Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2024 Earnings Presentation
36 slides from Qantas Airways's earnings presentation, Aug 29, 2024
Slide 1: FY24 Results Supplementary Presentation
FY24 Results Supplementary Presentation Qantas Airways Limited 29 August 2024 ASX:QAN US OTC: QABSY
Slide 2: Disclaimer
Disclaimer Summary information This Presentation is unaudited. Notwithstanding this, the the repayment of capital from Qantas or any particular Presentation contains disclosures which are extracted or tax treatment. This Presentation contains summary information about derived from the Annual Financi
Slide 3: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats Invested Capital (IC)– Net assets (excluding cash, debt, Revenue Passenger Kilometres (RPK) – Total number of available for passengers, multiplied by the number of other financial assets and liabilities and tax balances) passengers car
Slide 4: Group Performance
Group Performance YAcantas croup
Slide 5: FY24 Key Group Financial Metrics
FY24 Key Group Financial Metrics FY24 FY23 Profit metrics Revenue $M 21,939 19,815 Underlying Profit Before Tax1 $M 2,078 2,465 Underlying Earnings per Share2 c 88.0 94.9 Statutory Profit/(Loss) After Tax $M 1,251 1,744 Statutory Earnings per Share c 75.9 96.0 Balance Sheet and Cash Flow metrics Rol
Slide 6: FY24 Key Group Operating Metrics
FY24 Key Group Operating Metrics Change FY24 FY23 (%) Unit Revenue (RASK)1 c/ASK 11.20 12.29 (8.9)% Total Unit Cost1 c/ASK 9.73 10.19 (4.5)% Unit Cost (ex-Fuel)1 c/ASK 5.97 6.34 (5.8)% Available Seat Kilometres (ASK) M 141,357 117,258 20.6% Revenue Passenger Kilometres (RPK) M 116,895 97,693 19.7% P
Slide 7: Items not included in Underlying PBT
Items not included in Underlying PBT $M FY24 Comments ($128)m ACCC settlement (compensation and penalties) and related costs with cash outflow largely expected to occur in FY25; Legal provisions and related costs (198) ($70)m Increase in provision for ground handling outsourcing Federal Court case N
Slide 8: Reconciliation to Underlying Profit Before Tax
Reconciliation to Underlying Profit Before Tax $M FY24 FY23 Statutory Items not Underlying Statutory Items not Underlying included in included in Underlying Underlying Net passenger revenue 18,903 – 18,903 16,923 – 16,923 Net freight revenue 1,211 – 1,211 1,380 – 1,380 Other revenue 1,825 – 1,825 1,
Slide 9: Statutory Income Statement Detail
Statutory Income Statement Detail $M FY24 Net passenger revenue up 12% Net passenger revenue 18,903 • Group capacity increased 21% as flying restoration has returned to 100% pre-covid levels Net freight revenue 1,211 – Group Domestic1 Unit Revenue down 2% as fare prices stabilise – Group Internation
Slide 10: Statutory Other Revenue and Expenses Detail – Compared to FY23
Statutory Other Revenue and Expenses Detail – Compared to FY23 $M FY24 FY23 Variance $M FY24 FY23 Variance Other Revenue and Income 1,825 1,512 313 Other Expenditure 3,171 2,512 659 Frequent Flyer marketing revenue and other Qantas Loyalty Commissions and other selling costs up 5% businesses up 29%
Slide 11: Group Unit Revenue and Unit Cost (c/ASK)
Group Unit Revenue and Unit Cost (c/ASK) RASK FY24 CASK FY24 Net passenger revenue $M 18,903 Underlying (Profit)/Loss Before Tax $M (2,078) Excluding Other passenger $M (3,071) A Less: Ticketed Passenger Revenue $M 15,832 revenue A A Ticketed Passenger Revenue $M 15,832 C C Net expenditure $M 13,754
Slide 12: Revenue received in advance (RRIA) and travel credits
Revenue received in advance (RRIA) and travel credits Revenue received in advance ($B) Pre-COVID 8.5 8.1 7.8 0.6 0.5 0.5 5.9 0.2 4.4 4.5 • Airline RRIA experienced modest growth vs FY23 as Group capacity 4.0 restored, offset by RASK moderation 3.2 • Unredeemed Frequent Flyer revenue grew vs FY23 in
