Qantas Airways Limited · ASX:QAN
Qantas Airways — FY2022 Earnings Presentation
36 slides from Qantas Airways's earnings presentation, Aug 25, 2022
Slide 1: FY22 Results Presentation
FY22 Results Presentation Qantas Airways Limited 25 August 2022 ASX: QAN US OTC: QABSY
Slide 2: Disclaimer
Disclaimer 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 related bodies corporate (Qantas Group) and their activities current as at 25 August 2022, unless otherwise
Slide 3: FY22 overview
FY22 overview Operating result impacted by COVID-19 • FY22 Underlying EBITDA1 of $281m, Underlying Loss Before Tax (ULBT)2 of ($1,859)m, Statutory Loss Before Tax of ($1,191)m — Group capacity at 33% of pre-COVID levels3 for the financial year, impacted by COVID-19 border closures and lockdowns, rec
Slide 4: Qantas has come through an unprecedented period of uncertainty
Qantas has come through an unprecedented period of uncertainty FY20-22 Group capacity, ASKs as a % of FY19 1H22 2H22 FY20 FY21 FY22 Underlying EBITDA ($245)m $526m 110 % FY19: ASKs 74% 19% 33% Underlying Loss Before Tax ($1.28)b ($0.58)b 100 Average capacity1 18% 50% 90 Rapid recovery of demand with
Slide 5: Three-Year Recovery Plan progress
Three-Year Recovery Plan progress Scorecard Complete On-track Status for FY23 Completion timeframe • Financial strength restored Focus area Target FY21 FY22 FY23 — Lowest Net Debt since GFC5, strong liquidity; $3.3b cash balance, Sustainable positive Net Free Cash Flow prepaid $450m of gross debt, >
Slide 6: Network, demand and workforce management
Network, demand and workforce management Network and demand recovery Group Capacity Outlook (ASKs as a percentage of FY19) • Rapid recovery in Group network through 2H22 underpinned by easing of COVID 120% 112% 107% restrictions and full stand up of workforce 92% 96% 92% Domestic 100% 81% 81% Intern
Slide 7: The aviation ecosystem has been severely disrupted by COVID
The aviation ecosystem has been severely disrupted by COVID Aviation industry Operational disruptions in 2022 Restart challenges • The aviation industry is a complex ecosystem of Global Airport On Time Departures (%): June 20223 Challenging time for operational performance across providers, all of w
Slide 8: Australia has also had unique challenges which have complicated the return of travel
Australia has also had unique challenges which have complicated the return of travel Disruption drivers Local factors Examples • Winter causing a “double peak” of flu and COVID infections Operational sick leave rates compared with COVID Cases3 • >6 million COVID cases since March 2022 Sick leave Ave
Slide 9: Qantas Group is working hard to fix operational challenges
Qantas Group is working hard to fix operational challenges Across the Group we have plans in place to restore operational performance so we can get back to delivering the standard of service our customers expect and that we hold ourselves accountable for delivering. Steps made to address performance
Slide 10: Case study: Contact centres – Qantas took decisive action to address wait times
Case study: Contact centres – Qantas took decisive action to address wait times, now below pre-COVID levels 1 2 3 Despite uncertainty around travel demand and Increased calls and complexity with International Investment in technology and resourcing unlocked ~33% restrictions, Qantas began preparing
Slide 11: Recognising all stakeholders for their support through COVID
Recognising all stakeholders for their support through COVID Customers Employees Shareholders and lenders Rewarding customer loyalty and Rewarding employees with a Rewarding shareholders for their focusing on improving operational range of measures for their support during COVID and our performance
Slide 12: Environment, social and governance approach
Environment, social and governance approach Our approach to managing ESG is reflected in our sustainability framework (which has three key pillars) and is supported by sound governance structures. Key achievements in FY22 include: Valuing our • Released Group Climate Action Plan with key sustainabil
Slide 13: Financial Performance
Financial Performance
Slide 14: FY22 Key Group financial metrics
FY22 Key Group financial metrics Profit metrics Balance Sheet and Cash Flow metrics Other statistics (v FY19) $281m $2,670m $4.6b (67%) Underlying EBITDA profit Operating cash flow Total liquidity ASKs5 ($245)m | $526m $137m | $2,533m $3.94b (73%) 1H22 | 2H22 EBITDA (loss)/profit 1H22 | 2H22 Operati
Slide 15: FY22 Profit Bridge compared to FY19
FY22 Profit Bridge compared to FY19 1,326 (6,493) Manpower cost benefit $ 730 m 286 (149) 1H 135 (1,859) Other cost benefits $ 190 m 524 Restructuring benefits1 $ 920 m 1,693 Selling & Marketing $ 573 m 1,186 Property $ 98 m Computer & Communication $ 1m Capacity Hire $ 118 m 1,998 Other $ (266) m 2
Slide 16: FY22 Profit Bridge compared to FY21
FY22 Profit Bridge compared to FY21 342 Manpower cost benefit $ 250 m Other cost benefits $ 20 m (1,013) Restructuring benefits 1 $ 270 m 647 Selling & Marketing $ (123) m Property $ 1m (1,054) Computer & Communication $ (132) m Capacity Hire $ (55) m Other $ (370) m 2,185 Other Expense Increase $ (
Slide 17: FY22 movement in cash position
FY22 movement in cash position Net Free Cash Flow $2,430m 789 (1,029) (239) Predominantly lease liability Predominantly (950) repayments 2,628 aircraft capitalised (358) 3,343 maintenance. Includes TripADeal 2,221 281 acquisition Predominantly RRIA1 30 Jun 21 Underlying EBITDA Net working capital In
