Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2017 Earnings Presentation
27 slides from Qantas Airways's earnings presentation, Aug 25, 2017
Slide 1: Qantas Airways Limited FY17 Results Supplementary Presentation
Qantas Airways Limited FY17 Results Supplementary Presentation 25 August 2017 ASX:QAN US OTC:QABSY
Slide 2: Group Performance
Group Performance YRCANTAS broUP
Slide 3: FY17 Key Group Financial Metrics
FY17 Key Group Financial Metrics FY17 FY16 VLY %10 Comments Underlying PBT1 ($M) 1,401 1,532 (8.6) Underlying Earnings per Share2 (c) 54.6 53.1 2.8 Reflecting value of share buy-back Statutory Profit Before Tax ($M) 1,181 1,424 (17) FY16 includes $201m gain on sale of Sydney Airport Terminal 3 Statu
Slide 4: Underlying Income Statement Summary
Underlying Income Statement Summary $M FY17 FY16 VLY % Comments Unit Revenue decline of 2% as competitive pressures in Net passenger revenue 13,857 13,961 (0.7) international markets and the ramp up of new routes offset the improved Unit Revenue in domestic and Transformation benefits Excess interna
Slide 5: Items Not Included in Underlying PBT
Items Not Included in Underlying PBT $M FY17 FY16 Comments Ineffectiveness and non-designated derivatives relating to - 15 other reporting periods Net gain on disposal of Sydney Airport Terminal Three - (201) Redundancies, restructuring and other costs as part of the Qantas Transformation costs 142
Slide 6: Reconciliation to Underlying PBT
Reconciliation to Underlying PBT $M FY17 FY16 Statutory Ineffectiveness Other items Underlying1 Statutory Ineffectiveness Other items Underlying1 relating to not included in relating to not included in other reporting Underlying other reporting Underlying periods PBT periods PBT Net passenger revenu
Slide 7: Revenue Detail
Revenue Detail Net passenger revenue down 1% Revenue ($B) • Group Unit Revenue decreased 2% – Group Domestic1 Unit Revenue increased 2% – Group International2 Unit Revenue declined 5% • Significant international competitor capacity 16.2 (0.9)% 16.1 • Moderating decline in resources sector demand • R
Slide 8: Expenditure Detail
Expenditure1 Detail Fuel down 6% Expenditure1 ($B) • Benefit from lower jet fuel prices compared to FY16 • Improvement in fuel efficiency from Qantas Transformation • Partially offset by higher consumption from increased flying 0.1% 14.5 14.4 Manpower and staff-related up 4% • Operational head count
Slide 9: Cash Flow
Cash Flow $M FY17 FY16 VLY % • Positive net free cash flow1 of $1.3b Operating cash flows 2,704 2,819 (4.1) – Strong operating cash flows of $2.7b Investing cash flows (excluding aircraft operating (1,395) (1,145) (22) – Investing cash flows of $1.4b excluding aircraft lease refinancing) operating l
Slide 10: Invested Capital Calculation
Invested Capital Calculation $M FY17 FY16 • Refinanced 19 operating leased aircraft to unencumbered owned aircraft with minimal impact to Receivables (current and non-current) 907 929 invested capital Inventories 351 336 – Decrease in capitalised operating leased aircraft Other assets (current and n
Slide 11: ROIC Calculation
ROIC Calculation $M FY17 FY16 Underlying PBT 1,401 1,532 Add back: Underlying net finance costs 189 219 Add back: Non-cancellable aircraft operating 356 461 lease rentals Less: Notional depreciation1 (158) (203) ROIC EBIT 1,788 2,009 $M FY17 FY16 Net working capital2 (6,566) (6,701) Fixed assets3 13
Slide 12: Net Debt
Net Debt $M FY17 FY16 VLY • Issued two Australian dollar unsecured bonds of $425m at favourable rates and long tenor of Current interest bearing liabilities on balance sheet 433 441 (8) 7 and 10 years4 Non-current interest bearing liabilities on balance sheet 4,405 4,421 (16) • Repayment of $453m sh
Slide 13: Net Debt Movement
Net Debt Movement $M FY17 FY16 • Our Financial framework considers aircraft operating leases as part of net debt Opening Net Debt (5,646) (6,400) – Principal portions of rentals are treated as debt Net cash from operating activities 2,704 2,819 reduction Principal portion of aircraft operating lease