Slide 13: COVID credit balance continues to wind down through usage and refunds
COVID credit balance continues to wind down through usage and refunds COVID credit1 balance ($m) • As of 30 June 2024, $375m of customer balances remaining 652 in COVID credits (184) • The COVID credit balance has decreased by 40% in FY24 468 • Qantas customers holding COVID credits can request a ca
Slide 14: Financial Framework and Fleet
Financial Framework and Fleet
Slide 15: Return on Invested Capital (ROIC) Calculation
Return on Invested Capital (ROIC) Calculation $M FY24 FY23 Underlying EBIT 2,279 2,682 • ROIC EBIT is derived by adjusting Underlying EBIT to exclude AASB 16 lease depreciation and includes Add back: Lease depreciation under AASB 16 295 320 notional depreciation for leased aircraft as if they were o
Slide 16: Balance Sheet Summary under Financial Framework
Balance Sheet Summary under Financial Framework As at 30 As at 30 Invested Capital is defined as Net Assets adjusted for $M Jun 2024 Jun 2023 the following: Net Assets 294 10 – Exclusion of Cash and cash equivalents and Less: Cash and cash equivalents (1,718) (3,171) Interest-bearing liabilities whi
Slide 17: Net Debt Target Range
Net Debt Target Range • Net Debt Target Range = 2.0x — 2.5x EBITDA where ROIC = 10% • At average Invested Capital of $3.9b, optimal Net Debt range is $3.9b to $4.9b Jun 24 Drivers of Net Debt Target Range $B Invested Capital Avg Invested Capital for trailing 12 months 3.9 Invested Capital will rebui
Slide 18: Net Debt and Liquidity Position
Net Debt and Liquidity Position As at 30 As at 30 Net Debt increased by ($1.2b) for the 12 months to June 2024 $M Change Jun 2024 Jun 2023 – ($1.5b) cash decrease mainly driven by debt reduction, Net Net on Balance Sheet debt1 3,311 1,998 (1,313) Capital Expenditure and Shareholder Distributions fun
Slide 19: Net Debt movement under the Financial Framework
Net Debt movement under the Financial Framework $M FY24 FY23 The Financial Framework considers aircraft leases as part of Net Debt Opening Net Debt (2,885) (3,937) – Aircraft leases are initially recognised in Net Debt at fair Net cash from operating activities 3,441 5,085 value Less: Net lease prin
Slide 20: Financial Framework versus Statutory Net Debt
Financial Framework versus Statutory Net Debt • Under the Financial Framework, aircraft leases are $M FY24 FY23 treated as capital acquisitions and recognised at fair value (through Net Capex) and a notional Interest-bearing liabilities 5,035 5,169 borrowing recognised as part of Net Debt as Capital
Slide 21: 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 – Takes into conside
Slide 22: Robust financial risk management
Robust financial risk management Operational Fuel and FX Capital Expenditure FX – Hedging of USD Fleet Payments • FY24 fuel cost at $5.3b • Hedging remains consistent with long term approach to risk – FY24 total fuel cost lower than guided at 1H24 results due to management lower consumption in 2H24
Slide 23: Profit drivers of new fleet technology
Profit drivers of new fleet technology Fuel efficiencies Enhanced customer offering supporting NPS Greater fuel efficiency from new fleet Reduced maintenance In early years for new fleet Modernised cabin design improving comfort and convenience Cost across seats, noise, and larger overhead baggage d
Slide 24: Illustrative: Fleet benefits cycle
Illustrative: Fleet benefits cycle Benefits by fleet type over delivery timeline Benefits expected to be realised over period of fleet investment Returns Introductory Introduction Building to scale Maturity • Entry-into-service (EIS) costs1 of new aircraft types impact initial returns of fleet inves
Slide 25: Supplementary Segment Information
Supplementary Segment Information
Slide 26: Qantas Domestic and International Overview
