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QANTAS 2000 ANNUAL REPORT
The Spirit
of Australia

Table of contents

  • Page 1
    The Spirit of Australia QANTAS 2000 ANNUAL REPORT

  • Page 2
    ... Improving Business Efficiency Online 20 Contributing to the Community 22 Our 80th Anniversary 24 Board of Directors and Senior Management 26 Corporate Governance 27 Performance Summary 28 2000 Concise Report 46 Five Year Summary 48 Shareholder Information I BC Directory Qantas Airways Limited ACN...

  • Page 3
    On Thursday 16 November 2000, Qantas - the oldest airline in the English-speaking world - celebrates the 80th anniversary of its foundation. Registered originally as The Queensland and Northern Territory Aerial Services Limited, the airline has built a reputation for excellence in: " " " " SAFETY ...

  • Page 4
    ... Club - the airline's international and domestic airport lounge program - increased to 240,000. "Dividend yield of 17.5 percent based on 30 June 2000 share price. "Qantas continued to seek the opinions of travellers and some 65,000 people took part in comprehensive customer and market research...

  • Page 5
    ...international community through support of a wide range of sporting, cultural, charitable and environmental organisations and activities. "Of these, approximately 27,000 staff own Qantas shares. "Eligible employees to each receive $1,000 of bonus shares under the Qantas Profitshare Scheme. "Staff...

  • Page 6
    ... special dividend in cash or reinvesting in Qantas shares. PRODUCT In March 2000, Qantas announced an investment of $400 million in product and service improvements over the next two years. These improvements include: " a new inflight entertainment and communication system in its international...

  • Page 7
    ... contribution of staff towards an outstanding financial result, the Board has approved a grant of $1,000 of bonus shares to each eligible employee under the Qantas Profitshare Scheme. DOMESTIC STRATEGY Qantas will meet the challenge of new competition using pricing and inventory management as well...

  • Page 8
    ... airline operations EBIT up 5.9 percent to $272 million. A CONTINUOUS RECORD OF PROFIT IMPROVEMENT GEARING REMAINS AT AN ACCEPTABLE LEVEL "Subsidiary operations EBIT up 23.9 percent to $169.4 million. EARNINGS PERFORMANCE Dividends (cents per share) Interim Final Special RPKs per Employee...

  • Page 9
    ... per RPK). Qantas Shareholder Return vs Selected Airlines (%) 154 147 140 Airline Definitions QF Qantas SQ Singapore Airlines LH Lufthansa AA American Airlines UA United Airlines KL KLM CX Cathay Pacific DL Delta Airlines BA British Airways TG Thai Airways NW Northwest Airlines NZ Air New Zealand JL...

  • Page 10
    ...) in its core fleet of Boeing 737, 767 and 747 aircraft as part of the company's commitment to maintaining and enhancing air safety. "Qantas increased its Engineering and Maintenance division staff by 114 people during the financial year and is building further its staff numbers in operational and...

  • Page 11
    9

  • Page 12
    A FIRST CLASS FLEET 10

  • Page 13
    ... for its 777 and 767-400 aircraft. REGIONAL AIRLINES OPERATIONAL AIRCRAFT FLEET Details as at 30 June 2000 AIRCRAFT TYPE OWNED, HP & EXTENDABLE FINANCE LEASES OPERATING LEASES OTHER OPERATING LEASES TOTAL IN SERVICE "Eastern Australia Airlines purchased two additional 36-seat Dash 8 aircraft. 24...

  • Page 14
    ... Perth and Singapore and Brisbane and Singapore, connecting with Qantas and British Airways services between Singapore and the United Kingdom/Europe. "Qantas was the first airline to operate commercial services to the new Mount Hotham Airport in Victoria, effective June 2000. "Qantas extended the...

  • Page 15
    ..."welcomed new members Iberia, Finnair, Aer Lingus and LanChile "established a global headquarters in Vancouver. The alliance now has eight member airlines - Aer Lingus, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, LanChile and Qantas. TOP: SERVICES HAVE COMMENCED TO CANADA...

  • Page 16
    THE CUSTOMER EXPERIENCE INFLIGHT 14

  • Page 17
    ... MAINTAIN THE AIRLINE AT THE FOREFRONT OF CUSTOMER SERVICE AND INFLIGHT TECHNOLOGY. In March 2000, Qantas announced plans to invest $300 million in a new inflight entertainment and communications system on its international long-haul Boeing 747-400 aircraft, providing individual seat-back videos in...

  • Page 18
    ... on airport lounge developments, including: "relocation, expansion and modernisation of The Qantas Clubs at the Sydney and Melbourne International Terminals "opening of a new Melbourne domestic Qantas Club lounge "development of a new joint Qantas/British Airways First Class lounge in Singapore...

