Tag Archives: QANTAS Airways

QANTAS Group to slash carbon emissions

100 Centenary Scheme - "QANTAS Time Capsule Towards 2120"

The QANTAS Group will reach net zero carbon emissions by 2050 in a major expansion of the airline’s commitment to a more sustainable aviation industry.

The national carrier will:

  • Immediately double the number of flights being offset
  • Cap net emissions from 2020 onwards
  • Invest $50 million over 10 years to help develop a sustainable aviation fuel industry

 

CUTTING NET CARBON EMISSION

This announcement means that Qantas is the only airline group to commit to cap its net emissions at 2020 levels, and the second to commit to net zero emissions by 2050.

In total, these commitments are the most ambitious carbon emissions targets of any airline group globally.

Qantas, Jetstar*, QantasLink and Qantas Freight will offset all growth in emissions from domestic and international operations from 2020.

This includes offsetting all net emissions from Project Sunrise, the carrier’s plan to operate non-stop flights from the east coast of Australia to London and New York, should the project proceed. This will also extend to domestic flying, meaning that growth on key routes like Melbourne-Sydney will be carbon neutral.

The aviation industry, which contributes around 2 per cent of global CO2 emissions, has committed to halving emissions by 2050 compared to 2005 levels. It was the first industry to make such commitments. Qantas had signed up to those commitments but will now exceed them.

Qantas will work with industry, research institutions and governments to develop the long-term solutions to significantly reduce greenhouse gas emissions from the aviation industry over the next three decades.

OFFSETTING FLIGHTS

Qantas currently operates the largest carbon offset program in the aviation industry, with around 10 per cent of customers booking flights on Qantas.com choosing to offset their flights.

From today, Qantas and Jetstar will double the number of flights offset by matching every dollar spent by customers who tick the box to fly carbon neutral. By matching our customers’ commitment, we expect even more people to offset their emissions.

This additional investment will see Qantas Future Planet, which is already the largest private sector buyer of Australian carbon credits, support more conservation and environmental projects in Australia and around the world.

Existing projects include protecting the Great Barrier Reef, working with Indigenous communities to reduce wildfires in Western Australia and securing over 7000 hectares of native Tasmanian forest.

SUSTAINABLE AVIATION FUEL

Qantas will invest $50 million over the next ten years to help develop a sustainable aviation fuel industry.

Sustainable aviation fuel can reduce carbon emissions by eighty per cent compared to traditional jet fuel, but are currently almost double the price.

Qantas will work with governments and private sector partners to support the development of sustainable aviation fuel in Australia and overseas to make it more viable and increase demand throughout the industry.

The national carrier will also continue to reduce its emissions through continued investment in more fuel efficient aircraft, more efficient operations such as single-engine taxiing, and smarter flight planning to reduce fuel burn.

Qantas is on track to replace its Boeing 747 fleet by the end of 2020 with the more fuel-efficient B787 Dreamliners, which burn 20 per cent less fuel than aircraft of a similar size. Jetstar’s A321neo (LR) aircraft,
which begin arriving next year, use 15 per cent less fuel than the aircraft they are replacing.

The Qantas Group continues to work with aircraft and engine manufacturers on next-generation technology that will deliver a further step-change in emissions reduction – however, innovations such as electric aircraft engines are still some time away.

CEO COMMENTS

Qantas Group CEO Alan Joyce said these commitments would make Qantas a leader in the aviation industry’s efforts to reduce carbon emissions.

“We recognise that airlines have a responsibility to cut emissions and combat climate change. We’ve already made some good progress, especially by investing in newer aircraft that have a much smaller carbon footprint.

“We want to do more, and faster. We’re effectively doubling our carbon offsetting program from today and we’re capping our net emissions across Qantas and Jetstar from 2020 so that all new flying will be carbon
neutral.

“Qantas offsets all of its own travel needs and so do many of our customers. By matching their efforts, we’re hoping it will encourage even more people to offset and the program will keep growing.

“These short-term actions will go towards a longer-term goal of being completely net carbon neutral by 2050. It’s ambitious, but achievable.

