Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2021 Earnings Presentation
37 slides from Qantas Airways's earnings presentation, Aug 26, 2021
Slide 1: Qantas Airways Limited FY21 Results Presentation
Qantas Airways Limited FY21 Results Presentation 26 August 2021 ASX: QAN US OTC: QABSY
Slide 2: FY21 overview
FY21 overview Protecting the Balance Sheet and commencing the recovery • FY21 Underlying EBITDA1 of $410m, Underlying Loss Before Tax (ULBT)2 of ($1.8)b, Statutory Loss Before Tax of ($2.4)b, despite losing $12b of Total Revenue3 • Domestic airlines generated $233m of Underlying EBITDA in 2H21 despi
Slide 3: Recovery Plan ahead of schedule, Balance Sheet repair commenced
Recovery Plan ahead of schedule, Balance Sheet repair commenced Restructuring and Domestic ramp up and Preserving liquidity - 2H20 Domestic restart - FY21 International restart – FY22 • Acted swiftly to safely hibernate the • Delivered $650m of cost benefits in FY21, ahead • Recovery Plan activities
Slide 4: Agile management of domestic network addressing highly dynamic demand environment
Agile management of domestic network addressing highly dynamic demand environment 1 • Highly refined level of coordination between commercial planning Transformed and operations Group Domestic Capacity Profile scheduling • Rigorous daily capacity optimisation between Network and (Monthly domestic ca
Slide 5: Recovery Plan benefits exceeded the FY21 target, with $650m of structural cost benefits delivered
Recovery Plan benefits exceeded the FY21 target, with $650m of structural cost benefits delivered Ways of Working ~65%1 Digitalisation/Supplier ~35%1 Clear pathway to the $1b target by end of FY23 Improved workforce flexibility and Efficiencies across the business productivity • Streamlined and rest
Slide 6: Recovery Plan scorecard
Recovery Plan scorecard TARGET KEY AREA OF FOCUS METRICS TIMEFRAME AS AT 30 JUNE 2021 Restructuring cost benefits of $0.6b in FY21, $0.8b by FY22, $1.0b by FY23 FY23 Achieved $650m of cost benefits in FY21; Targeting $850m by FY22 Cost savings Increased target to at least 8,500 exits FY21 ~9,400 exi
Slide 7: ESG overview and proposition
ESG overview and proposition Environmental Social Governance Our Planet Our People Our Governance • Despite the impacts of COVID-19, the Group is • Operating cash positive flying across the Group • New Group Management Committee role – Chief strongly committed to building business resilience to airl
Slide 8: FY21 Environmental progress
FY21 Environmental progress ESG Focus Area Progress as at 30 June 2021 1 • First airline group to commit to capping net emissions1 and one of the first to commit to net zero emissions by 2050 • Aiming for 1.5 per cent average annual fuel efficiency improvements through fleet renewal and increased op
Slide 9: Financial performance
w 108 Financial performance
Slide 10: FY21 key Group financial metrics
FY21 key Group financial metrics Profit metrics Balance Sheet metrics Other statistics (v FY19) $410m ($386)m $3.8b (81%) Underlying EBITDA Statutory operating cash flow Total liquidity ASKs4 ($861)m 1H21 / $475m 2H21 ($1,525)m $5.9b (85%) Underlying EBIT1 loss Net Debt RPKs5 $693m ($1,826)m Net cap
Slide 11: FY21 Profit Bridge compared to FY19
FY21 Profit Bridge compared to FY19 Group Total Revenue Activity-based, rightsizing and decline $12.0b restructuring benefits $8.9b 1,326 Manpower cost benefit $ 483 m Other cost benefits $ 167 m 14 (13) 96 (152) Restructuring benefits $ 650 m 1,216 (1,826) 2,468 (11,930) Selling & Marketing $ 696 m
Slide 12: Items not included in Underlying LBT
Items not included in Underlying LBT $M FY21 Comments Redundancies incurred as part of the Recovery Plan not previously Recovery Plan restructuring costs 319 provided for in FY20 Including A380 fleet impairment due to fall in AUD market values and Impairment of assets and related costs 257 retiremen
