Media Release: Qantas one of the most profitable airline groups in the world

25 Aug 2017 7:06 PM | Anonymous


Media Release: Qantas Group Full Year 2017 Financial Result

Sydney, 25 August 2017 

·       Underlying Profit Before Tax: $1,401 million (second highest in Qantas’ history)

·       Statutory Profit Before Tax: $1,181 million

·       Statutory Earnings Per Share: 46c

·       Return On Invested Capital: 20.1%

·       Net free cash flow: $1,309 million

·       Up to $500 million shareholder return: 7 cents per share ordinary unfranked dividend, plus an on-market buyback of up to $373 million

·       $55 million for non-executive employee bonus

·       Upgrade of A380 cabins and Melbourne Domestic lounge announced

·       Evaluation of new ultra-long range aircraft for Qantas International

Qantas today reported an Underlying Profit Before Tax of $1,401 million and a Statutory Profit Before Tax of $1,181 million for the 12 months ended 30 June 2017.

The underlying result represents the second highest performance in Qantas’ 97 year history, down 8.6 per cent compared with last year’s record. It is slightly above the guidance range provided in early May this year, mainly due to strengthening of the Group’s domestic businesses. A drop in statutory profit before tax of $243 million reflects that the FY16 result included the gain on sale from the Sydney Domestic Terminal.

Overall, the FY17 performance shows the Qantas Group’s margin advantage over local and global competitors[2], which has been underpinned by completion of its three year transformation program.

SUMMARY OF RESULT

All parts of the Qantas Group delivered strong returns in FY17.

In the domestic market, Qantas and Jetstar combined reached a record $865 million Underlying EBIT, making them again the two most profitable airlines in Australia with around 90 per cent of the total domestic profit pool.

Qantas International, which has faced high levels of capacity growth in the broader market, saw an improvement of conditions in the second half; it posted an Underlying EBIT of $327 million. Continued strength in its core markets helped the Jetstar Group deliver the second highest profit in its 13 years of operation.

Qantas Loyalty booked a record $369 million Underlying EBIT on a 4 per cent increase in revenue as it continued to diversify its earnings.

The Group met all the objectives of its financial framework, reporting a 12-month return on invested capital of 20.1 per cent.  Another $470 million in transformation benefits were delivered, completing the three year program and outperforming the $2 billion target by $125 million.

The Qantas Transformation Program has underpinned these results and enabled the Group to outperform its key domestic and international competitors. 

This performance means Qantas is able to reward shareholders, recognise the hard work of its people and invest for customers.

Group CEO Alan Joyce said the result marked completion of a turnaround plan that has repositioned Qantas as one of the most profitable airline groups in the world.

“Three years ago, we started an ambitious turnaround program to make the Qantas Group strong and profitable. We tackled some difficult structural issues, became a lot more efficient and kept improving customer service. 

"Today’s announcements show this plan has well-and-truly paid off. It’s delivered $3.5 billion in cumulative underlying profit, record customer satisfaction and the opportunity for Qantas to grow.

"We operate in a very competitive environment, so continuous improvement is crucial. Being more efficient is part of our culture and we’re now targeting an average of $400 million in gross benefits a year. 

“We have a plan to keep delivering sustainable returns well into the future. We’re investing in lounges, Wi-Fi and cabin upgrades; looking at new aircraft to evolve our network; and diversifying into new businesses like insurance and financial services.

“Our people remain central to our success, and that is why it is so pleasing that we are able to grant another bonus to around 25,000 non-executive employees to mark the successful completion of the turnaround program,” added Mr Joyce.

[1] Refer to the Review of Operations for definitions and explanations of non-statutory measures. Unless otherwise stated, amounts are reported on an underlying basis. 

[2] IATA’s December 2016 profit outlook forecasts an average industry margin for 2017 of 4.1 per cent.  Qantas Group reported an operating margin of 9.9% for FY17 (calculated as Group Underlying EBIT divided by Group Total Revenue).

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