Qantas Domestic and International Overview Qantas Domestic Qantas International • Full service offering targeting business purpose and premium leisure • Globally recognised long haul carrier targeting high demand business and sectors premium leisure segments into USA, Europe and Asia — Market leadin
Slide 27: Jetstar Group Overview
Jetstar Group Overview Jetstar Domestic Jetstar International3 and New Zealand Jetstar in Asia • Australian industry-leading LCC1 Jetstar International Jetstar Japan • 100% owned by Qantas Group2 • Strong operational performance, customer • Australian industry-leading LCC1 capitalising on • Jetstar
Slide 28: Diversification and growth at Qantas Loyalty
Diversification and growth at Qantas Loyalty Members Burn Redemption Earn • Deliver everyday engagement between • Increase points earn through the flywheel effect • Large ecosystem for members to engage in members and the Qantas brand from growth in overall redemptions everyday earn • Incentivise me
Slide 29: Classic Plus
Classic Plus >100,000 seats redeemed since launch to our most popular Since April 2024 launch, early evidence of increased engagement from International destinations members who have redeemed on Classic Plus1 Top 10 Classic Plus Destinations International, ex-AU 10ppt premium in program confidence 1
Slide 30: Investing to scale and access climate solutions through the Qantas Climate Fund
Investing to scale and access climate solutions through the Qantas Climate Fund SAFFA • In August 2024, the Qantas Climate Fund • In January 2024, Qantas joined the Sustainable announced a cornerstone investment into Silva Aviation Fuel Financing Alliance (SAFFA) to boost Capital Origination Fund (S
Slide 31: Corporate and Unallocated/Eliminations
Corporate and Unallocated/Eliminations Corporate FY24 FY23 Change Unallocated/Eliminations FY24 FY23 Change Revenue $M 12 9 +33% Revenue $M (1,475) (1,347) (10%) Underlying EBIT $M (263) (212) (24%) Underlying EBIT $M (85) (137) +38% Includes investment in Sustainability, our People and Group Cyber
Slide 32: Ongoing transformation focus
Ongoing transformation focus Focus for Transformation ~$390m delivered in FY24 Targeting ~$400m for FY25+ 1H25 2H25 Fleet & Network • 3 x A321s and 2 x A330 deliveries to Qantas Freight — Retirement of 767F and 737-300Fs • Continued growth in A321LR and A220 fleets and A320neo EIS • 5 x A321LR deliv
Slide 33: 2H24 Group and Group Domestic Traffic Statistics vs 2H23
2H24 Group and Group Domestic Traffic Statistics vs 2H23 3Q24 3Q23 Change (%) 4Q24 4Q23 Change (%) 2H24 2H23 Change (%) Total Qantas Group Operations Passengers Carried ‘000 12,894 11,270 14 12,892 11,780 9 25,786 23,050 12 Revenue Passenger Kilometers M 29,267 24,348 20 29,639 26,023 14 58,906 50,3
Slide 34: 2H24 Group International Traffic Statistics vs 2H23
2H24 Group International Traffic Statistics vs 2H23 3Q24 3Q23 Change (%) 4Q24 4Q23 Change (%) 2H24 2H23 Change (%) Group International Available Seat Kilometres M 22,653 17,269 31 22,814 19,023 20 45,467 36,292 25 Group International Unit Revenue % (13) (10) (11) Change Qantas International Passenge
Slide 35: Qantas Domestic, Qantas International and Freight
Qantas Domestic FY 1H 2H FY24 FY23 1H24 1H23 2H24 2H23 Variance% Variance% Variance% Revenue $M 7,241 6,980 4 3,758 3,634 3 3,483 3,346 4 Underlying EBIT $M 1,063 1,270 (16) 641 785 (18) 422 485 (13) Operating Margin % 14.7 18.2 (3.5)ppts 17.1 21.6 (4.5)ppts 12.1 14.5 (2.4)ppts ASKs M 32,950 32,513
Slide 36: Jetstar Group and Qantas Loyalty
Jetstar Group FY 1H 2H FY24 FY23 1H24 1H23 2H24 2H23 Variance% Variance% Variance% Revenue $M 4,922 4,235 16 2,486 2,096 19 2,436 2,139 14 Underlying EBIT $M 497 404 23 325 177 84 172 227 (24) Operating Margin % 10.1 9.5 0.6pts 13.1 8.4 4.7pts 7.1 10.6 (3.5)pts ASKs M 49,529 39,558 25 23,883 18,863