Qantas Airways Limited · ASX:QAN
Qantas Airways — H1 2015 Earnings Presentation
37 slides from Qantas Airways's earnings presentation, Feb 26, 2015
Slide 1: Qantas Airways Limited 1H15 Results Supplementary Slides
Qantas Airways Limited 1H15 Results Supplementary Slides 26 February 2015
Slide 2: Group Performance
Group Performance N CANTAS
Slide 3: Group Highlights – Underlying Income Statement
Group Highlights – Underlying Income Statement1 $M 1H15 1H14 VLY VLY % Net passenger revenue 6,960 6,786 174 2.6 Net freight revenue 485 500 (15) (3.0) Other revenue 626 617 9 1.5 Revenue 8,071 7,903 168 2.1 Operating expenses (excluding fuel) 4,628 4,797 (169) 3.5 Fuel 2,164 2,255 (91) 4.0 Deprecia
Slide 4: Reconciliation to Statutory PBT
Reconciliation to Statutory PBT $M 1H15 1H14 Underlying1 Ineffectiveness Other items Statutory Underlying1 Ineffectiveness Other items Statutory relating to not included in relating to not included in other reporting Underlying PBT other reporting Underlying PBT periods periods Net passenger revenue
Slide 5: Revenue
Revenue REVENUE ($B) NET PASSENGER REVENUE UP 3% • Group yield (excluding FX) up 1.2% and load improvement of 1.5 pts driven by network optimisation and moderation in market capacity 7.9 2% 8.1 NET FREIGHT REVENUE DOWN 3% • Reduction in freighter aircraft FREQUENT FLYER REDEMPTION, MARKETING, STORE
Slide 6: Expenditure
Expenditure EXPENSES ($B) FUEL COSTS DOWN 4% • Reduction in net AUD fuel price • Improvement in fuel efficiency1 from fleet modernisation 8.1 (6)% 7.6 and Qantas Transformation fuel initiatives MANPOWER AND STAFF-RELATED DOWN 4% • Workforce changes as part of the accelerated Qantas Transformation pr
Slide 7: Expenditure
Expenditure EXPENSES ($B) DEPRECIATION AND AMORTISATION COSTS DOWN 28% • FY14 Qantas International non-cash fleet impairment 8.1 (6)% 7.6 • February 2014 fleet restructure and other fleet retirements • Partially offset by the acquisition of B787, B738 aircraft LEASE RENTAL EXPENSE DOWN 8% • Reductio
Slide 8: Continuing Unit Cost Improvement
Continuing Unit Cost Improvement • Comparable unit cost3 improvement of 4.8% C/ASK 1H15 1H14 VLY % Unit Cost1 7.80 8.37 6.8 Excluding: • Fuel (3.00) (3.14) Net Underlying Unit Cost2 4.80 5.23 8.2 • Qantas International fleet write-down (0.14) • February 2014 fleet restructure 0.06 (0.07) • Impact of
Slide 9: Sustainable Returns Through the Cycle
Sustainable Returns Through the Cycle LONG-TERM TARGETS Target performance: Airlines and Freight1 • Exceed cost of capital through the cycle ROIC > WACC Lowest cost of capital: Qantas Loyalty • Optimal capital structure and credit metrics Double digit EBIT Growth Optimal allocation of capital: Qanta
Slide 10: Group Operational Information
Group Operational Information 10
Slide 11: Fleet at December 2014
Fleet at 31 December 2014 Aircraft Type 1H15 FY14 Change • Net reduction of 11 aircraft during 1H15 A380-800 12 12 - B747-400 6 7 (1) – 10 aircraft deliveries1: B747-400ER 6 6 - 5xB737-800, 3xB787-8, 1xQ400, A330-200 16 13 3 1xA320-2004 A330-300 10 10 - B767-300ER - 13 (13) – 18 aircraft retired: B7
Slide 12: Unencumbered Fleet
Unencumbered Fleet • Approximately ⅓ of total Group fleet debt free1 • Significant pool of young, unencumbered narrowbody aircraft • Maximum flexibility retained for future financing and fleet planning COMPOSITION OF UNENCUMBERED FLEET CUMULATIVE MID-LIFE AIRCRAFT TO BECOME AS AT 31 DEC 20141 DEBT F
