Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2024 Earnings Presentation
73 slides from Qantas Airways's earnings presentation, Aug 29, 2024
Slide 1: Qantas Group FY24 Results Investor Presentations
29 August 2024 ASX Market Announcements Office Australian Securities Exchange Limited Lodged electronically via ASX Online Qantas Group FY24 Results Investor Presentations Qantas Airways Limited attaches the following documents: • Qantas Group FY24 Results Investor Presentation; and • Qantas Group F
Slide 2: FY24 Results Investor Presentation
FY24 Results Investor Presentation Qantas Airways Limited 29 August 2024 ASX:QAN US OTC: QABSY
Slide 3: Disclaimer
Disclaimer Summary information This Presentation is unaudited. Notwithstanding this, the repayment of capital from Qantas or any particular the Presentation contains disclosures which are tax treatment. This Presentation contains summary information about extracted or derived from the Annual Financi
Slide 4: Our focus this year has been getting the balance right
Our focus this year has been getting the balance right in delivering for customers, Our Customers Our People employees and shareholders and building a better, stronger Qantas Group Vanessa Hudson Group CEO Our Shareholders Our Community & Partners 3
Slide 5: FY24 overview
FY24 overview Operating results Customer $2,078m • Qantas Domestic and Qantas International • $230m investment made to address Underlying Profit Before Tax delivered strong performance with a record result customer pain-points for Jetstar Group • 12 pt uplift in reputation score3 since • Qantas Loya
Slide 6: Group FY24 integrated portfolio highlights
Group FY24 integrated portfolio highlights • Dual brand strategy drives segment success Domestic and sustainable industry-leading margins with FY24 highlights: Portfolio Segment EBIT5 ($b) leadership positions across all key market • Narrowbody renewal segments program ongoing with 7 deliveries1 COV
Slide 7: Our Vision: Driving sustainable growth starts with our people and customers
Our Vision: Driving sustainable growth starts with our people and customers OUR PEOPLE OUR CUSTOMERS Proud to work for us Proud to fly with us Passionate about our customers and Trust and depend on us to take care empowered to provide great service of the moments that matter Work in a safe and inclu
Slide 8: Investing in our People and Culture
Investing in our People and Culture Listen and Act Connect and Support Inclusion & Diversity Retention June 2024 Group Attrition5 6.3% Steadily declined over the past 12 months from 8.4% in June 2023 Attraction • Refreshed policies and toolkit • Increased parental leave for • Recognised as a Gold St
Slide 9: Investing in our Customers
Investing in our Customers Exceptional flying experience Seamless digital interactions Performance FY24 Domestic On Time Performance at 15mins (% flights) 80% Qantas 75% Jetstar 70% 65% • Improved operational reliability focusing on first • Upgraded Qantas App, including redesign of 60% flights1 and
Slide 10: Investing in our Customers
Investing in our Customers Trusted to recover well Unrivalled reward and recognition Performance FY24 >5 million >9 billion Classic Rewards seats Points redeemed on available1 Classic Plus Flight • Improved delay handling through better airport • Launched Classic Plus for Qantas International Reward
Slide 11: Investing in our Community
Investing in our Community Connecting the Connecting the Regions regions Supporting Communities partnerships First Nations Partnerships >$1b procurement spend across businesses Announced new multi-year partnership with $29m of procurement spend in 35 First based in Regional Australia Red Cross, fund
Slide 12: ESG progress through investments and partnerships
ESG progress through investments and partnerships Decarbonisation & Cost SAF Advocacy Customer Engagement Governance Management Climate Fund committed >$100m1 Qantas – Airbus joint policy paper SAF Coalition Internal Carbon Price • SAFFA2: $75m in international SAF • Outlined need for SAF mandate •
Slide 13: Australian consumers' travel intentions remain stable