Slide 13: 2H21 Movement in cash position
2H21 Movement in cash position Financing Cash Outflows Statutory Net Free Cash Flow ($652)m 1 $267m (837) 2,606 115 1,312 Term loan (557) Includes (208) redundancy and 2,221 restructuring costs, Includes aircraft Amortising secured refunds and debt repayment (210) deferred payables2 capitalised main
Slide 14: Net Debt and liquidity position
Net Debt and liquidity position As at 30 As at 30 • Net Debt increased by ($1.2)b for the 12 months to June 2021 $M VLY $M4 June 21 June 20 primarily driven by: Current interest-bearing liabilities on — Underlying operating cash flow of $2.4b 969 868 (101) balance sheet Non-current interest-bearing
Slide 15: Segment Results
w 108 Segment Results
Slide 16: Qantas Domestic
Qantas Domestic • Strong leisure-led recovery delivering a positive Underlying EBITDA Pre-COVID FY21 FY20 FY19 — Strong demand recovery in 4Q21 with capacity at 86% of Pre-COVID levels1 by May 2021; seat factor recovery to 64%2 Revenue $M 2,745 4,672 6,098 — Variabilisation of cost base underpinning
Slide 17: Qantas International (including Freight)
Qantas International (including Freight) • Record Freight profit1 supported by surging domestic e-commerce trends and strong Pre-COVID international yields FY21 FY20 FY19 — Freight providing a significant natural hedge to international passenger business, Revenue $M 1,598 6,077 7,420 materially cove
Slide 18: Jetstar Group
Jetstar Group • Achieved Underlying EBITDA profit1 driven by 2H21 domestic leisure strength, cost Pre-COVID FY21 FY20 variabilisation and $70m in recovery program benefits delivered FY19 — $145m AU Domestic Underlying EBITDA with $102m in second half as capacity Revenue6 $M 1,140 3,006 3,961 increas
Slide 19: Qantas Loyalty
Qantas Loyalty • Group cash contribution >$1b of gross receipts1 in FY21 Pre-COVID FY21 FY20 FY19 • Diversified portfolio strategy delivering second half earnings growth2 Revenue8 $M 984 1,224 1,654 — Spend on Qantas Points Earning Credit Cards returned to Pre-COVID levels3 in 4Q21; Maintaining ~35%
Slide 20: Financial Framework
w 108 Financial Framework
Slide 21: Financial Framework will continue to guide our capital decisions
Financial Framework will continue to guide our capital decisions 1 2 3 Maintaining an optimal capital structure ROIC2 > WACC3 Disciplined allocation of capital through the cycle Minimise cost of capital by targeting Grow invested capital with disciplined a Net Debt range of $4.5b to $5.6b1 Deliver R
Slide 22: Maintaining an optimal capital structure
Maintaining an optimal capital structure Capital structure and liquidity Debt maturity profile as at 30 June 2021 ($M)1 • Net Debt2 at $5.9b, prioritising debt reduction • Total liquidity of $3.8b including $2.2b cash3 and committed undrawn facilities of $1.6b maturing in FY23 and FY24 300 250 • Une
Slide 23: Historical operating cash flow trend
Historical operating cash flow trend Statutory EBITDA ($M)1 • Positive statutory EBITDA of $0.15b for FY21 Pre-COVID – Includes impact of $0.3b redundancies 3,108 3,334 3,431 • FY21 Statutory operating cash flow of ($386)m; 1,064 – FY21 underlying operating cash flow of $2.4b 149 FY17 FY18 FY19 FY20
Slide 24: Robust fuel and FX risk management
Robust fuel and FX risk management FY21 actual fuel cost and hedge accounting impacts Fuel cost ($B) • FY21 fuel cost of $0.8b, down $3.0b from FY19 through 74% reduction in -3.0 consumption and lower AUD jet fuel price; 2H21 fuel cost of $526m • Hedge accounting impact of $33m gain in FY21 relating
Slide 25: Disciplined capital allocation
Disciplined capital allocation Capital expenditure Shareholder Capital Movements ($B) ($B) Disciplined capital expenditure -0.4 +2.8 • Net capital expenditure1 of $693m in FY21, including capitalised maintenance on operational fleet and delivery of the first of three -0.9 A321-200P2F freighters • FY