“Innovation is going to be key. We’re investing $50 million to hopefully kickstart a sustainable aviation fuel industry in Australia. We know from our own trials that the technology works but we need to get to a scale of production where it’s a practical substitute.

“Concerns about emissions and climate change are real, but we can’t lose sight of the contribution that air travel makes to society and the economy. The industry has already come a long way in cutting its footprint and the solution from here isn’t to simply ‘fly less’ but to make it more sustainable.

“We’re doing this because it’s the responsible thing to do, but hopefully it will also encourage more people to choose Qantas and Jetstar because of the action we’re taking,” added Mr Joyce.

Copyright Photo: Gordon Reid via John Adlard.

In other news, Qantas has completed precautionary inspections of thirty-three 737NG aircraft, checking for hairline cracks that have appeared in some high cycle aircraft worldwide.

The cracks relate to the ‘pickle fork’ structure, which is located between the wing and fuselage. Qantas brought forward these precautionary checks by up to seven months and completed them within seven days.

Of the 33 of Qantas’ 737 aircraft that required inspection, three were found to have a hairline crack in the pickle fork structure. These aircraft have been removed from service for repair.

The aircraft had all completed around 27,000 cycles. Any aircraft with more than 22,600 cycles was inspected, in line with advice from regulators.

Qantas will minimise any customer impact from having these aircraft temporarily out of service.

Qantas is working with Civil Aviation Safety Authority and Boeing to resolve this issue, which involves some complex repair work. All three aircraft are expected to return to service before the end of the year.

CEO of Qantas Domestic, Andrew David said: “As people would expect with Qantas, we’ve gone above what was required to check our aircraft well ahead of schedule.

“We would never fly an aircraft that wasn’t safe. Even where these hairline cracks are present they’re not an immediate risk, which is clear from the fact the checks were not required for at least seven months.

“Unfortunately, there were some irresponsible comments from one engineering union, which completely misrepresented the facts. Those comments were especially disappointing given the fantastic job our engineers have done to inspect these aircraft well ahead of schedule, and the priority they give to safety every day of the week,” added Mr David.

Qantas will continue to monitor aircraft that are in scope of the airworthiness directive as inspections fall due.

Top Copyright Photo: QANTAS Airways Boeing 787-9 Dreamliner VH-ZNJ (msn 66074) (100 Centenary) PAE (Nick Dean). Image: 948008.

QANTAS Airways aircraft slide show:

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Record-breaking nonstop New York – Sydney flight touches down

QANTAS Airways made this announcement:

The first nonstop commercial airline flight from New York to Sydney has landed after 19 hours 16 minutes in the air.

A total of 49 passengers and crew were on the flight, which was used to run a series of experiments to assess health and well-being onboard.

Data from these experiments will be used help shape the crew rostering and customer service of Qantas’ ultra long haul flights in future – including Project Sunrise (opens in new window).

Tests ranged from monitoring pilot brain waves, melatonin levels and alertness, through to exercise classes for passengers.

Cabin lighting and in-flight meals were also adjusted in ways that are expected to help reduce jetlag, according to the medical researchers and scientists (opens in new window) who have partnered with Qantas.

Arriving in Sydney, Qantas Group CEO Alan Joyce said: “This is a really significant first for aviation. Hopefully, it’s a preview of a regular service that will speed up how people travel from one side of the globe to the other.

“We know ultra long haul flights pose some extra challenges but that’s been true every time technology has allowed us to fly further. The research we’re doing should give us better strategies for improving comfort and wellbeing along the way.

“Night flights usually start with dinner and then lights off. For this flight, we started with lunch and kept the lights on for the first six hours, to match the time of day at our destination. It means you start reducing the jetlag straight away.

“What’s already clear is how much time you can save. Our regular, one-stop New York to Sydney service (QF12) took off three hours before our direct flight but we arrived a few minutes ahead of it, meaning we saved a significant amount of total travel time by not having to stop,” added Mr Joyce.

David Gray /Getty Images for Qantas

Qantas Captain Sean Golding, who led the four pilots operating the service, said: “The flight went really smoothly. Headwinds picked up overnight, which slowed us down to start with, but that was part of our scenario planning. Given how long we were airborne, we were able to keep optimising the flight path to make the best of the conditions.