  • Page 19
    ABOVE: NEW DOMESTIC TERMINAL - MELBOURNE LEFT: QANTAS CLUB LOUNGE FAR LEFT: TRAVEL AGENTS - AN IMPORTANT PART OF OUR DISTRIBUTION NETWORK 17

  • Page 20
    IMPROVING BUSINESS EFFICIENCY ONLINE 18

  • Page 21
    ... air travel, hotel booking, car rentals and land tours "corProcure - indirect purchasing exchange for leading Australian companies "AirNewco - aircraft parts and consumables exchange for leading airlines. Both offer savings in purchase prices, purchasing process costs and supply chain management...

  • Page 22
    ... Foundation "UNICEF Change for Good "World Vision "Young Achievement Australia "Winston Churchill Memorial Trust NEW SOUTH WALES "Art Gallery of New South Wales and its Yiribana Gallery "New Children's Hospital, Westmead "Sydney Dance Company "Sydney Festival "Museum of Contemporary Art "Taronga...

  • Page 23
    ... of Tasmania Foundation "Tourism Council of Australia (Tasmania Branch) Annual Tourism Awards "Cerebral Palsy Association of Tasmania: "Project MM" Fundraising Project NORTHERN TERRITORY "Glenelg Jazz Festival "The Duke of Edinburgh Awards "Adelaide Symphony Orchestra LEFT: SYDNEY DANCE COMPANY...

  • Page 24
    ... AUSTRALIA Our 80th Anniversary Qantas has played a key role in the development of Australian and international aviation. 1920 The Queensland and Northern Territory Aerial Services Limited, a Winton-based company, is registered on 16 November in Queensland 1922 The first passenger flight operates...

  • Page 25
    ... Qantas pioneers round-the-world services, using Lockheed Super Constellations 1959 Qantas becomes the first non-US airline to introduce Boeing 707s which halve travel times on trans-Pacific services 1995 Qantas lists on the Australian Stock Exchange as a fully privatised company on 31 July 2000...

  • Page 26
    ...Methodist Ladies College, Melbourne. "Member of the Advisory Boards of Spencer Stuart and Blake Dawson Waldron. GEOFF DIXON, DEPUTY CHIEF EXECUTIVE OFFICER, AGE 60 "Director of Air Pacific Limited. "Member of the Finance & Treasury Association and the Australian Institute of Company Directors. JIM...

  • Page 27
    ... Planning BRETT JOHNSON General Counsel & Company Secretary ADAM MORONEY Deputy Chief Financial Officer * Member of Executive Committee "Appointed to the Qantas Board "General Manager Investments LORD MARSHALL "Director of Concorde International Travel Limited and World Aviation Systems (Australia...

  • Page 28
    ... of the Qantas Board and to protect the airline's position as an Australian flag carrier. "Set and review strategic direction. "Monitor operating and financial performance. "Risk management. "Report to shareholders. BOARD STRUCTURE DURING 1999/2000 "Head office must be in Australia. "Two-thirds...

  • Page 29
    ...448.7 8.4 (1.9) 8.1 9.4 7.8 EXPENDITURE Manpower and staff related Selling and marketing Aircraft operating - variable Fuel and oil Property Computer and communication Depreciation and amortisation Non-cancellable operating lease rentals Tours and travel cost of sales Capacity hire, insurance and...

  • Page 30
    ... investing activities of Qantas and its controlled entities as the Financial Report. A copy of the Financial Report, including the Independent Audit Report, is available to all shareholders, free of charge, upon request. The Financial Report can be requested by telephone (toll free within Australia...

  • Page 31
    ... domestic holiday tours and associated support activities including information technology, catering, ground handling and engineering and maintenance. There were no significant changes in the nature of the activities of the Qantas Group during the financial year. The number of Directors' Meetings...

  • Page 32
    ... the 30 June 2000 financial year. DIRECTORS' INTERESTS AND BENEFITS Particulars of Directors' interests in the share capital of Qantas at the date of this Report are as follows: Directors' Ordinary Shares 2000 Number 1999 Number executives in the 1995/96 financial year. This scheme provides for...

  • Page 33
    ... employees of the Qantas Group. The amount of non-cash benefits disclosed above has been determined on a "cost to the company" basis. 3. Directors' fees for British Airways Directors of Qantas are paid directly to British Airways Plc. 4. Fixed annual remuneration includes base salary, motor vehicle...

  • Page 34
    ... Incentive Plan which was approved by shareholders at the 1999 Annual General Meeting. These entitlements may vest and be convertible to shares between three and five years following award date, conditional on the executive remaining a Qantas Group employee and on the achievement of specific...

  • Page 35
    ...fuel prices. It is also exposed to credit risks from its operations. The Qantas Group manages these risk exposures using various financial instruments, based upon a set of policies approved by the Board. Compliance with these policies is strictly monitored by management and reported to the Board. It...

  • Page 36
    ....5 8,448.7 2 9,106.8 EXPENDITURE Manpower and staff related Selling and marketing Aircraft operating - variable Fuel and oil Property Computer and communication Depreciation and amortisation Non-cancellable operating lease rentals Tours and travel cost of sales Capacity hire, insurance and other...