Australian consumers’ travel intentions remain stable 1 Australian market travel intentions remains stable Revenue intakes remain steady for the Group Australia representative sample, % plan to fly in next 12 months1 Revenue intakes vs last year, trailing 6-week average on forward selling capacity4
Slide 14: Financial Performance
Financial Performance CANTAS GROUP
Slide 15: FY24 Group financial metrics
FY24 Group financial metrics Profit metrics (vs FY23) Balance Sheet and Cash Flow metrics Key statistics vs FY23 $2,078m ($387m) $3.4b +20.6% +19.7% Underlying profit before tax Operating cash flow ASKs RPKs $1,251m ($493m) $3.1b (8.9%) Statutory profit after tax Net Capital Expenditure Unit Revenue
Slide 16: FY24 profit bridge compared to FY23
FY24 profit bridge compared to FY23 $m RASK vs last year1 1H24 2H24 Group Domestic (6%) +1% Associates share of profits (incl. JJP2) $ 48 m Group International (11%) (11%) Net Finance Costs $ 16 m EIS Costs3 $ (26) m 371 Depreciation & Amortisation4 $ (39) m Other $ (45) m (862) Total $ (46) m 550 C
Slide 17: FY24 movement in Net Debt
FY24 movement in Net Debt Cash: $m A/C Acquisition $ (1.6) b Lease Buy Outs $ (0.3) b Maintenance $ (0.9) b Treasury Shares1 $ (0.3) b Other $ (0.3) b One Offs $ (0.6) b Non-cash: Addition of leased aircraft $ (0.3) b Net Capex $ (3.1) b (595) (267) 4,052 RRIA2 $ 0.4 b (3,148) Credit Usage & Refunds
Slide 18: Portfolio Results
Portfolio Results
Slide 19: Integrated portfolio drives value beyond the businesses
Integrated portfolio drives value beyond the businesses Integrated value metrics Domestic margin1 premium Dual brand Network connectivity Domestic and Domestic and Airline share of wallet International International Integrated Airline yield per passenger Loyalty offering QFF program engagement Procu
Slide 20: Qantas Domestic
Qantas Domestic Strong momentum in 2H with revenue growth, increased customer satisfaction and FY24 FY23 Change improved operational performance Revenue $M 7,241 6,980 +4% • Dynamic capacity management delivering 5% RASK growth (2H24 vs 2H23) in a stable demand environment Underlying EBIT $M 1,063 1
Slide 21: Qantas International (including Freight)
Qantas International (including Freight) Earnings moderation as global capacity restored FY24 FY23 Change • +30% capacity growth vs FY23, expanding International network breadth and depth Revenue $M 8,666 7,749 +12% – 787-9 fleet increased to 14, allowing commencement of Sydney to New York (Via Auck
Slide 22: Jetstar Group
Jetstar Group Jetstar Group delivered $497m Underlying EBIT, +93m vs FY23, a record result FY24 FY23 Change Jetstar’s Australian domestic network delivered $298m Underlying EBIT Revenue1 $M 4,922 4,235 +16% • FY24 Total RASK2 declined (4%) vs FY23. Demand environment and intention to travel remains
Slide 23: Qantas Loyalty
Qantas Loyalty Growing and rewarding our active member base FY24 FY23 Change • Members engaging with the program through 2+ products growing to 46% in FY24 Revenue $M 2,573 2,189 +18% • Launch of Classic Plus Flight Rewards on international network on 8-April – providing more choice and increased av
Slide 24: Financial Framework and Fleet
Financial Framework and Fleet
Slide 25: Financial Framework continuing to deliver for all stakeholders
Financial Framework continuing to deliver for all stakeholders 1 Maintain optimal capital structure 2 ROIC > WACC through the cycle 3 Disciplined allocation of capital Grow Invested Capital with disciplined Minimise cost of capital by targeting a Net investment, return surplus capital to Debt range
Slide 26: Strong Balance Sheet Settings
Strong Balance Sheet Settings Total liquidity of >$10b as at 30 June 2024 Liquidity • Financial Framework Net Debt target settings results in structurally higher sources of liquidity • Unencumbered assets include ~$5.4b of unencumbered aircraft (~64% of the Group $1.0b >$7.5b2 fleet4), spare engines
Slide 27: Structurally low Financial Leverage
Structurally low Financial Leverage Leverage3: Framework target vs Moody’s Baa2 Financial Framework assumes through cycle ROIC of 10% • FY24 Framework Net Debt target 2.0x – 2.5x Net Debt/EBITDA (where ROIC is 10%) = $3.9b - $4.9b1 • FY24 Moody’s Net Debt/EBITDA of 1.3x2 relative to Baa2 Moody’s lev
