Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qantas Airways Ltd (QABSY, Financial) reported an underlying profit of $2.08 billion for the financial year 2024, with an underlying EPS of $0.88 per share.
- The company invested $230 million in customer experience improvements, leading to enhanced on-time performance and customer satisfaction.
- Qantas Airways Ltd (QABSY) saw a 20% increase in group ASK, driven by the addition of 16 new aircraft to the fleet.
- Jetstar Group achieved a record result with an underlying EBIT of $497 million, up 23% from the prior year.
- Qantas Loyalty delivered an underlying EBIT of $511 million, with strong growth in both membership and active member engagement.
Negative Points
- Statutory profit after tax was $1.25 billion, down $493 million from the prior year, impacted by one-off legal provisions and ACCC settlement.
- Qantas Domestic recorded a decline in EBIT by 16% to $1.06 billion, primarily due to increased customer investments and temporary inefficiencies.
- Qantas International's underlying EBIT fell to $556 million, driven by declining freight yields and moderating fare environment.
- The group's operating margin decreased to 10.4%, reflecting increased costs and investments.
- The company faces ongoing challenges in restoring trust and pride among customers and stakeholders, with significant work still needed.
Q & A Highlights
Q: Can you talk about why there's confidence about the improving second half RASK outlook?
A: Cameron Wallace, CEO of Qantas International and Freight, explained that the moderation of competitor capacity and strong bookings into Q4 give confidence. Stephanie Tully, CEO of Jetstar Group, added that Jetstar's strong travel intentions and record results support a positive RASK outlook.
Q: Can you help me understand some of the cost drivers as we look into FY25?
A: Robert Marcolina, CFO, noted that while costs like food and beverage are growing, the $400 million transformation target aims to cover these costs. New costs include EIS and Same Job Same Pay, but revenue and cost initiatives will help offset these.
Q: How did the new aircraft contribute to Jetstar's strong FY24 results?
A: Stephanie Tully highlighted that new aircraft improved unit costs and opened new profitable routes. The new fleet also boosted employee morale and operational efficiency.
Q: Can you talk more about the strong improvement in active members and increased members overall in your loyalty business?
A: Andrew Glance, CEO of Loyalty Business Unit, stated that the growth is driven by the holistic value of the program, with Classic Plus playing a significant role. The focus is on driving deeper engagement across the audience.
Q: How do you get comfort around margin targets given the amount of investment required?
A: Vanessa Hudson, CEO, emphasized that the recovery of the corporate market, rational domestic market, and transformation benefits from new fleet investments will help achieve margin targets. Project Sunrise and other strategic initiatives also provide confidence.
Q: Can you talk about your on-time performance and its impact on productivity and margins?
A: Markus Svensson, CEO of Qantas Domestic, and Stephanie Tully explained that improved on-time performance reduces temporary costs and increases aircraft utilization, contributing to better financial performance.
Q: What is driving the decline in Qantas Domestic leisure intake?
A: Markus Svensson noted that premium leisure demand is moderating, with some down-trading to Jetstar and a shift to international travel as fares come down. The team has optimized the network to adapt to these changes.
Q: Is the $7 million EBIT per hull for Jetstar's new aircraft indicative of the benefits for Qantas?
A: Robert Marcolina clarified that while the $7 million figure is specific to Jetstar, Qantas also expects incremental profitability from new aircraft, though the exact benefits will differ.
Q: How should we think about the seasonality of the business in FY25?
A: Robert Marcolina confirmed that the business expects to return to typical seasonality, with profitability skewed towards the first half and cash flow towards the second half.
Q: How are you framing your distributions in the context of your capital management framework?
A: Robert Marcolina stated that the goal is to be at the middle of the net debt range, balancing investment in fleet and customer experience with shareholder distributions. The intention is to reinstate a base dividend once sufficient franking credits are accumulated.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