Slide 18: Segment Results
Segment Results
Slide 19: Qantas Domestic
Qantas Domestic • Domestic travel returned to near pre-COVID levels through 4Q22 Pre-COVID FY22 FY21 FY194 — 4Q22 capacity averaged 98%1 — Premium leisure revenue intakes significantly above pre-COVID levels Revenue $M 3,448 2,745 6,098 — Strong return in business purpose travel driven by resource a
Slide 20: Qantas International (including Freight)
Qantas International (including Freight) • Qantas International commenced recovery as travel restrictions eased, with freight Pre-COVID FY22 FY21 operations acting as a natural hedge to the passenger business FY197 • Record freight performance1 supported by record international yields and continued
Slide 21: Jetstar Group
Jetstar Group • Jetstar’s Australian business returned to Underlying EBITDA profit1 in 4Q22 Pre-COVID FY22 FY21 FY198 — 4Q22 AU Domestic RASK2 +1% and AU International +4%3,4 — AU Domestic capacity above pre-COVID levels3 and AU International RASK2 Revenue $M 1,440 1,140 3,961 strengthened to 19%3,4
Slide 22: Qantas Loyalty
Qantas Loyalty • 7% year on year growth in Underlying EBIT1 ; double digit growth2 in 2H22 and third Pre-COVID FY22 FY21 consecutive year contributing >$1b of gross receipts3 towards Group cash result FY19 • Significant recovery in business drivers observed in 4Q22 Revenue8 $M 1,334 984 1,654 — >200
Slide 23: Financial Framework
Financial Framework
Slide 24: Financial Framework recognises the role of ESG and EPS in driving TSR
Financial Framework recognises the role of ESG and EPS1 in driving TSR 1 2 3 Maintaining an optimal capital structure ROIC3 > WACC4 through the cycle Disciplined allocation of capital Minimise cost of capital by targeting Deliver ROIC > 10%5 Grow invested capital with disciplined a Net Debt range of
Slide 25: Maintaining an optimal capital structure
Maintaining an optimal capital structure Capital structure and liquidity • Net Debt2 at $3.94b, reflecting priority of debt reduction in 2H22 • Total liquidity of $4.6b including $3.3b cash3 and committed undrawn facilities of Debt maturity profile1 as at 30 June 2022 ($M) $1.3b extended, maturing i
Slide 26: Robust financial risk management
Robust financial risk management Operational Fuel and FX Capital Expenditure FX – Hedging of USD Aircraft Payments • FY22 fuel cost was $1.85b; hedging approach provided substantial • Hedging remains consistent with long term approach to risk management protection from elevated fuel prices allowing
Slide 27: Disciplined capital allocation
Disciplined capital allocation 1 Completed Balance Sheet repair Net Debt1 ($B) — FY22: Achieved Net Debt1 below target range FY22 target — FY23 onwards: Target bottom of Net Debt1 target range range lower than pre-COVID driven 2 Invest to drive sustainable earnings growth and returns > WACC2 5.6 5.9
Slide 28: Revenue Received In Advance (RRIA) and travel credits
Revenue Received In Advance (RRIA) and travel credits Total Revenue Received in Advance ($B) Includes $0.2b of Qantas travel credits • Credit usage expected to remain strong given continued recovery in generated from Oct-21 which have 7.9 Group capacity reverted to pre-COVID terms & conditions 0.4 —
Slide 29: Group Domestic narrow-body fleet transformation
Group Domestic narrow-body fleet transformation Strategic Priorities: Right Aircraft, Right Route Maintain flexibility Maintain competitiveness A320/21ceo 641 A321XLR 20 • Domestic narrow-body fleet renewal program includes roll-over of A320/321ceo and 717/737NG fleets across Jetstar and Qantas resp
Slide 30: Group fleet deliveries
Group fleet deliveries Greater flexibility of delivery profile Committed fleet units FY23 FY24 FY25 …. FY29 • Competitive orders for next generation technology secured supporting fleet renewal and sustainability 787-9 3 3 objectives A350-1000 1 12 • 299 narrow body aircraft now on order across the G
Slide 31: Outlook
Outlook
Slide 32: Group Domestic
Group Domestic FY23 Outlook Competitive Positioning • Leisure continuing to lead domestic recovery, with revenue intakes Qantas • Margin advantage through completion of cost transformation significantly above pre-COVID levels Domestic and yield premium — Market research indicates continued high prio
Slide 33: Group International (including Freight)
Group International (including Freight) FY23 Outlook Competitive Positioning • Leisure continuing to lead recovery with strong booking momentum, Qantas • Positioned to benefit from strong demand with full return of particularly on non-stop offerings and in premium cabins International fleet expected
Slide 34: Qantas Loyalty
Qantas Loyalty FY23 Outlook Growth Strategy • Loyalty “Flywheel” strategy 2 seeks to increase the number of members FY24 Target: $500-$600m and their participation in earning and redeeming Qantas Points Impacted by COVID • Loyalty profitability correlated to the number of members and Qantas 1H 2H Po
Slide 35: FY23 Group Outlook
FY23 Group Outlook As the Group is still continuing its full recovery to pre-COVID activity, a number of the financial outlook statements below are comparatives to FY19. FY23 Financial Assumptions (comparative statements versus FY19 Restated EBITDA of $3,544m) • Lower Group International revenue wit
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