Qantas Airways Limited · ASX:QAN
Qantas Airways — Investor Presentation (February 2019)
29 slides from Qantas Airways's investor presentation, Feb 21, 2019
Slide 1: Qantas Airways Limited 1H19 Results Supplementary Presentation
Qantas Airways Limited 1H19 Results Supplementary Presentation 21 February 2019 ASX:QAN US OTC:QABSY
Slide 2: Group Performance
Group Performance Yacantas croup
Slide 3: 1H19 Key Group Financial Metrics
1H19 Key Group Financial Metrics 1H19 1H1810 VLY %11 Comments Underlying PBT1 ($M) 780 959 (19) Revenue growth substantially recovered increased fuel costs Lower earnings offset by reduction of shares on issue through Underlying Earnings per Share2 (c) 31.8 38.0 (16) on-market share buy-back Statuto
Slide 4: Underlying Income Statement Summary
Underlying Income Statement Summary $M 1H19 1H182 VLY % Comments Group Unit Revenue increase of 5.7% and higher ancillary revenue. Net passenger revenue 8,027 7,607 5.5 Group capacity decreased 0.5% as disciplined capacity adjustments were made to address higher fuel costs Net freight revenue 525 45
Slide 5: Items Not Included in Underlying PBT
Items Not Included in Underlying PBT $M 1H19 1H18 Comments Redundancies, restructuring, 787-9 introduction, accelerated depreciation Transformation costs 98 74 on 747s and A320s, and other costs which form part of the transformation program Includes the reversal of impairment, consistent with the tr
Slide 6: Reconciliation to Underlying PBT
Reconciliation to Underlying PBT $M 1H19 1H182 Statutory Ineffectiveness Other items Underlying1 Statutory Ineffectiveness Other items Underlying1 relating to not included in relating to not included in other reporting Underlying other reporting Underlying periods PBT periods PBT Net passenger reven
Slide 7: Revenue Detail
Revenue Detail Net passenger revenue up 6% Revenue ($B) • Group Unit Revenue increased 5.7% 6% 9.2 − Group Domestic Unit Revenue up 6.1% 8.7 − Group International Unit Revenue up 5.4% • Group capacity down 0.5%, disciplined capacity management in high fuel environment • Transformation benefits Net f
Slide 8: Expenditure Detail
Expenditure1 Detail Fuel costs up 27% Underlying Expenditure ($B) • Higher jet fuel prices 8.3 9% • Offset by effective hedging and fuel efficiency initiatives 7.7 Manpower and staff-related up 3% • Increased operating crew manpower driven by network mix changes • Wage increases following the comple
Slide 9: Cash Flow
Cash Flow Operating Cash flow ($M) Operating Cash flow Statutory EBITDA $M 1H19 1H18 VLY % 1,679 1,734 1,674 1,682 1,373 1,489 1,173 1,254 Operating cash flows 1,254 1,734 (28) Investing cash flows (excluding aircraft operating lease 1H16 1H17 1H18 1H19 (1,036) (962) (7.7) refinancing) • Stable Stat
Slide 10: Invested Capital Calculation
Invested Capital Calculation 12 mths to 12 mths to • Increased Property, Plant and Equipment: $M Dec 18 Dec 173 – 787-9 deliveries Receivables (current and non-current) 1,063 973 Inventories 367 364 – Aircraft lease buyouts to unencumbered owned aircraft; 2 in 1H19, 3 refinanced in 2H18, with corres
Slide 11: ROIC Calculation
ROIC Calculation 12 mths to 12 mths to $M Dec 18 Dec 175 Underlying EBIT 1,572 1,687 Add back: Non-cancellable aircraft operating lease 266 305 rentals Less: Notional depreciation1 (113) (138) ROIC EBIT 1,725 1,854 12 mths to 12 mths to $M Dec 18 Dec 175 Net working capital2 (6,894) (6,566) Fixed as
Slide 12: Net Debt Target Range
Net Debt Target Range • Net Debt Target Range = 2.0x – 2.5x ROIC EBITDAR where EBITDAR achieves a fixed 10% ROIC • At current Average Invested Capital of $8.9b, optimal Net Debt range is $5.2b to $6.5b • Targeting Net Debt to be within the range on a forward looking basis $b Average Invested Capital
Slide 13: Disciplined Allocation of Capital
Disciplined Allocation of Capital Capital allocation prioritised to: Capital Allocation Priorities • Debt reduction (where required) to achieve optimal capital structure >$6.5B $6.5B $5.2B <$5.2B Greater returns to • Base dividend Debt reduction Capital Management shareholders • Reinvestment Conside
Slide 14: Net Debt
Net Debt • Borrowings of $445m from A$ Corporate Debt $M 1H19 FY18 VLY Program Current interest bearing liabilities on balance sheet 373 404 31 • Repayment of $221m in short term amortising debt, largely secured debt Non-current interest bearing liabilities on balance sheet 4,637 4,344 (293) • Reduc
Slide 15: Net Debt Movement
Net Debt Movement $M 1H19 1H18 Opening Net Debt (30 June) (4,903) (5,212) Net cash from operating activities 1,254 1,734 Principal portion of aircraft operating lease rentals 84 86 Funds From Operations 1,338 1,820 Net cash from investing activities (1,124) (1,115) Aircraft operating lease refinanci
Slide 16: Total Unit Cost
Total Unit Cost C/ASK 1H19 1H18 VLY %3 Total Unit Cost1 7.92 7.21 (9.8) Excluding: Fuel (2.55) (2.00) Change in FX rates - 0.08 Impact of changes in the discount rate and other actuarial assumptions (0.02) (0.02) Share of net profit/(loss) of investments accounted for under the equity method 0.02 0.
