Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2023 Earnings Presentation
29 slides from Qantas Airways's earnings presentation, Aug 24, 2023
Slide 1: FY23 Results Supplementary Presentation
FY23 RESULTS SUPPLEMENTARY PRESENTATION Qantas Airways Limited 24 August 2023 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 to the This Presentation contains summary information about Qantas and Presentation contains disclosures which are extracted or derived fairness, acc
Slide 3: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats available Net Capital Expenditure (Net Capex) – Net expenditure of RRP – Recovery and Retention plan for passengers, multiplied by the number of kilometres flown investing cash flows included in the Consolidated Cash Flow SAF – Sustain
Slide 4: Group Performance
GROUP PERFORMANCE WAcantas croup
Slide 5: FY23 Key Group Financial Metrics
FY23 Key Group Financial Metrics FY23 FY22 Profit metrics • FY23 Underlying Profit Before Tax (PBT) in top half of Revenue $M 19,815 9,108 guidance range Underlying Profit/(Loss) Before Tax1 $M 2,465 (1,859) • FY23 result driven by strong travel demand and completion of $1b Recovery Plan Statutory P
Slide 6: FY23 Key Group Operating Metrics
FY23 Key Group Operating Metrics Pre-COVID FY23 FY22 Change (%) Change (%) FY19 Unit Revenue (RASK)1 c/ASK 12.29 9.48 29.6% 8.85 38.9% Total Unit Cost1 c/ASK 10.19 13.16 (22.6) % 7.97 27.9 % Unit Cost (ex-Fuel and depreciation)1 c/ASK 4.88 6.24 (21.8) % 4.31 13.2% Available Seat Kilometres (ASK) M 1
Slide 7: Reconciliation to Underlying Profit/(Loss) Before Tax
Reconciliation to Underlying Profit/(Loss) Before Tax $M FY23 FY22 Statutory Items not included Underlying Statutory Items not included Underlying in Underlying in Underlying Net passenger revenue 16,923 – 16,923 5,951 – 5,951 Net freight revenue 1,380 – 1,380 1,963 – 1,963 Other revenue 1,512 – 1,5
Slide 8: Group Unit Revenue and Unit Cost (c/ASK)
Group Unit Revenue and Unit Cost (c/ASK) RASK FY23 CASK FY23 Net passenger revenue $M 16,923 Underlying (Profit)/Loss Before Tax $M (2,465) Excluding Other passenger revenue $M (2,513) Excluding Ticketed passenger revenue $M 14,410 A Ticketed Passenger Revenue $M 14,410 C Net expenditure $M 11,945 L
Slide 9: Ongoing transformation discipline
Ongoing transformation discipline Clear Pipeline of Value Targeting >$300m cost and revenue transformation in FY24 through initiatives already underway Creation for FY25+ FY24 Focus FY25+ Focus • Fleet renewal: ◦ 3 x A321s and 2 x A330 deliveries to Qantas Freight ◦ 7 x A321LR deliveries to Jetstar
Slide 10: Financial Framework
FINANCIAL FRAMEWORK WAcantas croup
Slide 11: Return on Invested Capital (ROIC) Calculation
Return on Invested Capital (ROIC) Calculation $M FY23 FY22 • ROIC EBIT is derived by adjusting Underlying EBIT Underlying EBIT 2,682 (1,558) to exclude AASB 16 lease depreciation and includes notional depreciation for leased aircraft as if they Add back: Lease depreciation under AASB 16 320 336 were
Slide 12: Balance Sheet Summary under Financial Framework
Balance Sheet Summary under Financial Framework As at 30 Jun As at 30 Jun $M 2023 2022 • Invested Capital is defined as Net Assets adjusted for Net Assets 10 (190) the following: Less: Cash and cash equivalents (3,171) (3,343) – Exclusion of Cash and cash equivalents and Interest-bearing liabilities
Slide 13: Net Debt Target Range
Net Debt Target Range • Net Debt target range = 2.0x — 2.5x EBITDA where ROIC = 10% • At average Invested Capital of $2.6b, optimal Net Debt range is $3.7b to $4.6b Jun 23 Drivers of Net Debt Range $B Invested Capital Avg Invested Capital for trailing 12 months 2.6 Invested Capital will rebuild with
Slide 14: Net Debt and Liquidity Position
Net Debt and Liquidity Position As at 30 As at 30 $M Change2 Jun 2023 Jun 2022 Net Debt decreased by $1.1b for the 12 months to June 2023 Current interest-bearing liabilities on – Borrowing activity for the period included Balance Sheet 799 669 (130) Non-current interest-bearing liabilities ◦ $1.0b
Slide 15: Net Debt movement under the Financial Framework
Net Debt movement under the Financial Framework $M FY23 FY22 The Financial Framework considers aircraft leases as part of Net Opening Net Debt (3,937) (5,890) Debt – Aircraft leases are initially recognised in Net Debt at fair value Net cash from operating activities 5,085 2,670 Less: Net lease prin
Slide 16: Financial risk management framework