“We had a lot of interest from air traffic controllers as we crossed through different airspace because of the uniqueness of this flight. We also had a special sign off and welcome home from the control towers in New York and Sydney, which you don’t get every day.

“Overall, we’re really happy with how the flight went and it’s great have some of the data we need to help assess turning this into a regular service,” said Captain Golding.

Two more research flights are planned as part of the Project Sunrise evaluations – London to Sydney in November and another New York to Sydney in December. Emissions from all research flights will be fully offset.

A decision on Project Sunrise is expected by the end of the year.

Photos by James D Morgan/Qantas.

American and QANTAS expand their relationship

American Airlines and QANTAS Airways will roll out improved frequent flyer benefits, including higher earning rates for points and status credits on each airline’s network. The partnership also includes enhanced connectivity with new codeshare destinations in the United States.

American customers will enjoy five additional codeshare markets with Qantas, and Qantas customers will benefit from enhanced connectivity across North America with access to more than 50 new routes and 30 new destinations.

This expansion is being implemented following the U.S. Department of Transportation’s final approval of Qantas and American’s joint business.

“Our customers are captivated by the natural beauty and cultural richness Australia and New Zealand offer, so we’re excited to bring them even more frequent flyer benefits and expanded codeshare opportunities for their adventures,” said Bridget Blaise-Shamai, President of the AAdvantage program and Vice President of Customer Loyalty and Insights for American.

More benefits for frequent flyers

AAdvantage members can now earn miles and elite status faster than ever on eligible flights between the United States and Australia or New Zealand thanks to an increase in mileage accrual. Members may earn up to two times more elite qualifying miles (EQMs) and elite qualifying dollars (EQDs) for most cabin classes on all eligible Qantas flights systemwide.

For more information about accruals, visit the Qantas partner page on aa.com.

Qantas Frequent Flyer members can now earn more Qantas Points and Status Credits on American flights. To learn more about Qantas Frequent Flyer earn rates, visit qantas.com.

Improved connectivity with new codeshare destinations

American also recently expanded its codeshare on new routes operated by Qantas, for a new total of 32 codeshare markets.

New flights operated by Qantas with expanded American codeshare:

  • Los Angeles (LAX) to Sydney (SYD)
  • Dallas-Fort Worth (DFW) to SYD
  • San Francisco (SFO) to Melbourne, Australia (MEL)
  • SFO to Brisbane, Australia (BNE)
  • Chicago (ORD) to BNE

Qantas has expanded its codeshare with American, adding more than 50 new codeshare city pairs from DFW and ORD. This expansion adds 28 new codeshare destinations to the Qantas network in the United States.

With these new destinations, Qantas places its code on American services to more than 100 destinations and almost 200 domestic city pairs.

From DFW, the new codeshare destinations include:

  • Spokane (GEG)
  • Charleston (CHS)
  • Dayton (DAY)
  • Savannah (SAV)
  • Vail/Eagle (EGE)

From ORD, the new codeshare routes include:

  • New York (LGA and EWR)
  • Boston (BOS)
  • Miami (MIA)
  • Washington (DCA)
  • Philadelphia (PHL)
  • Charlotte (CLT)

In addition to the improved frequent flyer benefits, expanded codeshare and new routes to the United States, Qantas recently announced it would increase the number of reward seats made available to members.

QANTAS unveils its 100th anniversary logo jet in a special Centenary livery on 787-9 VH-ZNJ

QANTAS Airways has released photos of its new Boeing 787-9 VH-ZNJ “Longreach” after the airliner emerged from the paint shop.

The special design features a “100” design with the airline logos from its history.

The airline issued this statement:

Qantas’ newest 787 Dreamliner has rolled out of the paint shop at Boeing’s factory in Washington State, wearing a special Centenary livery to celebrate the flying kangaroo’s 100th year in the skies.

Qantas will turn 99 in November, and as it enters its 100th year of operations, is embarking on a range of initiatives to celebrate the Spirit of Australia.

The special livery features each Qantas logo since its 1920 founding in outback Queensland through to today, along with the newly unveiled ‘Qantas100’ imprint that will run across its Centenary celebrations.