  • Page 37
    ..., due to the expansion of loyalty programs, co-branded credit cards and increased third party contract work. The Qantas Group is exposed to foreign exchange rate fluctuations on the Australian dollar value of foreign currency denominated revenue and expenditure. The Qantas Group earns revenue in...

  • Page 38
    ...-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS 2,530.8 419.5 747.0 439.0 52.1 4,188.4 9,142.7 2,864.4 2,577.7 312.9 752.8 410.9 33.0 4,087.3 8,166.7 3,059.9 SHAREHOLDERS' EQUITY Share capital Reserves Retained profits Shareholders' equity attributable to members of the Company Outside equity...

  • Page 39
    ... the special dividend and the inclusion of all aircraft leases. The Qantas Dividend Reinvestment Plan is to be reinstated prior to the payment of the special dividend in December 2000. This reinstatement is to assist in providing equity to fund future capital expenditure while maintaining gearing at...

  • Page 40
    ... FOR THE YEAR ENDED 30 JUNE 2000 QANTAS GROUP 2000 $m 1999 $m CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Dividends received Income taxes paid NET CASH PROVIDED BY OPERATING ACTIVITIES 9,066.6 (7,135.8) 90...

  • Page 41
    ... of commercial paper drawn down during the year; - increases in debt prepayments of $352.0 million relating to aircraft sale and leaseback transactions; and - an increase in dividends paid of $320.3 million, primarily due to the payment of the 1999 special dividend of 13.5 cents per share during...

  • Page 42
    ... with current financial year amounts and other disclosures. A full description of the accounting policies adopted by the Qantas Group may be found in the Qantas Group Financial Report for the financial year. QANTAS GROUP 2000 $m 1999 $m 2. REVENUE Sales revenue Dividend revenue TOTAL SALES AND...

  • Page 43
    4. DIVIDENDS Dividends proposed or paid by Qantas are: Cents per Share Total Amount $m Franked Tax Rate % Percentage Franked % Type Date of Payment 2000 Interim ordinary 2000 Final ordinary 2000 Special 11.0 11.0 37.0 59.0 133.3 133.3 448.0 714.6 29 March 2000 4 October 2000 13 December 2000...

  • Page 44
    ... area as it is impractical to do so. QANTAS GROUP 2000 $m 1999 $m ANALYSIS OF TOTAL REVENUE BY GEOGRAPHIC REGION Passenger, freight and services revenue Australia United Kingdom and Europe Japan South East Asia/North East Asia Americas and the Pacific Other regions 4,618.7 855.8 631.0 646.0 783...

  • Page 45
    ... Dividend Reinvestment Plan is to be reinstated so that it applies for the special dividend of 37 cents per share to be paid on 13 December 2000, and for the payment of dividends declared in the future. 7. CONTINGENT LIABILITIES RELATED PARTIES Guarantees to support borrowings and finance lease...

  • Page 46
    ... exchange losses on hedges of net revenue designated to service long-term debt were $374.7 million compared to $272.2 million as at 30 June 1999. QANTAS GROUP 2000 cents 1999 cents 8. EARNINGS PER SHARE Earnings per share based on net profit after tax attributable to members of the Company...

  • Page 47
    ... CONCISE FINANCIAL REPORT TO THE MEMBERS OF QANTAS AIRWAYS LIMITED SCOPE We have audited the Concise Financial Report of Qantas Airways Limited and its controlled entities for the financial year ended 30 June 2000, consisting of the Profit and Loss Statement, Balance Sheet, Statement of Cash Flows...

  • Page 48
    ...International airline operations Domestic airline operations Subsidiary operations EARNINGS BEFORE INTEREST AND TAX PROFIT AND LOSS PERFORMANCE INDICATORS Interest cover Return on shareholders' equity (excl operating leases) Return on shareholders' equity (incl operating leases) STATEMENT OF CASH...

  • Page 49
    ...time employee strength RPKs per employee ASKs per employee Aircraft utilisation (average per day) QANTAS GROUP PERFORMANCE STATISTICS TRAFFIC AND CAPACITY Passengers carried Revenue passenger kilometres Available seat kilometres Revenue seat factor Aircraft in service at balance date FINANCIAL 000...

  • Page 50
    ... than a marketable parcel of shares in Qantas Airways Limited. TWENTY LARGEST SHAREHOLDERS Shareholder Ordinary Shares Held % of Issued Shares British Airways Investments (Australia) Pty Limited Chase Manhattan Nominees Limited National Nominees Limited BT Custodial Services Pty Limited Westpac...

  • Page 51
    ... Convention Centre, Darling Harbour, Sydney. STOCK EXCHANGE Australian Stock Exchange 20 Bridge Street Sydney NSW 2000 Australia DEPOSI TARY FOR AM ERI CAN DEPOSI TARY RECEI PTS The Bank of New York ADR Division 101 Barclay Street New York NY USA Telephone Facsimile FI NANCI AL REPORT Shareholders...

  • Page 52