Friday, August 30, 2024 The Qantas Group achieved robust financial results in FY24, simultaneously focusing on enhancing customer experience, acquiring new aircraft, providing increased benefits for employees, and delivering returns to shareholders. The Qantas Group reported an impressive financial performance for the year ending June 30, 2024, achieving an Underlying Profit Before Tax of $2.08 billion and a Statutory Profit After Tax of $1.
25 billion. These strong figures underscore the Group’s strategic focus on balancing profitability with investments in various operational areas, positioning it well for future growth. Compared to the previous year, overall earnings saw a reduction as ticket prices stabilized with the return of increased market capacity.
This shift was complemented by a rise in expenditure on customer-focused initiatives and a decrease in freight revenue, particularly noticeable in the first half of the fiscal year. However, the second half of the year saw a positive trend, with Group Domestic unit revenue showing growth compared to the same period in the previous year, indicating a robust domestic market recovery. Both Qantas and Jetstar experienced notable enhancements in operational efficiency and customer satisfaction throughout the year.
These improvements were driven by strategic investments aimed at optimizing operational processes, elevating the quality of food and beverage services, overhauling Qantas’ digital platforms, and expanding the availability of frequent flyer seats. Such initiatives have significantly contributed to the overall enhancement of the customer experience. Fleet renewal was a key focus for the Group during the year, with the addition of 11 new aircraft.
This included five Jetstar Airbus A321neo Long Range aircraft and two QantasLink A220s, reflecting a commitment to modernizing the fleet. These new additions not only offer improvements in operating costs and network flexibility but also enhance passenger comfort and contribute to lower emissions, aligning with the Group’s sustainability goals. Consequently, capital expenditure for the year increased to $3.
1 billion. Acknowledging the efforts of its employees, the Qantas Group announced a $500 travel voucher for 23,000 non-executive staff members. This voucher can be used toward already discounted standby fares, recognizing the contribution of these employees to the company’s success.
Alongside the $500 voucher provided earlier in February, employees will receive a total of $1,000 in travel benefits for the year, highlighting the Group’s commitment to rewarding its workforce. Looking ahead, the Qantas Group is optimistic about future prospects, with stable booking trends and strong travel demand observed across all its flying brands. Positive revenue intake trends and a continued commitment to customer and operational excellence ensure that the Group is well-positioned to capitalize on growth opportunities in the evolving aviation market.
Domestic operations within the Group The Group’s Domestic division generated $1.361 billion in underlying earnings, achieving an EBIT margin of 14 percent. This success was largely attributed to the complementary dual-brand strategy employed by Qantas and Jetstar.
Jetstar expanded its domestic network by 15 percent compared to the previous year, driven by growing demand for affordable travel options. Meanwhile, Qantas increased its capacity by 1 percent, with the resurgence of corporate and small business travel compensating for a slight decline in premium leisure travel demand within the domestic market. The Group saw continued expansion in the resources sector, with charter flight revenue rising by 18 percent year-over-year.
To meet the increased demand, three mid-life A319 aircraft were added to the fleet, enhancing the Group’s ability to serve customers in this sector. Operational performance also showed significant improvements. Qantas achieved an on-time departure rate of 80 percent in the fourth quarter, approaching its long-term average, while Jetstar saw 74 percent of its flights depart on time.
These advancements contributed to higher customer satisfaction, as evidenced by a 24-point increase in Qantas Domestic’s Net Promoter Score. Additionally, Qantas significantly improved baggage handling, reducing mishandled baggage incidents by nearly one-third from the previous year, surpassing pre-COVID levels. In a display of customer commitment, the Group offered over 45,000 complimentary flights to Bonza and Rex customers following the cessation of their operations, ensuring uninterrupted travel for those affected.
International and Freight Division of the Group The Group’s International earnings softened to $755 million in Underlying EBIT, impacted by the increased global airline capacity, which exerted downward pressure on ticket prices and led to a decline in freight yields. By May 2024, the Qantas Group had restored its international capacity to pre-COVID levels, facilitated by the return of additional aircraft, including two more A380s. While the expanded flight schedule generated more revenue, it was counterbalanced by a projected rise in competitor capacity, resulting in an 11 percent decrease in unit revenue.
However, this decline showed signs of stabilizing in the latter half of the year. Routes like Perth-London, Perth-Rome, and the newly introduced Perth-Paris have continued to perform strongly, bolstering confidence for future non-stop flights from Melbourne or Sydney to London and New York. These routes are set to be launched with the arrival of the A350-1000ULR aircraft, expected in mid-2026.
