Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2009 Earnings Presentation
23 slides from Qantas Airways's earnings presentation, Aug 19, 2009
Slide 1: 2008/09 Full Year Results Investor Briefing
For personal use only 2008/09 Full Year Results Investor Briefing Alan Joyce Chief Executive Officer
Slide 2: Highlights of Result - Financial and Operational
Highlights of Result - Financial • Aviation industry in losses For personal use only • Full year profit before tax of $181 million • Operating cash flow $1.1 billion • Increase in net cash of $1.0 billion to $3.6 billion • Deferral and cancellation of US$7.9 billion capital expenditure1 • Gearing re
Slide 3: Summary of Financial Results
For personal use only Colin Storrie Chief Financial Officer Summary of Financial Results Year ended 30 June 2009 $m Revenue 14,552 Underlying EBIT 204 Results include the impact of: $m Non Recurring Items • Industrial action (130) Redundancies and restructuring (106) • A380 introduction (37) Gain on
Slide 4: Financial Performance
Financial Performance Cash Flow $bn Operating 1.1 Positive operating cash flow in first and second half For personal use only Investing (1.2) 11 aircraft delivered including three A380s Financing 1.1 Including debt funding $1.5bn, debt repayment $0.7bn, equity $0.5bn Net increase in cash held 1.0 Ca
Slide 5: Decisive, Comprehensive and Rapid Response
Decisive, Comprehensive and Rapid Response • Dynamic capacity management For personal use only • Adjusted capital expenditure • Revenue protection • Reducing costs • Financing and funding activities Dynamic Capacity Management • FY2009 - Planned growth 6 percent, actual reduction of 1.9 percent – In
Slide 6: Adjusted Capital Expenditure
Adjusted Capital Expenditure • Qantas deferred and cancelled US$7.9 billion in aircraft deliveries1 For personal use only Number of Aircraft Model Deferral Period 4 A380 10-12 months 12 737-800 14 months (Avg) 15 787-8 4 years 15 787-9 Cancelled • FY2009 capital expenditure $1.5 billion • FY2010 cap
Slide 7: Matching Capacity with Demand
Matching Capacity with Demand Apr to Jun 2009 vly Seat Factor vly Seat Factor -3.1 -0.1 pts 77.6 For personal use only -4.3 -0.8 pts 78.5 -6.9 +2.8 pts 79.6 -9.0 -0.4 pts 82.0 -12.9 +2.8 pts 79.0 -13.7 -5.2 pts 71.6 -16 -12 -8 -4 0 ASKs (% ) Airline published traffic statistics Unit Costs • Normalis
Slide 8: Workforce Initiatives and Financial Management
Workforce Initiatives Full Time 34,500 Equivalents FY2009 34,100 For personal use only 33,700 33,300 32,900 32,500 Jun 08 Se p 08 De c 08 Ma r 09 Jun 09 • Overall FTE’s reducing, with engineering FTE’s increasing • FY2010 capacity cuts will reduce 1,250 FTE equivalent – Minimising impact on employee
Slide 9: Hedging Performance
Hedging Performance • FY2009 fuel costs highly hedged against record fuel prices For personal use only • Options allowed high levels of participation in the >US$100 fall in fuel prices • Volatile fuel and FX resulted in net hedging gains of US$9 per barrel • Offset by option premium costs which tota
Slide 10: Positioning for the Future
For personal use only Alan Joyce Chief Executive Officer Positioning for the Future • Leveraging two brand strategy – Creating an integrated Qantas – Growing the Jetstar franchise – Leveraging power of networks • Group FY2010 forecast capacity growth close to zero • Investing in customer service exc
Slide 11: Two Brand Strategy – Overview
Revised Segmentation For personal use only Two Brand Strategy – Overview • Building two leading brands • Aiming to be: – World’s best premium airline - Qantas – World’s best low fares airline - Jetstar • Unique diversification – International and domestic – Premium and low fares – Business and leisu
Slide 12: Group International Strength and Domestic Leadership
Group International Strength • International competitors added >10% capacity despite falling demand For personal use only • Cohesive response - deploy optimal brand in each market segment • Decisive action positions the Group to strongly contest key markets • Qantas and Jetstar fleet investment – A3
Slide 13: Qantas
Qantas • Underlying EBIT of $4 million For personal use only • Reported EBIT after non-recurring items ($77m) • Result includes the impact of – Industrial action ($130m) – A380 introduction ($37m) – H1N1 in last quarter ($25m) • Continued profitable growth of QantasLink • Economic downturn significa
Slide 14: Q FUTURE
Q FUTURE • Three year transformation program For personal use only 2010 Benefit Realisation – Target $500m 2011-2012 Benefit Realisation – Target - $1bn • 2009 organisation and management restructure • Configuration • IT transformation • Aircraft utilisation and scheduling • Sales and distribution •
Slide 15: Qantas - Best for Business
Qantas - Best for Business Leader Leader On Time Arrivals On Time Departures Jul 08 Virgin Blue Virgin Blue For personal use only Qantas Industrial Aug 08 Virgin Blue Virgin Blue dispute Sep 08 Virgin Blue Oct 08 Virgin Blue Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 Virgin Blue Virgin Blue May 09 Ju
Slide 16: Jetstar
Jetstar • Improving profitability – Underlying EBIT $107 million – increase of 4.9% – Record PBT* $137 million – increase of 18% For personal use only – Profit impacted by H1N1 in the last quarter - $20 million • Continued strong growth – 14.4% increase in capacity – Largest low cost carrier in Asia
Slide 17: Jetstar Pan Asia
Jetstar Pan Asia • Increased alignment between Jetstar and Jetstar Asia – Foundation for further Pan Asian growth For personal use only – Operating synergies of S$20m per annum • Singapore network leveraged to improve group offer – 12 destinations added to the group offer • Jetstar Pacific – Commerc
Slide 18: Qantas Frequent Flyer
Qantas Frequent Flyer • Underlying EBIT up 77% at $226 million For personal use only – Reported EBIT, including direct earn rush, up 142% at $310 million • Record PBT* up 64% at $384 million • Record billings, up 35% at $1,255 million • Membership now over 6 million • Membership satisfaction at reco
Slide 19: Qantas Freight Enterprises
Qantas Freight Enterprises • Underlying EBIT of $7 million For personal use only • Air Freight impacted by worldwide reduction in demand • Diversification within Freight portfolio reduced impact of downturn • Strong position in Express businesses - proven to be more resilient • Freighter network opt
Slide 20: Safety is our First Priority
Safety is our First Priority • Safety policies, systems and procedures reflect this commitment For personal use only • Reduced workplace injury frequency rates – focus on injury prevention • Significant challenges to operations A Challenging Year • QF30 B747-400 to Manila • QF72 A330-300 to Learmont
Slide 21: Sustainable Environmental Strategy
Sustainable Environmental Strategy • Investment in fuel efficient aircraft and technology For personal use only • Strong focus on fuel conservation - 100% improvement on prior year • 16.5% improvement in fuel efficiency targeted by 2020 • Involvement in efforts to develop sustainable aviation fuel •
Slide 22: New Executive Team In Place
New Executive Team In Place • Executive team remuneration levels reset – Total remuneration down by 25-30% For personal use only • Executive management salary and director fee freeze in place since 2007 • Flatter, leaner organisation structure – Reducing management and senior award positions by 590
Slide 23: Outlook
Outlook • There are signs of an improvement in passenger volumes. In For personal use only addition, yields have stabilised at the levels experienced in the second half of the 2009 financial year. High levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and