The Boeing 787 Dreamliner, registration VH-ZNJ, is named “Longreach” – a nod to the Queensland town that was integral to the national carrier’s beginnings, its role in conquering the tyranny of distance and the Longreach series of retiring 747-400 jumbo jets.

The aircraft – Qantas’s tenth Dreamliner – will undergo a series of delivery test flights in Seattle prior its handover from Boeing next month. It will operate the second of Qantas’ Project Sunrise research flights, flying non-stop from London to Sydney and replicating the journey of the first 747-400 delivery 30 years ago. It will then enter normal commercial service with Qantas International.

Qantas CEO Alan Joyce said the aircraft livery is a reminder of the airline’s past on its newest piece of technology.

“The story of Qantas is the story of modern Australia, and the logos on this livery tell that story from the beginning,” Mr Joyce said.

“Our Centenary celebrations are all about honouring our past with an eye on the future, so it’s very fitting that this special livery will be worn by our newest state-of-the-art Dreamliner.”

Over the past century, Queensland and Northern Territory Aerial Services has evolved from delivering the mail in the outback to serving as the national carrier – from two passengers at a time to 50 million a year.

Mr Joyce said Qantas began by assembling its own aircraft and now flies non-stop from Australia to Europe, having established an unrivalled reputation for safety in the process.

“We have a lot of exciting things planned to mark the Centenary, so watch this space,” he said.

QANTAS introduces its upgraded Airbus A380 fleet

QANTAS Airways has made this announcement:

The best of Australian fashion, design and food are all showcased onboard the first of Qantas’ upgraded Airbus A380 aircraft, which touched back down in Sydney this morning (October 2).

All 12 of the national carrier’s A380 aircraft will be refurbished as part of a multimillion-dollar upgrade, delivering higher levels of comfort and a higher number of premium seats.

Qantas Group CEO Alan Joyce said the upgrade would benefit customers in every cabin.

“Australians are used to flying long haul and we know it’s important to make the journey comfortable,” Mr Joyce said.

“We’re very proud to showcase the best of Australian design, wine and food on these services which will provide a step change in comfort.”

Australian designer David Caon has transformed the aircraft’s upper deck lounge, which has been significantly expanded.  It now features seating for 10 people on deep green leather couches and wood panelled walls. Customers will be able to order from a range of bespoke snacks and light meals to be enjoyed in the lounge.

The Caon-designed Premium Economy seat, which made its debut on the Qantas Dreamliner fleet, also features as part of the upgrade. Smarter use of space on the A380 has allowed Qantas to increase the number of Premium Economy seats from 35 to 60.

The Qantas Business Suite, dubbed “mini First” by the airline’s frequent flyers, has replaced the Skybed and provides direct aisle access for every passenger.

In total, there is a 27 percent boost to premium seats, improving the economics of the aircraft and allowing Qantas to respond to growing demand on long-haul flights.

The airline has used the introduction of the upgraded A380 to roll out several improvements for passengers travelling in the airline’s First cabin including:

  • A refresh of the First Suite with new contoured cushioning and higher resolution entertainment screen.
  • Redesigned Martin Grant sleeper suit in dark charcoal with a Henley neckline and burgundy trim introduced from November.
  • New First amenity kits including socks made from bamboo cotton and new skin care products from Australian brand LaGaia Unedited.
  • The LaGaia Unedited First amenities (launching onboard in November) that incorporate a Qantas-signature Australian native scent of lemon myrtle and geranium in a refreshing facial mist, accompanied by a moisturiser and lip balm. LaGaia Unedited products will be stocked in the First lavatories. From late November, LaGaia Unedited will move into Qantas’ Sydney and Melbourne First Lounge spa facilities.

Qantas chef Neil Perry and his Rockpool team have created a menu of snacks and light meals to be enjoyed by First and Business Class customers in the redesigned upper deck lounge.

Passengers will be able to chose from dishes including dry laska goreng with fishcakes and seared prawns to mushroom arancini in a tomato ragu as part of custom-designed menus for each route.