Slide 28: Disciplined allocation of Capital
Disciplined allocation of Capital Growth in operating cash flow and optimisation of assets to support fleet Continuous Review / Recycle Capital renewal program and shareholder distributions • New investment delivers growth in cash earnings which in turn increases Operating Cash Flow borrowing capaci
Slide 29: New aircraft deliveries and fleet flexibility
New aircraft deliveries and fleet flexibility New aircraft deliveries1 Current fleet delivery status Key: Changes from 1H24 investor presentation in superscript • OEM5 production process continues to be challenged by supply chain FY24 FY25 FY26 disruption (incl. seat suppliers), with the Group incur
Slide 30: New fleet technology to drive profitability over time
New fleet technology to drive profitability over time Direct benefits Narrowbody fleet ASK mix evolution6 3% 2% A321LR A220 A321XLR 8% 11% EIS1 / Scale established (Year) FY23 / FY25 FY24 / FY26 FY25 / FY28 18% 20% EIS1 costs / capex Minimal + ++ Cost drivers (CASK) 24% • Fuel efficiencies (Part of
Slide 31: Project Sunrise and A350 establishing structural advantage
Project Sunrise and A350 establishing structural advantage Value drivers Customers continue to show preference for direct services PER-LHR Non-stop proposition, difficult to replicate, attracting high-yielding passengers on core markets • 20%+ revenue premium vs one-stop • #1 route for economy and b
Slide 32: Outlook
Outlook CANTAS GROUP
Slide 33: Outlook
Outlook Business Outlook Financial Outlook • The Group is seeing stable travel demand across the portfolio • 1H25 fuel cost at ~$2.7b2, inclusive of hedging and gross with positive revenue momentum heading into 1H25 carbon cost of ~$35m3 — Group Domestic RASK expected to increase 2-4% in 1H25 • FY25
Slide 34: Outlook: Guidance Tables
Outlook Guidance Tables Capacity Guidance1 1Q25 2Q25 1H25 2H25 FY25 (vs prior corresponding period) Group Domestic +1% +4% +2% +2% +2% Group Domestic ~104% of pre-COVID capacity for 1H25 Qantas Domestic (2%) +1% (1%) +3% +1% Jetstar Domestic +7% +7% +7% +1% +4% Group International (ex. JSA) +15% +17
Slide 35: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats Invested Capital (IC)– Net assets (excluding cash, debt, months average Invested Capital. Refer to slide 15 of the available for passengers, multiplied by the number of other financial assets and liabilities and tax balances) Supplemen
Slide 36: Q&A
Q&A
Slide 37: Thank you
CGANTAS GROUP —<—SSS ——
Slide 38: FY24 Results Supplementary Presentation
FY24 Results Supplementary Presentation Qantas Airways Limited 29 August 2024 ASX:QAN US OTC: QABSY
Slide 39: 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 40: 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 41: Group Performance
Group Performance YAcantas croup
Slide 42: 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 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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 $M 13,754
Slide 49: Revenue received in advance (RRIA) and travel credits
Revenue received in advance (RRIA) and travel credits Revenue received in advance ($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 50: 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 51: Financial Framework and Fleet
Financial Framework and Fleet
Slide 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 60: 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 61: 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 62: Supplementary Segment Information
Supplementary Segment Information
Slide 63: 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 64: 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 65: 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 66: 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 67: 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 68: 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 69: 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 70: 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 71: 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 72: 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 73: 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