QAN
Qantas Airways Limited
ASX
Qantas 2024 Annual Report
Sentiment:
Annual Report
11 September 2024 7:57 PM
Qantas Airways Limited released its 2024 Annual Report, reporting a statutory profit after tax of $1.25 billion, driven by strong travel demand and improved operational performance, despite a reduction in underlying profit before tax.
Worse than expected
While Qantas reported a statutory profit after tax, the underlying profit before tax decreased significantly compared to the previous year, indicating that the company's performance was worse than expected despite the overall positive financial results.
Delay expected
Delays in the exit of the 717 fleet and entry into service of the A220 fleet impacted Qantas Domestic's performance.
Capital raise
The company announced a $400 million on-market share buy-back to distribute surplus capital.
Summary
- Qantas' 2024 Annual Report shows a Statutory Profit After Tax of $1.25 billion.
- Underlying Profit Before Tax was $2.08 billion, down $387 million from the previous year.
- The report highlights a 10-point increase in Qantas' on-time performance and a 22-point increase in its Net Promoter Score in the fourth quarter of 2024 compared to the second quarter.
- Jetstar also saw improvements, with an 8.8-point increase in on-time performance and a 19-point increase in Net Promoter Score.
- The company invested an additional $230 million in customer experience in FY24.
- Qantas took delivery of eight new passenger aircraft in FY24, with 20 more expected in FY25.
- The company welcomed 2,000 new employees in FY24 and plans leadership development programs for 6,000 frontline employees in FY25.
- Qantas flew over 50 million passengers for the first time since the pandemic.
- The company announced a $400 million on-market share buy-back to distribute surplus capital.
- The Group's Net Debt was $4.1 billion as of June 30, 2024, within its target range.
- The company's operating margin was 10.4%.
Sentiment
Score: 6
Explanation: The report shows mixed results. While the company achieved profitability and improved key metrics, there were also significant decreases in profit and ongoing challenges related to legal issues and operational performance. The overall sentiment is cautiously positive.
Positives
- Strong travel demand supported the company's financial performance.
- Significant improvements in operational reliability and customer satisfaction were achieved.
- The company delivered strong financial results, exceeding expectations in some areas.
- Successful new routes were launched, including non-stop Perth-Paris flights.
- The fleet renewal program is progressing well, with new fuel-efficient aircraft being delivered.
- Significant investments in customer experience and operational improvements are underway.
- The company is focused on rebuilding trust with stakeholders.
- The company maintained a strong balance sheet and high liquidity.
Negatives
- Underlying Profit Before Tax decreased compared to the previous year.
- Group Unit Revenue fell 9%, primarily due to international operations.
- Freight performance was challenged in the first half of FY24.
- The company faced challenges related to industrial relations and legal proceedings.
- Workplace safety targets were not met.
Risks
- Shifts in customer behavior and market demand pose a risk.
- Economic uncertainty and geopolitical instability could impact operations.
- Volatility in fuel prices and foreign exchange rates is a concern.
- Increased competition from other airlines could affect profitability.
- Operational challenges, such as cancellations and delays, could harm the company's reputation.
- Industrial relations disputes could disrupt operations.
- Climate change poses both physical and transition risks.
- Cybersecurity threats and data loss are potential risks.
- Supply chain disruptions could impact operations.
- Policy or regulatory changes could significantly impact the business.
- The emergence of new business models could disrupt the industry.
Future Outlook
The company expects continued challenges related to fuel price volatility and geopolitical instability. The company expects to see a decline in ROIC in the near term as Invested Capital grows. The rollout of Wi-Fi for select Qantas international fleet is expected to launch by the end of the first half of financial year 2024/25.
Management Comments
- ’This time last year, I assured shareholders that we were acutely aware of the need to rebuild confidence in Qantas after the Group fell short in important areas of our business.’
- ’While there is much work still to be done, 12 months later I am pleased to report that we have seen material improvement in our operational reliability and customer satisfaction.’
- ’Our people are our greatest asset and we will continue to invest in them, including through recruitment and training.’
- ’2023/24 was a year of challenge, change and recovery for Qantas.’
- ’The message was clear. Many of our shareholders and their advisors considered that the remuneration outcomes were inappropriate in light of operational performance, governance issues, and the reputational impacts of the actions and decisions leading to the Australian Competition and Consumer Commission (ACCC) proceedings and the Ground Handlers High Court outcome.’
- ’We achieved an Underlying PBT of $2.08 billion and delivered a Total Shareholder Return (TSR) of 21.65 per cent.’
