Qantas Airways Limited · ASX:QAN
Qantas Airways — Investor Presentation (August 2018)
28 slides from Qantas Airways's investor presentation, Aug 23, 2018
Slide 1: Qantas Airways Limited FY18 Results Supplementary Presentation
Qantas Airways Limited FY18 Results Supplementary Presentation 23 August 2018 ASX:QAN US OTC:QABSY
Slide 2: Group Performance
Group Performance Yacantas croup
Slide 3: FY18 Key Group Financial Metrics
FY18 Key Group Financial Metrics FY18 FY17 VLY %10 Comments Underlying PBT1 ($M) 1,604 1,401 14 Record result achieved in rising fuel price environment Underlying Earnings per Share2 (c) 64 55 18 Record Underlying EPS Statutory Profit Before Tax ($M) 1,391 1,181 18 Strong demand and revenue environm
Slide 4: Underlying Income Statement Summary
Underlying Income Statement Summary $M FY18 FY17 VLY % Comments Net passenger revenue 14,715 13,857 6 Improved Group Unit Revenue of 4% and increased capacity of 1% Net freight revenue 862 808 7 Recovery in global freight markets Other revenue 1,483 1,392 7 Total Revenue 17,060 16,057 6 Operating ex
Slide 5: Items Not Included in Underlying PBT
Items Not Included in Underlying PBT $M FY18 FY17 Comments Redundancies, restructuring, 787-9 Introduction, 747 retirement and Transformation costs 162 142 other costs associated with ongoing transformation Turnaround, Wage Freeze bonus and Record Results Turnaround Bonus announced in August 2017 pa
Slide 6: Reconciliation to Underlying PBT
Reconciliation to Underlying PBT $M FY18 FY17 Statutory Ineffectiveness Other items not Underlying1 Statutory Ineffectiveness Other items not Underlying1 relating to other included in relating to other included in reporting Underlying reporting Underlying periods PBT periods PBT Net passenger revenu
Slide 7: Revenue Detail
Revenue Detail Net passenger revenue up 6% Revenue ($B) • Group Unit Revenue increased 4% – Group Domestic1 Unit Revenue increased 7% 17.1 – Group International2 Unit Revenue increased 3% 16.1 6% • Group capacity up 1%, increased international capacity achieved through cross fleet utilisation offset
Slide 8: Expenditure Detail
Expenditure1 Detail Fuel up 6% Expenditure1 ($B) • Effective hedging reduced impact of higher jet fuel prices • Higher consumption from increased flying • Offset by favourable FX and fuel efficiency initiatives 6% 15.3 Manpower and staff-related up 6% 14.5 • Increase in operating crew manpower drive
Slide 9: Cash Flow
Cash Flow • Positive net free cash flow1 of $1.4b $M FY18 FY17 VLY % – Record operating cash flows of $3.4b Operating cash flows 3,413 2,704 26 – Investing cash flows of $1.97b excluding aircraft operating lease Investing cash flows (excluding aircraft (1,971) (1,395) (41) refinancing operating leas
Slide 10: Invested Capital Calculation
Invested Capital Calculation $M FY18 FY17 • Increased property, plant and equipment: Receivables (current and non-current) 1,008 907 – 787-9 deliveries and impact of refinancing operating leases Inventories 351 351 – Aircraft lease buyouts to unencumbered owned aircraft; 6 in FY18, 19 Other assets (
Slide 11: ROIC Calculation
ROIC Calculation $M FY18 FY17 Underlying PBT 1,604 1,401 Add back: Underlying net finance costs 182 189 Add back: Non-cancellable aircraft operating lease 272 356 rentals Less: Notional depreciation1 (124) (158) ROIC EBIT 1,934 1,788 $M FY18 FY17 Net working capital2 (6,912) (6,566) Fixed assets3 14
Slide 12: Net Debt Target Range
Net Debt Target Range • Net Debt Target Range = 2.0x – 2.5x ROIC EBITDAR where EBITDAR achieves a fixed 10% ROIC • At current Invested Capital of $8.8b, optimal net debt range is $5.1b to $6.3b • Targeting net debt to be within the range on a forward looking basis $b Invested Capital 8.81 Average In
Slide 13: Disciplined Allocation of Capital
Disciplined Allocation of Capital Capital allocation prioritised to: Capital Allocation Priorities • Debt reduction (where required) to achieve optimal capital structure >$6.3B $6.3B $5.1B <$5.1B Greater returns to • Base dividend Debt reduction Capital Management shareholders • Reinvestment Conside
