Qantas Airways Limited · ASX:QAN
Qantas Airways — H1 2023 Earnings Presentation
28 slides from Qantas Airways's earnings presentation, Feb 23, 2023
Slide 1: 1H23 Results Supplementary Presentation
1H23 RESULTS SUPPLEMENTARY PRESENTATION Qantas Airways Limited 23 February 2023 ASX: QAN US OTC: QABSY
Slide 2: Disclaimer
Disclaimer 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 related bodies corporate (Qantas Group) and their activities current as at 23 February 2023, unless otherwis
Slide 3: Group Performance
GROUP PERFORMANCE WAcantas croup
Slide 4: 1H23 Key Group Financial Metrics
1H23 Key Group Financial Metrics 1H23 1H22 Profit metrics • Record 1H Underlying Profit Before Tax (PBT) in top half of Revenue $M 9,909 3,074 guidance range Underlying Profit/(Loss) Before Tax1 $M 1,428 (1,277) • Strong Group RASK offsetting record fuel prices and Statutory Profit/(Loss) Before Tax
Slide 5: 1H23 Key Group Operating Metrics
1H23 Key Group Operating Metrics Pre-COVID 1H23 1H22 Change (%) Change (%) 1H19 Unit Revenue1 (RASK) c/ASK 13.05 8.41 55.2% 8.94 46.0% Total Unit Cost2 c/ASK 10.47 17.86 (41.4) % 7.93 32.0% Unit Cost (ex-Fuel and depreciation)3 c/ASK 4.81 8.67 (44.5) % 4.44 8.3% Available Seat Kilometres4 (ASK) M 55
Slide 6: Reconciliation to Underlying Profit/(Loss) Before Tax
Reconciliation to Underlying Profit/(Loss) Before Tax $M 1H23 1H22 Statutory Items not included Underlying1 Statutory Items not included Underlying1 in Underlying in Underlying Net passenger revenue 8,393 – 8,393 1,534 – 1,534 Net freight revenue 810 – 810 920 – 920 Other revenue 706 – 706 620 – 620
Slide 7: 1H23 movement in cash position
1H23 movement in cash position Net Free Cash Flow $2,094m Predominately aircraft payments and capitalised Includes $0.3b maintenance of prepayments Operating Cash Inflow Investing Cash Outflow Financing Cash Outflows $2,811m ($717)m ($1,292)m1 Net Free Cash Flow positive for 1H23; Balance Sheet in s
Slide 8: Revenue received in advance (RRIA) and travel credits
Revenue received in advance (RRIA) and travel credits Total Revenue Received in Advance ($B) • Unavailed passenger revenue >130% of pre-COVID levels with expectations to maintain substantially above pre-COVID levels • Loyalty unredeemed Frequent Flyer revenue continues to grow, representing a struct
Slide 9: $1b Recovery Plan benefits
$1b Recovery Plan benefits Breakdown by Segment1 Breakdown by category1, 2 2% ~9% 9% ~3% ~12% 45% ~10% 44% ~9% ~57% Freight contributing ~$35m cost benefits 1. Breakdown is for the full $1b Recovery Plan benefits. 2. Costs of Ground Handling outsourced as part of the transformation initiative are ne
Slide 10: Three-year Recovery Plan progress
Three-year Recovery Plan progress KEY: Complete On-track KEY AREA OF FOCUS TARGET STATUS STATUS AS AT 31 DECEMBER 2022 ~$0.75b capex1 for FY21 Cash Flow Complete: Sustainable Net Free Cash Flow2 restored Sustainable Net Free Cash Flow2 Defer deliveries of A321neo and 787-9 aircraft Fleet Management
Slide 11: Group Unit Revenue and Unit Cost (c/ASK)
Group Unit Revenue and Unit Cost (c/ASK) RASK1 1H23 CASK3 1H23 Net passenger revenue $m 8,393 Underlying (Profit)/Loss Before Tax $m (1,428) Excluding other passenger revenue $m (1,160) Excluding Ticketed passenger revenue $m 7,233 A Ticketed passenger revenue $m 7,233 C Net expenditure $m 5,805 Les
Slide 12: Financial Framework
FINANCIAL FRAMEWORK WAcantas croup
Slide 13: Return on Invested Capital (ROIC) Calculation
Return on Invested Capital (ROIC) Calculation 12 mths to 12 mths to $M Dec 22 Dec 21 • ROIC EBIT is derived by adjusting Underlying EBIT Underlying EBIT 1,115 (1,739) to exclude leased aircraft depreciation under AASB 16 and include notional depreciation for these Add back: Lease depreciation under
Slide 14: Balance Sheet Summary under Financial Framework
Balance Sheet Summary under Financial Framework As at 31 Dec As at 31 Dec $M 2022 2021 • Invested Capital can be defined as Net Assets adjusted Net Assets 16 15 for the following: Less: Cash and cash equivalents (4,145) (2,705) – Exclusion of Cash and cash equivalents and Interest-bearing liabilitie