Slide 13: On-Time Performance Leadership
On-Time Performance Leadership • Qantas1 remains the most reliable domestic ON-TIME DEPARTURES3 (%) 1H15 RANK carrier2 Qantas1 86.8 1 – In 1H15, Qantas led Virgin Australia for on- Virgin1 85.6 2 time departures and arrivals for the 6th Jetstar 81.7 3 consecutive year – Best on-time departures in 1H
Slide 14: Segment: Qantas Domestic
Segment: Qantas Domestic N CANTAS
Slide 15: Qantas Domestic – Mainline & Regional Network
Qantas Domestic – Mainline & Regional Network • Continued strength in customer advocacy Mainline Network 1H15 1H14 VLY % Mainline Network – Refurbishment of A330 fleet, improved economy ASKs M 15,659 16,431 (4.7) meal offering, new Darwin lounge RPKs M 12,232 12,621 (3.1) – Ongoing investment in ser
Slide 16: Qantas Domestic
Qantas Domestic Best for business and premium leisure customers • Customer advocacy (NPS1) at record level in December quarter • Ongoing investment in service training programs SUPERIOR • Long-term OTP leadership2 CUSTOMER • Continued lounge investment in Darwin, Perth Launch of A330 lie-flat busine
Slide 17: Segment: Qantas International
Segment: Qantas International 17
Slide 18: Qantas International
Qantas International • RASK1 recovery as market absorbs five years of aggressive 1H15 1H14 VLY % market capacity growth: ASKs M 29,580 29,863 (0.9) – Assisted by dynamic scheduling initiatives to actively match capacity with demand and fare family revisions RPKs M 24,368 24,138 1.0 – Nine consecutiv
Slide 19: Segment: Jetstar
Segment: Jetstar N CANTAS
Slide 20: Growing Jetstar Footprint
Growing Jetstar Footprint JETSTAR GROUP – GROWING NETWORK OF ROUTES1 5 6 2 7 BASED 4 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT2 1 Jetstar Australia 100% 2004 51xA320s/A321s 2 Jetstar International 100% 2006 11xA330s/787s 3 Jetstar NZ3 100% 2009 9xA320s 4 Jetstar Asia (Singapore) 49% 2004 18xA320s 5 Jetsta
Slide 21: Jetstar Domestic
Jetstar Domestic • Improved performance with cost control and Jetstar Domestic 1H15 1H14 VLY % capacity moderation ASKs M 9,474 9,207 2.9 • 4% RASK1 increase, 1pt seat factor improvement RPKs M 7,889 7,574 4.2 • Enhanced customer experience Passengers ‘000 6,708 6,283 6.8 – Best LCC2 on-time perform
Slide 22: Jetstar International
Jetstar International • Jetstar International delivered strong earnings Jetstar International 1H15 1H14 VLY % (excl. Jetstar Asia & NZ Domestic) performance ASKs M 9,182 8,830 4.0 – Leading LCC1 across increasingly competitive RPKs M 7,174 6,571 9.2 leisure market into Australia Passengers ‘000 1,65
Slide 23: Jetstar Asia (Singapore)
Jetstar Asia (Singapore) • Profitable at Underlying EBIT level in 2Q15 Jetstar Asia 1H15 1H14 VLY % • Strengthening yield improvement after market ASKs M 4,203 3,970 5.9 capacity moderation RPKs M 3,291 3,129 5.2 ‒ 10% RASK1 improvement in 2Q15 vs 2Q14 Passengers ‘000 1,995 2,029 (1.7) • Continues t
Slide 24: Jetstar Japan
Jetstar Japan • Improved performance on 1H14, despite weaker JPY Jetstar Japan 1H15 1H14 VLY % and aggressive competitor pricing ASKs M 2,463 1,843 33.6 • Strengthening LCC market position RPKs M 1,843 1,418 30.0 – 4th largest domestic carrier1 Passengers ‘000 2,146 1,598 34.3 – 56% LCC market share
Slide 25: Jetstar Pacific (Vietnam)
Jetstar Pacific (Vietnam) • Strong business performance in tough market Jetstar Pacific 1H15 1H14 VLY % conditions ASKs M 1,333 1,051 26.8 – 9% controllable unit cost1 improvement RPKs M 1,177 942 24.9 – Load factors remain high Passengers ‘000 1,413 1,028 37.5 – International launch to Singapore in
