Qantas Group targeting USD196m p/a in ongoing transformation

Qantas Group released (30-May-2023) the following updates on its strategy to 2030:

• Customer:
  • Detail on the 'right aircraft, right route' approach underpinning the airline's current network and supporting its new fleet arriving from 2023, including A220, Boeing 787 and A320 Family aircraft;
  • Plans for an overhauled Qantas app launching towards the end of 2023 to give customers more control over bookings, introduction of baggage tracking and better integration of Qantas Loyalty;
  • Changes to Qantas' boarding process from Oct-2023 to improve on time performance and to better recognise tiered frequent flyers;
  • Plans to significantly expand the current range of redemption options for frequent flyers;
  • Continued investment in low fares, particularly by Jetstar, with around 10 million fares under AUD100 (USD65.28) offered in 2023 and five million reward seats via Qantas Loyalty;
• Sustainability:
  • Launching a AUD400 million (USD261.1 million) climate fund to accelerate progress towards the group's sustainability targets. This includes a further AUD110 million (USD71.8 million) investment in addition to the AUD290 million (USD189.3 million) already committed. The fund will focus on stimulating production of sustainable aviation fuel (SAF), "high integrity" offsets, carbon removal technology and efficiency and waste reduction targets;
  • Calling for Australia's Government to introduce an SAF blending mandate to help kickstart local production;
• People:
  • AUD11,500 (USD7507) in bonuses in FY2023 to FY2024 and ongoing improvement to staff travel benefits;
  • Plans to grow by creating up to 8500 operational roles in Australia by 2033 to support new aircraft and additional flying;
  • Training and promotional opportunities through fleet growth, including via the pilot academy and engineering academy. The group will deliver around two million training hours in 2023;
  • Restoring 'employer of choice' status. Over 160,000 applications have been received for 7000 jobs across the group. Attrition rates have declined from a peak of 18% in Dec-2021 to an average of 5% across the group to 2% for pilots;
• Financial:
  • Through cost and revenue improvements, sustaining margins of 18% for Qantas domestic and 15% for Jetstar domestic from FY2024 onwards;
  • Qantas international margins to grow from about 5% pre-COVID-19 to over 8% in FY2024 and up to 10% to 12% with Project Sunrise and the evolution of freight;
  • Through structural changes to the e-commerce market and Qantas Freight business, the group is targeting AUD250 million (USD163.2 million) in annual earnings contribution from FY2030 onwards, compared with FY2019;
  • Introduction of A350 growth aircraft and Project Sunrise operations are expected to deliver a "significant" incremental earnings increase, reaching an estimated AUD400 million (USD261.1 million) EBIT p/a in the first full year of having all 12 aircraft in service;
  • Qantas Loyalty to reach its FY2024 EBIT target of AUD500 million (USD326.4 million) to AUD600 million (USD391.7 million), increasing to AUD800 million (USD522.2 million) to AUD1 billion (USD652.8 million) by FY2030. Key profit drivers will be continued expansion into hotels and holidays, more partnerships including 'points burn' opportunities with major retailers, diversification in financial services and growth of the existing Qantas Business Rewards programme for SMEs;
  • Targeting AUD300 million (USD195.8 million) p/a in ongoing transformation, driven largely by new technology enabling better efficiency. This includes fleet renewal, better disruption management and schedule and workforce planning.

Qantas Group CEO Alan Joyce stated new technology is "central" to the group's plan and the new aircraft will "transform" its network over the next few years. Mr Joyce added: "Our revenue projections and track record for ongoing transformation show we can invest heavily in people and technology at the same time as generating strong returns for shareholders". [more - original PR]