The lounge also features a new self service bar, while customers will also be able to order signature cocktails including an Australian Negroni with mountain pepper and river mint as well as the Qantas signature gin and tonic with pink grapefruit.

Qantas’ A380s will also feature a larger dedicated Premium Economy cabin including a self-service bar.

The capacity of Qantas A380s after the upgrade will be: 14 First Suites (unchanged), 70 Business Suites (up by six), 60 Premium Economy (up by 25) and 341 Economy (down by 30) for a total of 485 passengers (up by one).

Qantas expects to complete the refurbishment of all remaining 11 aircraft by the end of 2020.

All photos by QANTAS.

QANTAS to operate ‘Project Sunrise” research flights from New York and London

Photo by David Gray/Getty Images for Qantas

QANTAS Airways has made this announcement:

  • Re-purposed Boeing 787-9 delivery flights scheduled for October, November and December
  • On-board research to test ways of improving wellbeing on ultra long-haul flights
  • Made possible by carrying 40 people to increase aircraft range

Qantas has announced three ultra long-haul research flights to gather new data about inflight passenger and crew health and wellbeing.

The flights form part of planning for Project Sunrise – Qantas’ goal to operate regular, non-stop commercial flights from the east coast of Australia (Brisbane, Sydney and Melbourne) to London and New York.

The three flights over three months will use new Boeing 787-9s and re-route their planned delivery flights. Instead of flying empty from Seattle to Australia, the aircraft will simulate two Project Sunrise routes – London and New York to Sydney.

Photo by David Gray/Getty Images for Qantas

 

This will represent the world’s first flight by a commercial airline direct from New York to Sydney and only the second time a commercial airline has flown direct from London to Sydney.

Each flight will have a maximum of 40 people, including crew, in order to minimise weight and give the necessary fuel range. Carbon emissions from the flights will be fully offset.

The on-board research is being designed in partnership with Sydney University’s Charles Perkins Centre and Monash University in conjunction with CRC for Alertness, Safety and Productivity.

People in the cabin – mostly Qantas employees – will be fitted with wearable technology devices and take part in specific experiences at varying stages of the approximately 19 hour flights. Scientists and medical experts from the Charles Perkins Centre will monitor sleep patterns, food and beverage consumption, lighting, physical movement and inflight entertainment to assess impact on health, wellbeing and body clock.

Monash University researchers will work with pilots  to record crew melatonin levels before, during and after the flights.  Pilots will wear an EEG (electroencephalogram) device that tracks brain wave patterns and monitors alertness.  The aim is to establish data to assist in building the optimum work and rest pattern for pilots operating long haul services.

Qantas Group CEO Alan Joyce said the flights will give medical experts the chance to do real-time research that will translate into health and wellbeing benefits.

“Ultra-long haul flying presents a lot of common sense questions about the comfort and wellbeing of passengers and crew. These flights are going to provide invaluable data to help answer them.

“For customers, the key will be minimising jet lag and creating an environment where they are looking forward to a restful, enjoyable flight. For crew, it’s about using scientific research to determine the best opportunities to promote alertness when they are on duty and maximise rest during their down time on these flights.

“Flying nonstop from the East Coast of Australia to London and New York is truly the final frontier in aviation, so we’re determined to do all the groundwork to get this right.

“No airline has done this kind of dedicated research before and we’ll be using the results to help shape the cabin design, inflight service and crew roster patterns for Project Sunrise. We’ll also be looking at how we can use it to improve our existing long-haul flights,” added Mr Joyce.

Qantas has already conducted data on passenger sleep strategies on its direct Perth–London service, and some of these initial findings will be assessed further as part of these dedicated research flights. Customer feedback on food choices, separate stretching and wellbeing zones and entertainment options will also be tested.

Findings on crew wellbeing data will be shared with the Civil Aviation Safety Authority to help inform regulatory requirements associated with ultra-long haul flights. (opens in new window)

Airbus and Boeing have both pitched aircraft (A350 and 777X) to Qantas that are capable of operating Project Sunrise flights with a viable commercial payload. A final decision on Project Sunrise – which depends on aircraft economics, regulatory approvals and industrial agreements – is expected by the end of December 2019.