Slide 26: Segment: Qantas Loyalty
Segment: Qantas Loyalty N CANTAS
Slide 27: Qantas Loyalty Financial Results
Qantas Loyalty Financial Results • Strong Underlying EBIT1 growth $M 1H15 1H14 VLY % • Total billings2 $700m, up 6% Coalition Marketing Revenue 209 197 6.1 • Strategic acquisition of Taylor Fry expands the data Redemption Revenue 415 407 2.0 and analytics capability and continues earnings diversific
Slide 28: Taylor Fry
Taylor Fry A leading Australian and New Zealand analytics and actuarial consulting firm ENHANCING • A leading consultancy firm providing innovative data analytics, DATA DRIVEN actuarial, statistical and policy advice to businesses and CUSTOMER INSIGHTS government CAPABILITY • Established in 1999 wit
Slide 29: Qantas Loyalty
Qantas Loyalty Australia’s leading loyalty business We market the ability to influence and change Australian buying behaviour 29
Slide 30: Qantas Frequent Flyer
Qantas Frequent Flyer Australia’s leading Coalition Loyalty Program • Strong first half member growth, >400,000 added • Expanding youth market appeal and penetration with 60% of STRONG MEMBER new members aged 36 or younger GROWTH AND ENGAGEMENT • Award winning1 qantaspoints.com launched as new membe
Slide 31: New Qantas Loyalty Businesses
New Qantas Loyalty Businesses Expanding member and partner engagement, diversifying revenue AQUIRE - AUSTRALIA’S • Over 55,000 businesses joined since April 2014 launch ONLY AIRLINE BASED • Significant increase in SME1s flying Qantas COALITION BUSINESS LOYALTY PROGRAM • Partners seeing uplift in acq
Slide 32: Data and Marketing Services
Data and Marketing Services Introduction of Red Planet harnessing 27 years of data expertise DATA-DRIVEN • Leveraging the expertise and knowledge of Qantas Loyalty to TARGETED deliver effective data and marketing services MARKETING – Access to broad behavioural data on a large population ANALYTICS A
Slide 33: Qantas Loyalty Business Model Financials
Qantas Loyalty Business model financials Points Flow Points Redeemed Points Earned for Award Life of a Point Pointsby Flow Spending ~2 years Points Expire (Breakage) Cash Flow Free Cash Flow2 Billings1 and Cash Generated Net Other Cash in Operating Costs4 Award Costs5 Cash In Cash Balance Cash out3
Slide 34: Governance, Environment and Social
Governance, Environment and Social 34
Slide 35: Sustainability: 1H15 Highlights
Sustainability 1H15 highlights GOVERNANCE • Periodic health checks preformed on individual Qantas Transformation initiatives to ensure appropriate risk Corporate Governance, management and governance controls are in place for success Oversight Framework • Inaugural annual Longreach Review published
Slide 36: Sustainability: External Recognition
Sustainability External recognition Recognition Dow Jones Sustainability Asia/Pacific Index —Member since 2011 —1 of only 2 airlines listed Dow Jones Sustainability Australia Index — Only Australian Airline in the Index FTSE4Good Index Series —Member since 2009 —Only Australian airline in the Index
Slide 37: Disclaimer & ASIC Guidance
Disclaimer & ASIC Guidance This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). Summary information This Presentation contains summary information about Qantas and its subsidiaries (Qantas Group) and their activities current as at 26 February 2015. The informa