Slide 17: Impact of AASB 15 Adoption from 1 July 2018
Impact of AASB 15 Adoption from 1 July 2018 The adoption of AASB 15 in FY19 requires restatement of the FY18 result for comparative purposes. There is a net increase in opening retained earnings and net reduction in FY18 Underlying PBT as a result of retrospectively applying AASB 15 to prior periods
Slide 18: AASB 15 Impacts – Income Statement
AASB 15 Impacts – Income Statement $M 1H18 FY18 6 months Reclassifications Remeasurements 6 months 12 months Reclassifications Remeasurements 12 months ended 31 ended 31 ended 30 ended 30 Dec 2017 Dec 2017 Jun 2018 Jun 2018 (Reported) (Restated) (Reported) (Restated) Net passenger revenue 7,493 115
Slide 19: Group Operational Information
Group Operational Information
Slide 20: Disciplined Hedging Program
Disciplined Hedging Program Indicative Fuel and Foreign Currency Exposure Reducing Volatility of Earnings / Cash Flow • Net foreign currency revenues are offset against USD expenses Examples of Operational Adjustments • Remaining USD exposure is funded by net AUD revenue Capacity adjustments and Fue
Slide 21: Qantas Group Long-term Value Framework
Qantas Group Long-term Value Framework 21
Slide 22: Fleet at 31 December 2018
Fleet at 31 December 2018 Aircraft Type 1H19 FY18 Change A380-800 12 12 - • Net addition3 of 2 aircraft in 1H19 747-400 3 4 (1) 747-400ER 6 6 - – 3 x 787-9 additions A330-200 18 18 - – 1 x 747-400 retired October 2018 A330-300 10 10 - 737-800NG 75 75 - 787-9 8 5 3 Total Qantas 132 130 2 717-200 20 2
Slide 23: Fleet Age at 31 December 2018
Fleet Age at 31 December 2018 Flexibility maintained Regional Competitor Fleet Ages2 VARA3 ~19 years Alliance ~26 years Fleet Age1 as at 31 December 2018 REX ~25 years Qantas International Qantas Domestic Jetstar Qantas Domestic Regionals average fleet age of 9.2 Mainline average fleet age of 8.8 av
Slide 24: Supplementary Segment Information
Supplementary Segment Information
Slide 25: Jetstar Group
Jetstar Group Jetstar Group – Network of Routes1 5 179 177 179 183 6 151 115 129 130 96 98 109 67 82 59 31 39 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1H19 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT3 4 2 ❶Jetstar Australia 100% 2004 52 x A320s/A321s ❷Jetstar International
Slide 26: Jetstar in Asia
Jetstar in Asia1 • Growing the Jetstar leisure brand in Asian markets, taking advantage of strong regional tourism demand2 • Improved connectivity across Asia between Jetstar Group and Qantas airlines in Australia, Japan, Singapore and Vietnam • Jetstar Japan remained profitable3 whilst impacted by
Slide 27: Diversification and Growth at Qantas Loyalty
Diversification and Growth at Qantas Loyalty One of the world’s most diverse airline loyalty programs • 4%1 growth in Qantas Frequent Flyer membership; 9%2 growth in Qantas Business Rewards membership (>220,000 SME members3) • Record4 number of Qantas Points earning credit cards acquired; average ea
Slide 28: Glossary
Glossary Available Seat Kilometres (ASK) – Total number of seats available for passengers, multiplied by Net Working capital – Net total of the following items disclosed in the Group’s Consolidated Balance the number of kilometres flown Sheet: receivables, inventories and other assets reduced by pay
Slide 29: 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 21 February 2019, unless othe
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