Slide 14: Net Debt
Net Debt $M FY18 FY17 VLY4 • Borrowings of $350m from $A Corporate Secured Debt Program and A$325m from Syndicated Loan Facility Current interest bearing liabilities on balance 404 433 29 sheet • Repayment of $802m of debt including Non-current interest bearing liabilities on 4,344 4,405 61 – $280m
Slide 15: Net Debt Movement
Net Debt Movement $M FY18 FY17 • The Financial Framework considers aircraft operating leases as part of net debt Opening Net Debt (5,212) (5,646) ‒ Principal portions of rentals are treated as debt reduction Net cash from operating activities 3,413 2,704 ‒ Purchase of aircraft operating leases are t
Slide 16: Total Unit Cost
Total Unit Cost Group Unit Cost FY18 FY17 VLY % Total Unit Cost1 7.26 7.07 3 Excluding: Fuel (2.12) (2.02) Change in FX rates (0.03) Impact of changes in the discount rate and other actuarial assumptions (0.00) 0.01 Share of net profit/(loss) of investments accounted for under the equity method 0.01
Slide 17: Impact of AASB 15 adoption from 1 July 2018
Impact of AASB 15 adoption from 1 July 2018 The adoption of AASB 15 in FY19 will require restatement of the FY18 result for comparative purposes. We expect a net increase in opening retained earnings and net reduction in FY18 Underlying PBT as a result of retrospectively applying AASB 15 to prior pe
Slide 18: Group Operational Information
Group Operational Information
Slide 19: Disciplined Hedging Program
Disciplined Hedging Program Indicative Fuel and Foreign Currency Exposure Reducing Volatility of Earnings / Cash Flow • Net foreign currency revenues are offset against USD expenses Examples of Operational Adjustments • Remaining USD exposure is funded by net AUD revenue Capacity adjustments and Fue
Slide 20: Qantas Group Long-term value Framework
Qantas Group Long-term value Framework 20
Slide 21: Fleet at 30 June 2018
Fleet at 30 June 2018 Aircraft Type FY18 FY17 Change A380-800 12 12 - • Net addition3 of 4 aircraft in FY18 747-400 4 5 (1) – 5 x 787-9 additions 747-400ER 6 6 - A330-200 18 18 - – 1 x 747-400 retired August 2017 A330-300 10 10 - 737-800NG 75 75 - – 2 x A320-200 transferred to Network Aviation from
Slide 22: Fleet Age at 30 June 2018
Fleet Age at 30 June 2018 Flexibility maintained Regional Competitor Fleet Ages2 VARA3 ~18 years Alliance ~25 years Fleet Age1 as at June 2018 REX ~24 years Qantas International Qantas Jetstar Qantas Domestic Regionals average fleet age of 10.7 Domestic average fleet age of 8.3 average fleet age of
Slide 23: Supplementary Segment Information
Supplementary Segment Information
Slide 24: Jetstar Group
Jetstar Group Jetstar Group – Network of Routes1 5 6 179 177 179 151 115 129 130 96 98 109 82 59 67 31 39 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT3 4 2 ❶Jetstar Australia 100% 2004 52 x A320s/A321s ❷Jetstar International 100% 2006
Slide 25: Jetstar in Asia
Jetstar in Asia • All Jetstar-branded airlines in Asia1 profitable − Jetstar Japan earnings2 continue to improve with leading domestic LCC position3 and maturing international network − Jetstar Asia remains profitable2 in competitive market with leading OTP and strong brand; Network restructure to f
Slide 26: Diversification and Growth at Qantas Loyalty
Diversification and Growth at Qantas Loyalty One of the world’s most diverse airline loyalty programs • 7.1% growth in credit card portfolio versus market decline of 3.8%1 • >140 new Coalition partners; FY18 joins included Red Energy, Luxury Escapes and True Value Solar Diversifying revenue outside
Slide 27: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats available for passengers, multiplied by Net Working capital – Net total of the following items disclosed in the Group’s Consolidated Balance the number of kilometres flown Sheet: receivables, inventories and other assets reduced by pay
Slide 28: 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 23 August 2018, unless otherw