Mr Joyce added: “There’s plenty of enthusiasm for Sunrise, but it’s not a foregone conclusion.  This is ultimately a business decision and the economics have to stack up.”

PROJECT SUNRISE RESEARCH FLIGHTS – KEY FACTS

  • Non-stop flights from New York and London to Sydney will take around 19 hours each, subject to wind and weather conditions. The data will be used to inform all Sunrise flight planning, including from Brisbane and Melbourne.
  • The aircraft will position from Boeing’s factory in Seattle, where they will be collected off the production line by Qantas pilots, and flown to their starting points of New York (for two of the flights) and London (for one flight). Cabins will be fully fitted out and otherwise ready to enter normal commercial service.
  • The flights will take place in October, November and December, in-line with scheduled aircraft deliveries from Boeing.
  • Flights will have up to 40 people (including crew) on board and a minimum of luggage and catering to extend the range of 787-9.
  • Other than crew, those in the cabin will mostly be Qantas employees taking part in testing. No seats will be sold as these flights are for research purposes only.
  • After the flights, each aircraft will enter regular service with Qantas International – with just a few extra miles on the clock.
  • Qantas operates the largest airline carbon offset scheme in the world. This same program will be used to offset all the carbon emissions from these three flights.
  • No commercial airline has ever flown direct from New York to Australia. Qantas has once flown non-stop from London to Sydney in 1989 to mark the entry into service of the Boeing 747-400. That flight had a total of 23 people on board and minimal internal fit-out in order to provide the range. The aircraft, registered VH-OJA, was donated by Qantas in 2017 to the Historical Aircraft Restoration Society near Wollongong, New South Wales.

QANTAS Group posts record revenue, strong profit in FY 2019

QANTAS Group posts record revenue, strong profit in FY2019:

  • Underlying Profit Before Tax: $1.30 billion (down 17%)
  • Statutory Profit Before Tax: $1.27 billion (down 6%)
  • Record revenue for the Group
  • Statutory Earnings Per Share: 54.6c (flat on last year)
  • Return On Invested Capital: 18.4%
  • Net free cash flow: $1,244 million
  • Shareholder return of 13 cents per share fully franked dividend, plus an off-market buyback of up to 79.7 million shares
  • $1,250 staff travel bonus for 25,000 non-executive employees, worth $32 million
  • The Qantas Group has achieved an Underlying Profit Before Tax of $1.30 billion and a Statutory Profit Before tax of $1.27 billion for the Financial Year 2019.

While the Underlying result was 17 per cent lower compared with the Group’s record profit in FY18, it was impacted by an $614 million increase in fuel costs from higher oil prices and a further $154 million of the foreign exchange impacts on non-fuel net expenditure.

The result was also impacted by a $92 million non-cash expense on provisions for items including employee leave entitlements – part of an accounting requirement that means this charge increases when interest rates fall.

All key parts of the Group’s portfolio remain strongly profitable, generating significant cashflow that allows for ongoing investment as well as shareholder returns.

CEO COMMENTARY

Qantas Group CEO Alan Joyce said the FY19 performance was particularly positive given mixed market conditions.

“This result shows the strength of our individual businesses but also the strength of our portfolio as a whole. Even with headwinds like fuel costs and foreign exchange, we remain one of the best performing airline groups in the world.

“Our performance is the result of having the right strategy and the ability to deliver it.

“Domestically, our dual brand approach with Qantas and Jetstar continued to give us a leadership position in the corporate, premium leisure and budget travel categories, all with strong margins.

“Qantas International has improved its competitive position by evolving its fleet, network and partnerships. We’ve carved out some unique advantages like the Perth-London route and there is a lot of value still to be unlocked through our alliances.

“Qantas Loyalty returned to double-digit earnings growth in the second half, thanks to new revenue streams from insurance and financial services as well as improvements to the Frequent Flyer program.

“The simple message from this result is that the Qantas Group has solid foundations to keep investing and innovating, and to keep rewarding our shareholders as a result.

“We’re pleased to reward around 25,000 of our people with a $1,250 staff travel bonus each, which would take a family of four from Sydney to Honolulu on Jetstar. Since 2015, we’ve now set aside more than $340 million in cash and staff travel bonuses for non-executives.