Industry Context
Qantas' results reflect the broader recovery in the airline industry following the COVID-19 pandemic, but also highlight the ongoing challenges of fuel price volatility, increased competition, and the need for operational efficiency and customer service improvements. The company's focus on fleet renewal and sustainable aviation fuel aligns with industry trends towards environmental sustainability.
Next Steps
- Continue implementing the 32 recommendations from the Qantas Governance Review.
- Continue investing in customer experience and operational improvements.
- Continue the fleet renewal program with the delivery of more new aircraft.
- Implement leadership development programs for frontline employees.
- Continue to rebuild trust with all stakeholders.
- Roll out Wi-Fi for select Qantas international fleet.
Key Dates
- June 30, 2020: End of Financial Year 2019/20
- June 30, 2021: End of Financial Year 2020/21
- June 30, 2022: End of Financial Year 2021/22
- June 30, 2023: End of Financial Year 2022/23
- August 2023: High Court dismissed Qantas' appeal regarding ground handling outsourcing
- September 2023: Alan Joyce retired as CEO
- October 2023: Qantas Board commenced a governance review
- February 2024: Maxine Brenner and Jacqueline Hey retired from the Board
- March 2024: Dr Nora Scheinkestel joined the Board
- March 2024: Compensation hearing held for ground handling outsourcing case
- May 2024: Qantas announced agreement with ACCC to resolve court proceedings
- May 2024: Closing submissions for ground handling outsourcing compensation hearing
- June 30, 2024: End of Financial Year 2023/24
- August 2024: Board released Qantas Governance Review Report
- August 2024: Board resolved to announce a $400 million on-market share buy-back
- September 12, 2024: Annual Report released
- September 16, 2024: Richard Goyder retires as Chair
- October 25, 2024: 2024 Annual General Meeting
Keywords
Qantas, Annual Report, Financial Results, Airline, Aviation, Profit, Revenue, Operational Performance, Customer Satisfaction, Fleet Renewal, Share Buyback, Net Debt, Travel Demand, Risks, Governance
QAN
Qantas Airways Limited
ASX
Sector: Transportation
Filings with Classifications
Delay expected
10 June 2025 7:15 PM
Strategic Restructure Announcement
- Group International capacity for the second half of FY25 is expected to grow by 9 percent, which is 3 percent lower than previously guided due to the impact of industrial action on Qantas Finnair wet lease.
Worse than expected
10 June 2025 7:15 PM
Strategic Restructure Announcement
- Jetstar Asia was expected to post a $35 million underlying EBIT loss for the financial year prior to the closure decision, indicating poor financial performance.
- The performance of Jetstar Asia deteriorated further in the second half, with an expected underlying EBIT loss of $25 million.
- The closure will result in approximately $175 million in one-off redundancy, restructuring, and non-cash costs, impacting the Group's financials.
- Group International capacity for 2H25 is expected to grow by 9 percent, which is 3 percent lower than previously guided, partly due to industrial action.
Delay expected
26 February 2025 4:33 PM
HY25 Investor Presentation
- OEM production process continues to be challenged by supply chain disruption (incl. seat suppliers), with the Group incurring minor aircraft delivery delays.
Better than expected
26 February 2025 4:29 PM
Half Year Results
- The results were better than expected due to strong travel demand and effective cost management.
Delay expected
26 February 2025 4:29 PM
Half Year Results
- The arrival of Qantas's first A321XLR is now expected in June.
Capital raise
11 September 2024 7:57 PM
Annual Report
- The company announced a $400 million on-market share buy-back to distribute surplus capital.
Worse than expected
11 September 2024 7:57 PM
Annual Report
- While Qantas reported a statutory profit after tax, the underlying profit before tax decreased significantly compared to the previous year, indicating that the company's performance was worse than expected despite the overall positive financial results.
Delay expected
11 September 2024 7:57 PM
Annual Report
- Delays in the exit of the 717 fleet and entry into service of the A220 fleet impacted Qantas Domestic's performance.
Worse than expected
7 August 2024 6:38 PM
Update on Executive Remuneration
- The document details significant reductions in executive compensation and penalties due to reputational damage and customer service failures, indicating worse than expected outcomes for the company.
Delay expected
5 May 2024 6:03 PM
Media Release
- Qantas did not promptly notify existing ticketholders that their flights had been cancelled.
Worse than expected
5 May 2024 6:03 PM
Media Release
- Qantas admitted to misleading conduct over a longer period than initially alleged, resulting in a larger number of affected customers and a potentially significant financial penalty.
Worse than expected
5 May 2024 6:00 PM
Settlement Announcement
- The document indicates worse than expected results due to the $100 million civil penalty and $20 million remediation program, stemming from issues with flight cancellation processes.
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