strong for both INT Revenue $M 1,271 1,027 +24% (+27%) & DOM (+21%)3, as members continue to prioritise travel over other spend ca
Slide 24: Financial Framework
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Slide 25: Financial Framework: Settings reviewed and confirmed
Financial Framework: Settings reviewed and confirmed • Since 2015, the Financial Framework has set appropriate risk parameters for the Group’s balance sheet and allocation of capital • The Framework has guided the Group through challenging periods and is well regarded by key stakeholders • As the Gr
Slide 26: Financial Framework continues to drive capital discipline
Financial Framework continues to drive capital discipline 1 Maintain optimal capital structure 2 ROIC > WACC through the cycle 3 Disciplined allocation of capital Net Debt $B Return on Invested Capital % Surplus Capital Uses $B 4.9 3.6 3.7 2.9 3.0 3.0 2.6 1.0 2.1 1.0 1.9 5.2 4.9 4.7 0.6 1.0 1.2 0.5
Slide 27: Maintaining an optimal capital structure: Liquidity and debt maturity profile
Maintaining an optimal capital structure: Liquidity and debt maturity profile Total liquidity of >$9.2b as at 31 December 2023 Liquidity Expected Unencumbered Fleet Profile by age7 (A $b) • Unencumbered assets include ~$4.4b of unencumbered aircraft >$4.0b >$4.7b >$5.0b >$5.7b (~64% of the Group fle
Slide 28: Financial Framework: Net Debt Target
Financial Framework: Net Debt Target To date FY24 to FY26 • In FY22 to FY23, the appropriate target was to be at or below the • The dynamic nature of the Financial Framework allows the bottom of the net debt target range as the Group recovered from the Group to recognise the impact of low IC on leve
Slide 29: Financial Framework Application
Financial Framework Application Maintain net debt at or below middle of the target range Expected Net Debt Target Range ($b) • Net Capex guidance: FY24 $3.0b – $3.2b, FY25 $3.7b - $3.9b Not to scale, • Target range calculated on a financial year basis and expected to increase by ~$0.7b for illustrat
Slide 30: New aircraft deliveries and fleet flexibility
New aircraft deliveries and fleet flexibility New aircraft deliveries1 Key: Changes from FY23 investor presentation in superscript New fleet technology continues to drive long-term advantage • Fleet renewal delivers substantial transformation benefits and step-change in cost FY24 FY25 FY26 Current f
Slide 31: Jetstar Australia A321LR and B787 redeployment
CASE STUDY Jetstar Australia A321LR and B787 redeployment Narrowbody fleet renewal International Growth and B787 redeployment & investment • Jetstar has received 11 x A321LRs as at 1H241, growing to 15 by end FY24, • ~1 x A321LR launched on Sydney-Rarotonga & Melbourne-Nadi routes driving fleet rene
Slide 32: Outlook
CANTAS GROUP Outlook
Slide 33: Outlook
Outlook Business Outlook 2H24 Financial Outlook • The Group is seeing 2H24 travel demand remaining strong across the portfolio • FY24 fuel cost expected to be $5.4b1 at current fuel prices inclusive of hedging • Group RASK to continue to moderate vs 2H23 as international capacity returns to pre-COVI
Slide 34: Outlook: Guidance Tables
Outlook Guidance Tables Capacity Guidance1 FY24 1Q25 Qantas Loyalty FY24 (vs prior corresponding period) 3Q24 4Q24 2H24 FY24 (% of pre- 1Q25 (% of pre- COVID) COVID) Points Earned B >180 Group Domestic +7% +3% +5% +7% 103% +2% 105% Points Redeemed3 B >180 Qantas Domestic +2% (3%) (1%) +2% 98% (1%) 9
Slide 35: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats available investing cash flows included in the Consolidated Cash Flow RRP – Recovery and Retention Plan for passengers, multiplied by the number of kilometres flown Statement and the impact to Invested Capital from acquiring or SAF – S