“Looking ahead, the overall market remains mixed. Domestically, we’re seeing weakness in the price sensitive leisure market but premium leisure demand is steady.

“Overall demand from our corporate customers is flat, with continued strength in the resources sector offsetting weaker demand from other industries, like financial services and telecommunications. In competitive terms we’re growing our overall share of the corporate and SME sectors.

“Internationally, the outlook remains positive for premium international travel demand, helped by a reduction in broader market capacity.

“Our anticipated flat Group domestic capacity for the first half of FY20 reflects the mixed environment, and we’ll continue to monitor our settings against demand and our strategic position,” said Mr Joyce.

GROUP DOMESTIC

Group Domestic delivered an Underlying EBIT of $1.03 billion, down by 4 per cent. Unit Revenue from Qantas and Jetstar’s domestic operations grew by a combined 4 per cent on flat capacity, as fares caught up to higher oil costs.

Qantas Domestic, which achieved its second-highest Underlying Profit, increased Unit Revenue by 5 per cent and seat factors were steady at 78 per cent.

Qantas’ share of both the corporate and small business markets grew, helping to offset some broader weakness in travel demand. Qantas maintained a 15 point customer satisfaction premium to its domestic competitor.

The resources market continued to strengthen, with capacity added in Western Australia and Queensland contributing to a $47 million revenue increase from this part of the market.

Jetstar’s domestic Unit Revenue increased by 3 per cent and ancillary revenue per passenger rose by 12 per cent, driven largely by take-up of new baggage options and Club Jetstar reaching 340,000 members. The airline’s upgrade of its A320 cabins is now complete, delivering a 3 per cent capacity improvement per aircraft.

As a low fares leader, the Jetstar Group sold almost two-thirds of its fares for less than $100.

GROUP INTERNATIONAL

Qantas International delivered an Underlying EBIT of $285 million, down by 28 per cent. There was a significant improvement in second half performance, as competitor capacity and overall fare levels adjusted to higher fuel prices.

Unit Revenue grew by 6 per cent compared with FY18 and seat factor grew by 2 percentage points to 86 per cent.

Network and fleet changes continue to deliver benefits, with particularly strong performances on the Perth-London route and Singapore hub services. Competitive pressure on the Pacific remained intense but Qantas’ performance is expected to improve following implementation of the American Airlines joint business and the start of new routes, including Brisbane-Chicago in FY20.

Qantas Freight continued to provide steady earnings, which will be supported going forward by an expanded seven-year contract with Australia Post.

Jetstar’s international services achieved significant Unit Revenue growth, with solid performance on key leisure routes such as Bali and Japan.

Jetstar Japan delivered a record profit[1] (opens in new window) and Jetstar Pacific remained profitable, while Jetstar Asia faced challenges due to a significant increase to airport charges and taxes in its home market of Singapore. Jetstar’s regional services in New Zealand were loss-making and market conditions are being monitored closely.

QANTAS LOYALTY

Qantas Loyalty achieved a record Underlying EBIT of $374 million, up 8 per cent.

Earnings growth was driven by the core Frequent Flyer Program as well as new insurance and financial products.

Total points redeemed grew by 12 per cent compared with a 5 per cent increase in membership. High levels of engagement with the program are expected to keep improving as the recent changes to redemption costs and flight availability take full effect from September 2019. Already, there has been a 24 per cent increase in Classic flight redemptions since these changes were announced in June.

The Qantas Business Rewards program, which helps drive airline market share in the SME segment as well as earnings from Loyalty partners, reached 250,000 members.

Growth of credit cards that earn Qantas Points continued to outperform the broader market[2] (opens in new window) and Qantas’ own premium cards performed well. Qantas health insurance customers grew by 46 per cent[3] (opens in new window), helped by one of the lowest average premium increases in the market.

FINANCIAL FRAMEWORK

The Group continued to deliver on the three pillars of its financial framework.

Operating cashflow was strong at $2.81 billion and net debt is now below the target range[4] (opens in new window) at $4.7 billion. Net capital expenditure was $1.6 billion after adjusting for cash received from the sale of Qantas Catering and the Melbourne Domestic Terminal lease. This resulted in net free cashflow of $1.24 billion.