Slide 14: Unit Cost
Unit Cost • Ex-fuel unit cost1 increased by 4.2% largely due to the impacts of aircraft right-sizing and other network changes to protect margins – Total unit cost2 benefited from a reduction in fuel expense Group Unit Cost FY17 FY16 VLY % Total Unit Cost2 7.00 7.05 (0.7) Excluding: Fuel (2.02) (2.1
Slide 15: Achieving Our Targets: Qantas Transformation Scorecard
Qantas Transformation Scorecard TARGET METRICS TIMEFRAME END OF $2b PROGRAM OUTCOMES $2b Benefits, extended to $2.1b FY17 $2.13b benefits realised Accelerated >10% Group ex-fuel expenditure reduction1 Ex-fuel expenditure down by 10%1 Transformation Benefits 5,000 FTE reduction FY17 5,000+ fewer FTE
Slide 16: Group Operational Information
Group Operational Information
Slide 17: Fleet at June 2017
Fleet at 30 June 2017 Aircraft Type FY17 FY16 Change • Net addition3 of 6 aircraft in FY17 A380-800 12 12 - 747-400 5 5 - – 2 x A321-200 747-400ER 6 6 - A330-200 18 18 - – 3 x F100 A330-300 10 10 - – 1 x 737-400SF 737-800NG 75 75 - Total Qantas 126 126 - • Domestic capacity reductions achieved by ri
Slide 18: Fleet Age at June 2017
Fleet Age at 30 June 2017 Flexibility maintained Regional Competitor Fleet Ages2 VARA3 ~15 years Fleet Age1 as at June 2017 Alliance ~25 years REX ~23 years Qantas International Qantas Jetstar Qantas Domestic average fleet age of 11.1 Domestic average fleet age of 7.4 Regionals Mainline average flee
Slide 19: Supplementary Segment Information
Supplementary Segment Information
Slide 20: Jetstar Group
Jetstar Group Jetstar Group – Network of Routes1 5 179 177 151 109 115 129 130 6 96 98 82 59 67 31 39 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT3 4 ❶Jetstar Australia 100% 2004 53 x A320s/A321s 2 ❷Jetstar International 100% 2006 11 x B78
Slide 21: Jetstar Domestic
Jetstar Domestic • Underlying EBIT of $220m Jetstar Domestic FY17 FY16 VLY % • Consistent strong earnings1 with healthy operating ASKs M 18,694 18,660 0.2 margins2, ROIC > WACC RPKs M 15,535 15,565 (0.2) • Continuing to leverage fleet size, network and frequency advantage over competitors Passengers
Slide 22: Jetstar International (Australia outbound and New Zealand)
Jetstar International (Australia outbound and New Zealand) • Strong earnings1 with strategic optimisation of core markets Jetstar International (incl. New Zealand Domestic and Regional, FY17 FY16 VLY % and 787-8 wide body fleet excl. Jetstar Asia) ASKs M 21,929 21,710 1.0 • Long-haul business focuse
Slide 23: Jetstar in Asia
Jetstar in Asia • Jetstar in Asia1 portfolio delivering both revenue and earnings2 growth − Jetstar Asia (Singapore) remains profitable2 in highly competitive market − Jetstar Japan earnings2 continue to improve with growing international network; largest3 domestic LCC − Jetstar Pacific incurring lo
Slide 24: 787-9 Introduction
787-9 Introduction Lifecycle of the Qantas 787-9 program 787-9 Flight Aircraft 2 Program New Premium Aircraft 1 Simulator Oct 17 Dec 17 Launch Economy Seat Aircraft 3 Aug 15 Committed to Announced Jan 18 Purchase Feb 17 Mar 16 Aircraft 4 Feb 18 FY FY FY FY 16 17 18 19 Domestic MEL-LAX1 PER-LHR2 Engi
Slide 25: Diversification and Growth at Qantas Loyalty
Diversification and Growth at Qantas Loyalty One of the world’s most diverse airline loyalty programs • Technology led innovation supporting Coalition growth • Re-platform of Qantas Store and Qantas epiQure • Integration of QFF1 into the Qantas companion app • Simplified SME2 program (QBR3) driving
Slide 26: Overview of Qantas Loyalty Value Chain
Overview of Qantas Loyalty Value Chain Business Model Sources of Value Coalition Loyalty 4 Other Verticals Marketing Revenue: percentage of price per point Core earnings stream recognised upfront for the service Loyalty provides its Part of Coalition (QFF1 + QBR2) Earn Partners. An allowance for br
Slide 27: 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 25 August 2017, unless otherw