Slide 26: Fleet strategic priorities
Fleet strategic priorities Qantas Group fleet strategy Recovery phase Right aircraft • Deferred delivery of 787-9s and A321neos to meet the Group's requirement Right route • A380s remain in storage • Reallocated 6 x A320s to QantasLink fleet to service intra Western Australia resources market • A330
Slide 27: Looking ahead
w& 108 Looking ahead
Slide 28: Vaccine supply and uptake suggests 80% threshold to be reached by December 2021
Vaccine supply and uptake suggests 80% threshold to be reached by December 2021 • Sufficient vaccine dosages available by early October to Potential Australia Vaccination Timing1 achieve 80% of eligible Australians vaccinated; supply ramping up from September 2021 100% • Based on current rate of upt
Slide 29: Uptake supports all domestic borders open by 1 December, gradual opening of international from mid December
Uptake supports all domestic borders open by 1 December, gradual opening of international from mid December Potential State Vaccination Timings 1 • National COVID-19 plan requires all states to Australia hit vaccination targets for restrictions to lift ACT • Based on current rates of vaccine uptake
Slide 30: Domestic market
Domestic market FY22 Outlook Competitive Positioning • Recent state lockdowns and associated border closures are expected to • Expecting to maintain ~70% domestic capacity share have a significant impact on 1H22 capacity • Extended competitive position for both domestic airlines • Recovery delayed b
Slide 31: International markets
International markets FY22 Outlook Competitive Positioning • International border closure and quarantine restrictions expected to ease • Australia’s only long-haul premium and low cost international airline with once 80% of eligible Australians are vaccinated extensive transformation improving relat
Slide 32: Freight and Loyalty
Freight and Loyalty Freight Loyalty • International belly space expected to be negligible through 1H22 • Continuing to deliver strong cash flow contribution and into 2H22 until international capacity stabilises • Travel related products continue to remain sensitive to border • Strong international f
Slide 33: Investing in customer, brand and digital
Investing in customer, brand and digital Giving customers confidence to book • Record high or near high Net Promotor Scores across all brands and most trusted airline in the region1 • Domestic Dual Brand strategy powerful with each airlines’ continued strength in targeted customer segments — Busines
Slide 34: Outlook
Outlook FY22 outlook The Group’s existing undrawn liquidity facilities, proactive approach to securing funding and the ongoing strong contributions from Qantas Freight, Qantas Loyalty and cash positive flying ensures it has sufficient liquidity for a range of recovery scenarios. Through our improved
Slide 35: Well-positioned for recovery
Well-positioned for recovery Group Domestic1 airlines are well-positioned to benefit from the Operating Segment Underlying EBITDA recovery in domestic travel and changing competitive environment; capacity share ~70%; significant unit cost reduction post $4.0b restructuring; FY21 Group Domestic Under
Slide 36: Looking forward, we remain committed to the FY24 targets
Looking forward, we remain committed to the FY24 targets Qantas Jetstar Qantas Jetstar International Qantas Loyalty Domestic Domestic International Relative competitive Stable earnings growth Relative margin advantage Relative margin advantage Lowest cost position advantage Targeting EBIT margin1 ~1
Slide 37: Disclaimer and ASIC Guidance
Disclaimer and 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 August 2021, unless othe