Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2006 Earnings Presentation
19 slides from Qantas Airways's earnings presentation, Aug 17, 2006
Slide 1: 2005/06 Full Year Results
2005/06 Full Year Results Presentation to Investors Geoff Dixon Chief Executive Officer 17 August 2006 heawras Group Highlights Increase/ YeartoJune YeartoJune (decrease) 2006 2005 * % Sales and Other Income $m 13,647 12,564 8.6 Expenditure $m (12,921) (11,550} 11.9 EBIT $m 726 1,014 (28.4) Net fina
Slide 2: Key Drivers
Key Drivers Fuel costs +45 percent Net passenger revenue +9.7 percent 2.2 percent underlying unit cost reduction ° $282 million of net hedging benefits Strong net cash position, up $998 million to $2.9 billion hoawras Group Strategy @ Developing the right flying models to generate strong returns and
Slide 3: Qantas
Qantas @ Group market share of 67 percent in May 2006 @ Maintaining yield premium of 35 percent @ Defending and strengthening leading corporate market position @ 4.6 million Frequent Flyer Program members (+7.6 percent) @ Regional capacity growth and network improvements *| 5 hoawras Qantas @ Transi
Slide 4: Jetstar
Jetstar # Consolidation of domestic position, following move to all-A3260 fleet © Operating profit (EBDRIT) + 43.6 percent ~ Excluding international start-up costs of $10 million Passenger loads +1.6 percentage points, yield -4.9 percent ~ Yields +5 percent on a sector length-adjusted basis @ Mainta
Slide 5: Fleet
Fleet @ First A380 expected around October 2007 © Four new A330-200s for delivery in 2007 and 2008 ~ Qantas and Jetstar to use for international point-to-point growth @ Commenced specification work for B787 "l a hoawras Sustainable Future ® Accelerating reforms to achieve $1.5 billion target over ne
Slide 6: Segmentation
Segmentation Extending program to drive faster structural reform @ Transition of cost centres to profit centres @ All businesses to stand alone and compete for investment Qantas and Jetstar to bid for routes e Evaluating alternative structures to foster efficiency and growth hoawras Catering @ Benef
Slide 7: Qantas Holidays
Qantas Holidays # Avaluable business - but model needs to change @ Impacted by changing trends in distribution @ Repositioning business following strategic review ~ Shifting more business to direct channels ~ Evaluating expansion in emerging markets, eg. China, india, Vietnam hoawras Freight @ Combi
Slide 8: Capital Management
Capital Management @ Net cash inflows from operations of $2 billion, down 3.6 percent Capital expenditure decreased by 15.5 percent to $1.5 billion @ A-IFRS gearing improved to 44:56 {including the new financial AGAAPy hedge reserve) from 47:53 at June 2005 (under @ Confident that we can fund our fu
Slide 9: 2005/06 Full Year Results Supplementary Information
2005/06 Full Year Results Supplementary Information haawras Highlights Increase/ 12monthsto 12monthsto (decrease) June 2006 June 2006 * % Sales and other income $m 13,647 12,564 8.6 Expenditure $m (42,921) (14,550) 119 EBIT $m 726 1,014 (28.4) Net finance costs $m (85) (100) (45.2) Profit before tax
Slide 10: Revenue
Revenue $bn 16.0 $13.6bn Net passenger revenue up 9.7% Net freight revenue up 16.8% Tours and travel revenue up 1.6% 4a $12.6bn 12.0 10.0 6.0 6.0 Contract work revenue down 3.3% Other income up 2.6% 4 ig) 40 | L] | L] 20 Go June 2005 June 2006 Note: Alf revenue movements inchide the impact of forvig
Slide 11: Revenue
Revenue — Tours and travel revenue up 1.6% (up 2.4% excluding exchange) — Contract work revenue down 3.3% (down 3.3% excluding exchange} Decline in third-party ground handling revenue — Other income up 2.6% (up 1.7% excluding exchange) Recognition of $104 million of liquidated damages recoverable fr
Slide 12: Expenditure
Expenditure « Expenditure excluding net finance costs up 11.9% (up 12.7% excluding exchange) — Manpower and staff related costs up 5.0% (up 5.1% excluding exchange) — Includes $109 million of redundancy costs under the Sustainable Future Program (SFP) — Group ASKs up 3.6% — Increase in wages of 3% u
Slide 13: Expenditure
Expenditure — Depreciation and amortisation costs up 0.7% ~ New aircraft between July and December 2004 (4 x A330-300, 3 x B737-800) ~ New aircraft between January and June 2005 (3 x B737-800) — New aircraft between July and December 2005 (2 x A330-300) ~ New aircraft between January and June 2006 (
Slide 14: Expenditure
Expenditure — Capacity hire costs up 8.4% (up 9.2% excluding exchange) — Increased B747 freighter aircraft wet-lease costs ~— Partially offset by the return of four AWAS B737-300 aircraft between September 2004 and March 2005 — Non-cancellable operating lease rentals up 33.3% (up 33.5% excluding exc
Slide 15: Expenditure
Expenditure — Other costs up 22.7% (up 38.1% excluding exchange) ~ Largely due to the recognition of A-IFRS fair value changes — Write down of the investment in Jetstar Asia — Net finance costs down 45.2% (down 42.0% excluding exchange) ~ Due to interest received from higher average cash balance Air
Slide 16: Qantas Mainline
Qantas Mainline 4,000 PBT $m $m $00 $745m PBT of $542m, or 80.7% of Group PBT RPKs up 1.8% ASKs up 0.8% Seat factor up 0.7% pts to 77.2% Yield excluding exchange increased by 7.9% P 34 June 2005 June 2006 hoawras Jetstar PBT $m gm 4) $36m PBT" of $11m, or 1.6% of Group PBT 30 RPKs up 47.5% ASKs up 4
Slide 17: Yield
Yield - Total Domestic yield” (Qantas, QantasLink and Jetstar) excluding exchange for the financial year to June 2006 increased by 4.4% when compared with the last year - Total International yield* (Qantas, Australian Airlines and Jetstar Trans-Tasman operations) excluding exchange increased by 8.0%
Slide 18: Equity Accounted Investments
Equity Accounted Investments Contribution to Net Profit 12 months to 12 months to Increases June 2006 June 2005* {decrease} $m, $m $m Australian air Express 14.3 16.6 (1.3) Star Track Express 16.5 14.5 2.0 Air Pacific 8.4 8.6 (0.2) Jetstar Asia / Orangestar (0.7) (18.5) 417.8 Jet Turbine Services {4
Slide 19: Group Operational Aircraft Fleet
Group Operational Aircraft Fleet Roawras Aircraft Type 30/08/2005 | FYO6 in |FYOE (Out}| Transfers | 30/06/2006 [Qantas B747-200 6 (1) 5 8747-400 24 24 747-400 oy 6 Ww t 7 7 2 @) . 9 9 2t 21 B737-BOONG 2r 8 a3 JA330-200, 4 4 1330-300 7 3 10 [TOTAL MAINLINE FLEET 13 s 3a : 16 JAustralian Airlines B7E