Ongoing transformation delivered $452 million of revenue and cost benefits.

The Group’s total fuel cost was $3.85 billion, an increase of $614 million on FY18. Ongoing efficiency measures, including fleet modernisation and a new flight planning system, drove a 2.2 per cent improvement in fuel efficiency.

The Group incurred $374 million income tax on its FY19 profit.

REWARDING SHAREHOLDERS

The Qantas Board has announced a fully franked dividend totaling $204 million dollars or 13 cents per share to be paid on 23 September 2019 with a record date of 3 September 2019, as well as an off market buy-back of up to 79.7 million shares. Detail on the buyback, which is worth approximately $400 million at yesterday’s share price, is available via https://www.investor.qantas.com.

This latest buyback, once complete, will bring the total reduction in shares on issue by nearly one third since 2015 – the most of any company in the ASX All Ordinaries in the past five years.

Surplus capital will continue to be assessed at each half, in-line with our financial framework. The first tranche of this surplus will be allocated to a base dividend, which is currently assessed at $400 million a year. Adjusting for the EPS benefits from the buyback announced today, this equates to 27 cents a share per annum.

INVESTING FOR THE FUTURE

The Qantas Group continues to invest for the future, with key initiatives including:

  • Today’s announcement of three research flights for Project Sunrise before the end of calendar 2019. Operating non-stop from New York and London to Sydney using Qantas’ existing 787-9s, and made possible by carrying a small number of people to minimise weight, the flights will test different approaches to crew and passenger wellbeing as part of designing unique ultra-long haul services. The research flights, which are re-routed delivery flights, will have their emissions fully offset. The final business case for Project Sunrise has several hurdles to pass ahead of a final decision in December 2019. (See separate release and video (opens in new window).)
  • A complete refurbishment of Qantas’ 12 Airbus A380 aircraft, including upgrades to each class of cabin, a new on-board lounge and 27 per cent increase in premium seating. Work on the first aircraft is underway, which is expected to be in service by September.
  • Delivery of six additional 787-9s for Qantas International from October 2019, taking the total fleet to 14 aircraft.
  • Increasing lounge capacity in Qantas’ Singapore hub by 60 per cent, including an expansion to the existing Business Lounge and opening of a new First lounge.
  • Rolling out $25 million of improvements to Frequent Flyer, including 1 million more reward seats per annum, reducing some carrier charges for points bookings by up to 50 per cent and cutting the points required for international Economy seats by up to 10 per cent.
  • Progress towards cutting 100 million single-use plastics by end-2020 and eliminating 75 per cent of waste to landfill by end-2021.
  • Preparations to introduce the A321 NEO to Jetstar, with 18 aircraft to begin arriving from mid-2020. 

OUTLOOK

The Group continues to focus on matching capacity with demand, together with growing revenue to recover higher fuel costs.

The Group’s current operating expectations for FY20 are[5] (opens in new window):

  • Total fuel bill is expected to increase to ~A$3.95 billion (up ~$100 million) and is fully hedged.
  • Group capacity is expected to increase by ~1 per cent in in the first half of FY20. Group Domestic is expected to be flat to slightly down. Group International is expected to increase by ~1.5 per cent while competitor capacity is expected to decline by ~1 per cent in the first half of FY20.
  • Inflation impact on Group expenditure (including wage growth) expected to be ~$250 million.
  • Transformation benefits are expected to be ~$400 million.
  • Gross capital expenditure expected to be $2.0 billion for FY20.
  • Net underlying depreciation and amortisation expected to be ~$130 million higher than FY19.

[1] (opens in new window) Record AUD profit share.

[2] (opens in new window) Qantas Points earning credit cards includes co-branded credit cards and Qantas Premier cards. Based on RBA credit and card charges statistics at June 2019 and Qantas internal analysis.

[3] (opens in new window) Qantas/ NIB internal analysis and estimates.

[4] (opens in new window) Net Debt Target Range as at 30 June 2019 is $5.2 billion to $6.5 billion.

[5] (opens in new window) See Investor Presentation for detailed outlook assumptions.