Qantas Investor Day 2017: What you need to know

8 May, 2017

Qantas Group hosted its Investor Day 2017 on Friday 05-May-2017, which reviewed its preliminary trading for Q3FY2017 and highlighted future key initiatives. Blue Swan has pulled together all the key highlights from the day into an easy to read snapshot for your reference.


Q3FY2017 capacity and unit revenue results:

  • Domestic unit revenue increased 4.6% year-on-year;
  • Domestic capacity decreased 3.7%, predominantly from the resource sector;
    • Resource sector capacity decreased 19%;
  • International unit revenue decreased 5.6% year-on-year;
  • International capacity increased 2.2% year-on-year;
    • Qantas International capacity increased 4.8%;
    • Jetstar International capacity decreased 1.8%;
  • Group unit revenue decreased by 1.8%.

Full year outlook based on Q3FY2017 results:

  • Unit revenue for Group Domestic is expected to continue into Q4FY2017;
  • Unit Revenue for Group International is expected to continue moderating in Q4FY2017;
  • Qantas Group expects to report an underlying profit before tax in the range of AUD1.35 billion (USD1 billion) to AUD1.40 billion (USD1.04 billion) for FY2017.

Results for the new Qantas Business Rewards programme, launched in Feb-2017:

  • 14% increase in businesses using the programme;
  • 20,000+ new members;
  • 5% increase in bookings from pre-existing members;
  • NPS up 28 points.

Passenger numbers up 1% - traffic highlights for Q3FY2017:

  • Passenger numbers: 13.0 million, +0.8% year-on-year;
    • Qantas Domestic: 5.2 million, -1.9%;
    • Qantas International: 1.8 million, +6.8%;
    • Jetstar Domestic: 3.4 million, +1.4%;
    • Jetstar International: 1.6 million, +3.5%;
    • Jetstar Asia: 1.1 million, -1.5%;
  • Passenger load factor: 80.1%, +0.8ppt;
    • Qantas Domestic: 75.0%, +1.7ppts;
    • Qantas International: 80.6%, -0.6ppt;
    • Jetstar Domestic: 83.5%, +1.1ppts;
    • Jetstar International: 83.3%, +2.6ppts;
    • Jetstar Asia: 81.8%, +0.8ppt.

Results for the Qantas Loyalty programme, including:

  • 11.7 million members (50% of Australian households);
  • 4.9 million seats purchased with points in 2016;
  • >120 billion points earned by member in 2016;
  • 35% of all credit card spend in Australia is on a Qantas Co-branded credit card;
  • AUD100 million (USD73.78 million) in value redeemed each year via online loyalty redemption.

Results for its strategic airline partnerships, including:

  • 35% increase in partner sales on Qantas (Domestic and International) since 2013;
  • 54% increase in Qantas sales on partner airline services since 2013;
  • 30% increase in revenue associated with airline partners since 2013.

Key initiatives and plans:

Invest in and improve customer experience through:

  • Lounges and onboard
    • Brisbane Business Lounge upgraded including Premium Lounge Entry;
    • Refurbishment of domestic Boeing 737 and A330 fleets;
    • Enhanced in-flight menu;
    • Cabin crew training and tools;
  • Digital and Personalisation
    • Making it easy for customers to choose Qantas via a single app for planning, booking and travel;
    • Delivering personalised and contextual offers;
  • Disruption Management
    • Industry-first system design will enable best practice;
    • Automated sourcing of slot options;
    • Faster response and decision times;
    • Reducing length of delays and improving communications;
  • Onboard WiFi
    • Boeing 737 and A330 enabled aircraft will provide free, high-speed internet access inflight;
    • Video streaming services with Netflix, Foxtel, Spotify and Stan available on board;
    • Customer trials underway on Boeing 737.

Plans to reposition international capacity in response to shifting global traffic flows:

  • Asia will remain its largest international market with 55% of total international capacity, "the rise of the Asian middle class has provided significant growth and new opportunity for Qantas".
  • North America makes up 25%, UK8% and 12% to other destinations including Tasman, South America, South Africa and Pacific Islands.

Capitalise on the strong Australia-China market. The three-pronged strategy includes:

  • Servicing key business hubs such as Hong Kong, Shanghai and Beijing;
  • Strengthen airline partnerships for network reach:
    • Alliance with China Eastern;
    • Codeshare with China Southern;
    • oneworld with Cathay Pacific over Hong Kong;
  • Funnel inbound traffic to Group Domestic airlines.

Plans to align Jetstar with Asia's growth between FY2018-FY2020 by:

  • Leveraging Boeing 787-8 to grow point-to-point leisure markets in Asia;
  • Feeding traffic between Jetstar Group airlines across Asia Pacific;
  • Increasing interconnectivity between affiliate airlines in Japan, Singapore and Vietnam;
  • Maintaining Jetstar Japan leadership in highly attractive market;
  • Adding new airline partnerships for increased feed;
  • Focusing on China opportunity with all Jetstar Group airlines.

Plans to maximise its leading domestic position targeting ROIC >10% through FY2020 by:

  • Maintaining margin advantage to competitors;
  • Holding corporate market share, growing SME and leisure;
  • Extending network and product leadership;
  • Investing in WiFi, digital customer experience and ancillary product;
  • Holding stable Group market share with limited fleet growth.

Qantas Group executive strategy, transformation and IT Rob Marcolina announced key initiatives for FY18. These initiatives included:

  • Boeing 787-9 fleet introduction
  • Fuel burn programme
  • Operations centre optimisation
  • Flight planning system
  • Group travel website for Asian markets
  • Freight air lease and contracts
  • Groundstar rostering

Qantas Mastercard powered by Mastercard and issued by Citi:

  • Expected to be launched by the end of Jun-2017.
  • Qantas Loyalty CEO Lesley Grant stated the card was a response to the strong consumer demand for points as part of everyday spending.
  • Around 35 per cent of credit card spend in Australiaearns Qantas Points, which shows strong interest in this type of reward.
  • Premium card aimed at people who want to earn Qantas Points and who travel enough to want access to special deals on air fares and lounge access.