Jetstar’s international network experienced notable growth, achieving an 11 percent profit margin for the year. The introduction of new A321LR aircraft facilitated the expansion of short-haul international routes to popular destinations such as Fiji and Bali, which in turn allowed the redeployment of B787s on longer-haul routes, including flights from Australia’s east coast to Japan and South Korea. Qantas Freight rebounded in the latter half of FY24 following a challenging start to the year, aided by a fleet simplification program that saw the introduction of two A330 freighters and three A321 freighters.
Despite international freight yields moderating faster than anticipated, they remain significantly elevated, over 150 percent above pre-COVID levels. Qantas Frequent Flyer Program Qantas Loyalty maintained its robust performance in FY24, achieving a record Underlying EBIT of $511 million while implementing significant enhancements for its members. Throughout the year, members set new records for both points earned and redeemed, including an unprecedented number of reward seats being booked.
Additionally, the program saw a 14 percent increase in active membership compared to the previous year, reflecting its growing popularity and member engagement. A major milestone for Qantas Loyalty was the introduction of the Classic Plus Flight Rewards, marking one of the most extensive expansions in the history of the Qantas Frequent Flyer program. This new redemption option, launched on international routes in April 2024, significantly increased members’ opportunities to use their points.
By the end of 2024, with the rollout across Qantas’ domestic network, members will have access to over 20 million reward seats. Further solidifying its presence in the travel sector, Qantas Loyalty acquired the remaining shares in TripADeal, an online travel company. This acquisition aims to combine the extensive networks of Qantas and Jetstar with the expanding market for curated tour experiences, benefiting both the Group and its frequent flyer members.
Since 2022, the total transaction value of TripADeal bookings has increased fourfold, showcasing the successful integration. The Qantas Loyalty program also continued to grow its footprint in the financial services market, offering white-label insurance and home loan products. Additionally, the program expanded its network to include more than 800 coalition partners, forming significant new partnerships with companies like Ticketek and the Accent Group.
Financial Strategy and Shareholder Value The Group’s financial strategy emphasizes the need to invest in both our operations and workforce to achieve positive outcomes for customers, society, and the environment, ultimately ensuring long-term returns for shareholders. By the end of the fiscal year, the Group had a robust liquidity position totaling $10.2 billion, which included $1.
7 billion in cash reserves, $1 billion in available undrawn credit facilities, and $7.5 billion in unencumbered assets. Net debt increased to $4.
1 billion by June 2024, largely due to the acquisition of new aircraft, the execution of $869 million in share buy-backs, and the payment of bonuses to approximately 20,000 employees. This debt level now places the Group within the lower half of its targeted range of $3.9 to $4.
9 billion. The Group’s solid balance sheet, coupled with enhanced cash flow generation, is expected to support future aircraft acquisitions and provide ongoing value to shareholders. In FY25, the Group plans to return up to $400 million to shareholders during the first half of the year through an on-market share buy-back program.
Aircraft Fleet Strategy The Group is reaping the rewards of its largest fleet renewal initiative to date, having welcomed 11 new aircraft over the past year. This momentum will continue, with an additional 20 aircraft scheduled for delivery in the coming year and the return of the final two A380s anticipated over the next 18 months. Currently, fifteen Jetstar A321LR aircraft are in service, with approximately half replacing older A320 models.
These newer planes are generating around $7 million in additional EBIT per aircraft, thanks to improved fuel efficiency and economies of scale. QantasLink introduced its first A220 aircraft in March, and now three of these new planes are operational across the network, receiving favorable feedback from both passengers and crew members. In June, QantasLink announced a significant investment in 14 mid-life Q400 turboprop aircraft, which will gradually replace the smaller Q300 and Q200 models.
This move reinforces the company’s commitment to maintaining vital air connections for regional Australia. Despite ongoing supply chain challenges affecting aircraft manufacturers and seat suppliers, which have led to delivery delays across the industry, Qantas now expects the first A321XLR to arrive in April 2025. Preparations for the integration of these new aircraft are already underway, with pilot training in progress and the design details of the onboard cabin experience finalized.