Financial risk management framework Hedging Program Principles of Financial Risk Management • Principles of financial risk management Reducing cash flow volatility in the short term through – Manage net cash flow impacts disciplined hedging program to allow for implementation of operational levers –
Slide 17: New aircraft deliveries and fleet flexibility
New aircraft deliveries and fleet flexibility New aircraft deliveries1 FY24 FY25 FY26 FY29 A350-1000ULR 3 12 (Project Sunrise) A350-1000LR 8 Qantas 787-9/-10 1 5 A321neo-XLR 3 9 20 Qlink2 A220-300 3 4 11 29 Freight3 A321F 3 2 3 9 A321neo-XLR 3 15 Jetstar A321neo-LR 7 7 1 23 A320neo4 5 12 Total commi
Slide 18: Supplementary Segment Information
SUPPLEMENTARY SEGMENT INFORMATION
Slide 19: Qantas Domestic and International Overview
Qantas Domestic and International Overview Qantas Domestic Qantas International • Full service offering targeting business purpose and premium leisure sectors • Globally recognised long haul carrier targeting high demand business and premium leisure segments into USA, Europe and South East Asia – Ma
Slide 20: Jetstar Group Overview
Jetstar Group Overview Jetstar Domestic Jetstar International5 Jetstar in Asia and New Zealand • Targeting industry-leading LCC1 15% EBIT margin for • Targeting 10-12% EBIT Margin in FY24 and beyond Jetstar Japan FY24 and beyond • Jetstar Japan is the #1 domestic LCC1 at Tokyo’s • Strong profitabili
Slide 21: Diversification and growth at Qantas Loyalty
Diversification and growth at Qantas Loyalty One of the world’s most diverse airline loyalty programs • Contributing >$2b towards the Group Cash Flow1 for FY23; delivering long term value to the Qantas Group • 8% growth2 in Qantas Frequent Flyer membership to 15.2m members; 19% growth2 in QBR member
Slide 22: 2H23 Group and Group Domestic Traffic Statistics vs Pre-COVID
2H23 Group and Group Domestic Traffic Statistics vs Pre-COVID Pre-COVID Pre-COVID Pre-COVID 3Q23 Change (%) 4Q23 Change (%) 2H23 Change (%) 3Q19 4Q19 2H19 Total Qantas Group Operations Passengers Carried ‘000 11,270 13,670 (18) 11,780 13,643 (14) 23,050 27,313 (16) Revenue Passenger Kilometers M 24,
Slide 23: 2H23 Group International Traffic Statistics vs Pre-COVID
2H23 Group International Traffic Statistics vs Pre-COVID Pre-COVID Pre-COVID Pre-COVID 3Q23 Change (%) 4Q23 Change (%) 2H23 Change (%) 3Q19 4Q19 2H19 Group International Available Seat Kilometres M 17,269 24,742 (30) 19,023 24,087 (21) 36,292 48,829 (26) Group International Unit Revenue Change % 47
Slide 24: 2H23 Group and Group Domestic Traffic Statistics vs 2H22
2H23 Group and Group Domestic Traffic Statistics vs 2H22 3Q23 3Q22 Change (%) 4Q23 4Q22 Change (%) 2H23 2H22 Change (%) Total Qantas Group Operations Passengers Carried ‘000 11,270 5,772 95 11,780 10,079 17 23,050 15,851 45 Revenue Passenger Kilometers M 24,348 8,902 >100 26,023 18,358 42 50,371 27,
Slide 25: 2H23 Group International Traffic Statistics vs 2H22
2H23 Group International Traffic Statistics vs 2H22 3Q23 3Q22 Change (%) 4Q23 4Q22 Change (%) 2H23 2H22 Change (%) Group International Available Seat Kilometres M 17,269 4,944 >100 19,023 10,163 87 36,292 15,107 >100 Group International Unit Revenue Change % 47 5 20 Qantas International Passengers C
Slide 26: Qantas Domestic
Qantas Domestic1 FY23 FY FY22 Variance% 1H23 1H 1H22 Variance% 2H23 2H 2H22 Variance% Revenue $M 6,980 3,448 >100 3,634 1,127 >100 3,346 2,321 44 Underlying EBIT $M 1,270 (765) >100 785 (613) >100 485 (152) >100 Operating Margin % 18.2 <0 N/A 21.6 <0 N/A 14.5 <0 N/A ASKs M 32,513 21,233 53 16,171 7,
Slide 27: Qantas International and Freight
Qantas International and Freight1 FY23 FY FY22 Variance% 1H23 1H 1H22 Variance% 2H23 2H 2H22 Variance% Revenue $M 7,749 3,706 >100 3,802 1,317 >100 3,947 2,389 65 Underlying EBIT $M 906 (238) >100 464 (238) >100 442 — — Operating Margin % 11.7 <0 N/A 12.2 <0 N/A 11.2 <0 N/A ASKs M 45,187 12,187 >100
Slide 28: Jetstar Group
Jetstar Group1 FY23 FY FY22 Variance% 1H23 1H 1H22 Variance% 2H23 2H 2H22 Variance% Revenue $M 4,235 1,440 >100 2,096 394 >100 2,139 1,046 >100 Underlying EBIT $M 404 (796) >100 177 (417) >100 227 (379) >100 Operating Margin % 9.5 <0 N/A 8.4 <0 N/A 10.6 <0 N/A ASKs M 39,558 17,213 >100 18,863 4,584
Slide 29: Qantas Loyalty
Qantas Loyalty FY23 FY FY22 Variance% 1H23 1H 1H22 Variance% 2H23 2H 2H22 Variance% Revenue1 $M 2,189 1,334 64 1,027 485 >100 1,162 849 37 Underlying EBIT $M 451 292 54 220 127 73 231 165 40 Operating Margin % 20.6 21.9 (1.3ppts) 21.4 26.2 (4.8ppts) 19.9 19.4 0.5ppts QFF Members2 M 15.2 14.1 8 14.7