Slide 15: Net Debt Target Range
Net Debt Target Range • Net Debt target range = 2.0x — 2.5x ROIC EBITDA where ROIC = 10% • At average Invested Capital of $3.3b, optimal Net Debt range is $3.9b to $4.8b Dec 22 Drivers of Net Debt Range $B Invested Capital 3.3 Invested Capital will grow in line with aircraft deliveries Avg Invested
Slide 16: Net Debt and Liquidity Position
Net Debt and Liquidity Position As at 31 As at 30 $M Change4 Dec 2022 Jun 2022 Net Debt decreased by $1.5b for the 12 months to December 2022 Current interest-bearing liabilities on – Borrowing activity for the period included Balance Sheet 895 669 (226) Non-current interest-bearing liabilities ◦ $0
Slide 17: Net Debt movement under the Financial Framework
Net Debt movement under the Financial Framework $M 1H23 1H22 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 2,811 137 Less: Net lease princi
Slide 18: The Qantas fleet is 'fit for purpose'
The Qantas fleet is ‘fit for purpose’ Evaluating future Mainstream fleet (fit for purpose) Adopting next generation technology1 technology2 Maintain aircraft life and keep product relevant Identify technology that Select right aircraft and build scale quickly step changes capabilities A380 103 787-8
Slide 19: 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 20: Robust financial risk management
Robust financial risk management Operational Fuel and FX Capital Expenditure FX – Hedging of USD Aircraft Payments • 1H23 fuel cost was $2.33b; hedging approach provided substantial • Hedging remains consistent with long term approach to risk management protection from elevated fuel prices allowing
Slide 21: Supplementary Segment Information
SUPPLEMENTARY SEGMENT INFORMATION
Slide 22: 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 23: Jetstar Group Overview
Jetstar Group Overview Jetstar Domestic Jetstar International4 Jetstar in Asia • Low fares leadership with margin premium over • Australia international • Jetstar Japan is positioned for recovery as competitors driven by low-cost base, scale, network international markets open up, demand fully retur
Slide 24: Diversification and growth at Qantas Loyalty
Diversification and growth at Qantas Loyalty One of the world’s most diverse airline loyalty programs • Contributing ~$1b towards the Group Cash Flow1 for 1H23; delivering long term value to the Qantas Group • 7% growth2 in Qantas Frequent Flyer membership to 14.7m members; 17% growth2 in QBR3 membe
Slide 25: 1H23 Group and Group Domestic Traffic Statistics vs Pre-COVID
1H23 Group and Group Domestic Traffic Statistics vs Pre-COVID Pre-COVID Pre-COVID Pre-COVID 1Q23 Change (%) 2Q23 Change (%) 1H23 Change (%) 1Q19 2Q19 1H19 Total Qantas Group Operations Passengers Carried ‘000 11,186 14,103 (21) 11,489 14,397 (20) 22,675 28,500 (20) Revenue Passenger Kilometers M 22,
Slide 26: 1H23 Group International Traffic Statistics vs Pre-COVID
1H23 Group International Traffic Statistics vs Pre-COVID Pre-COVID Pre-COVID Pre-COVID 1Q23 Change (%) 2Q23 Change (%) 1H23 Change (%) 1Q19 2Q19 1H19 Group International Available Seat Kilometres M 14,077 25,031 (44) 16,037 24,816 (35) 30,114 49,847 (40) Group International Unit Revenue Change % 56
Slide 27: 1H23 Group and Group Domestic Traffic Statistics vs 1H22
1H23 Group and Group Domestic Traffic Statistics vs 1H22 1Q23 1Q22 Change (%) 2Q23 2Q22 Change (%) 1H23 1H22 Change (%) Total Qantas Group Operations Passengers Carried ‘000 11,186 2,153 >100 11,489 3,253 >100 22,675 5,406 >100 Revenue Passenger Kilometers M 22,940 2,790 >100 24,382 4,313 >100 47,32
Slide 28: 1H23 Group International Traffic Statistics vs 1H22
1H23 Group International Traffic Statistics vs 1H22 1Q23 1Q22 Change (%) 2Q23 2Q22 Change (%) 1H23 1H22 Change (%) Group International Available Seat Kilometres M 14,077 636 >100 16,037 1,493 >100 30,114 2,129 >100 Group International Unit Revenue Change % 123 41 54 Qantas International Passengers C