Customer and People Since September 2023, Qantas has rolled out over 120 customer-focused initiatives and service improvements. These include efforts by a dedicated engineering team to update aircraft cabins, the introduction of baggage tracking systems, and the implementation of route-specific menu options. These enhancements have led to a significant boost in customer satisfaction and Net Promoter Scores across both Qantas and Jetstar’s domestic and international routes, as well as their Loyalty programs.
Qantas’ reputation score has seen notable improvement, rising 12 points from September 2023 to reach 63 by June 2024, and further climbing to 67 in July. The Group anticipates continued progress in these areas as it remains committed to consistently meeting customer expectations. In addition to these service enhancements, customers have benefited from more affordable fares.
Domestic fares within the Group were 8 percent lower than the previous year, while international fares saw a 10 percent reduction, adjusted for inflation, as market capacity begins to stabilize. The Group has also made significant investments in its workforce, focusing on hiring and training, particularly with the introduction of new aircraft creating more employment opportunities. Around 2,000 full-time positions were added during the year, including roles for pilots, engineers, cabin crew, and airport staff.
Additionally, 2,300 existing employees were promoted or moved into new positions within the company. Throughout the financial year, employee engagement levels improved, and attrition rates decreased. The Group also experienced high interest in its job openings, receiving 150,000 applications for 4,700 advertised positions, indicating strong appeal as an employer.
Environmental Responsibility, Community Engagement, and Corporate Governance Sustainability remains a central focus for the Group as it strives to achieve its interim goal of a 25 percent reduction in net emissions by 2030, based on 2019 levels, and to reach net zero emissions by 2050. The Qantas Group is channeling substantial investments into decarbonization initiatives through its Climate Fund. This includes providing second-round funding for a sustainable aviation fuel (SAF) project in Townsville, allocating $75 million to an international SAF development fund, and dedicating $20 million to a fund that supports high-integrity, nature-based carbon projects within Australia.
The Group continues to be a strong advocate for establishing a domestic SAF industry, which promises to deliver substantial economic advantages for Australia, boost job creation, and enhance the country’s fuel security. In the fiscal year 2024, Qantas extended its SAF purchasing agreement for flights departing from Heathrow for a third consecutive year and expanded its corporate customer SAF program, doubling its scale. The Group maintained its commitment to community engagement by investing in initiatives aimed at making a positive impact within Australian communities.
This includes launching a new 10-year partnership with the Great Barrier Reef Foundation and forging a major new agreement with the Australian Red Cross. These efforts build upon existing regional initiatives, such as offering $50 million in fare discounts to residents in remote and regional areas and providing an additional $2 million in grants to support regional community groups. In response to recommendations from a Governance Review, which was conducted to assess the Board’s decision-making and governance practices that led to a loss of stakeholder trust, the Qantas Board and management team have been implementing various corrective actions.
Many of these measures have already been completed or are currently in progress. Future Prospects The Group anticipates steady travel demand across its portfolio, with strong revenue momentum as it moves into the first half of FY25. For Group Domestic operations, unit revenue is projected to rise by 2-4 percent during the first half of the financial year, compared to the same period last year.
In contrast, Group International unit revenue is expected to decrease by 7-10 percent as market capacity continues to recover. However, the pace of this decline is predicted to slow in FY25, with international unit revenue likely to turn positive in the fourth quarter compared to the previous year. Net freight revenue is anticipated to increase by $20-40 million in the first half of FY25 compared to the same period last year.
Several other important projections include the following, with additional details available in the full Investor Presentation: Management remains focused on meeting its performance targets, ensuring continued growth and financial stability for the Group. Qantas Group Operational Capacity Unique presentation of the Qantas Group capacity guidance Capacity Category 1Q25 2Q25 1H25 2H25 FY25 Additional Notes Group Domestic +1% +4% +2% +2% +2% Group Domestic capacity is projected to reach approximately 104% of pre-COVID levels for the first half of FY25. Qantas Domestic -2% +1% -1% +3% +1% – Jetstar Domestic +7% +7% +7% +1% +4% – Group International (ex.
JSA) +15% +17% +16% +12% +14% Group International capacity, excluding Jetstar Asia, is expected to reach about 102% of pre-COVID levels for 1H25. Group International (incl. JSA) +17% +19% +18% +13% +16% – Qantas International +13% +12% +12% +8% +10% – Jetstar International (ex.
JSA) +21% +30% +25% +22% +24% – Jetstar Asia (JSA) +76% +66% +70% +41% +53% – Total Group +11% +13% +12% +9% +10% –.
