Qantas 2003 Annual Report Download

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En route to Frankfurt, Germany, 50º 7‘N 8º 41‘E_11.40 PM
2003 Qantas Annual Report

Table of contents

  • Page 1
    2003 Qantas Annual Report En route to Frankfurt, Germany, 50º 7'N 8º 41'E_11.40 PM

  • Page 2
    2003 Qantas Annual Report page 2 Report from the page 10 Review of page 26 Board of page 28 Corporate page 32 Financial Chairman and Chief Executive Officer Operations and Activities Directors Governance Review Qantas Airways Limited ABN 16 009 661 901

  • Page 3
    ... and regional destinations across the country. Qantas also operates a number of non-flying, airline-related businesses, including Qantas Holidays, Qantas Freight, Qantas Flight Catering, Qantas Defence Services and engineering and maintenance services. Los Angeles, USA_34º 4'N 118º 15'W_9.00 AM

  • Page 4
    ... that our industry is now suffering from " constant shock syndrome" and the impact on the w orld's airlines has been enormous. The International Air Transport Association has estimated that its member airlines w ill lose US$30 billion betw een September 2001 and the end of the 2003 calendar year.

  • Page 5
    ... crew and 25,000 ground and administration staff (w hich includes sales and support, airports, engineering and maintenance, freight and catering). This makes Qantas one of Australia's largest employers. Our people responded magnificently to the bombings in Bali, the bushfires in Canberra and Sydney...

  • Page 6
    ... delivery of some new aircraft; and introducing a program to reduce planned capital expenditure next year, the 2003/04 financial year, by $1 billion. These initiatives resulted in a one-off charge of $91 million for the w rite dow n of the Boeing 767-200 fleet, w hich w ill be retired by the end...

  • Page 7
    ...99 03 01 00 99 Final Interim Sales and Operating Revenue ($M ) Ordinary Dividends per Share* (Cents per Share) * Excludes special dividends paid OUR STRATEGY While Qantas is profitable and has performed better than most of its peers in the current environment, it must continue to improve its...

  • Page 8
    2003 Qantas Annual Report page 6 operating a fleet of 196 aircraft Los Angeles, USA_34º 4'N 118º 15'W_7.00 AM Year Ended 30 June 2003 $M $M $M $M cents cents 000 M M % # 2002 2001 2000 1999 Sales and Operating Revenue Earnings Before Interest and Tax Profit From Ordinary Activities ...

  • Page 9
    ...of the w hole Qantas Group. The businesses w ill be supported by a corporate centre, including a shared services division that w ill provide information technology, human resources and financial services to each business segment. This reorganisation w ill greatly improve the company's performance in...

  • Page 10
    ... offering customers greater choice in inflight service and greater comfort; expansion of the successful Cityflyer service to Perth and Canberra; and launch of a new uniform for Qantas frontline staff - including pilots, flight attendants and ground staff - created by leading Australian designer...

  • Page 11
    ... to the travelling public, w ith Australian Airlines operating its first services betw een Australia and Asia in October 2002 (see page 12). In September 2003, Qantas w ill launch its new International Business Class, featuring Skybed - a state-of-the-art, cocoon-style sleeper seat - that w ill be...

  • Page 12
    ... Melbourne, Australia_37º 50'S 145º 0'E_10.30 AM safety Brisbane, Australia_27º 25'S 153º 2'E_2.50 PM Review of Operations and Activities OUR INTERNATIONAL OPERATIONS Giovanni Bisignani, Director-General of the International Air Transport Association, said during the year that international...

  • Page 13
    ... aviation market w ill remain extremely competitive, w ith 37 international passenger airlines flying to and from Australia each w eek. Qantas' ongoing investment program w ill see new seating and interiors on nearly all its international aircraft by the end of 2004. The highlight is Skybed - a new...

  • Page 14
    ... customer comfort and relaxation. Looking further forw ard, Qantas w ill take delivery of 12 Airbus A380 aircraft from 2006. These aircraft w ill revolutionise international air travel and offer even greater personal space and comfort. AUSTRALIAN AIRLINES A new concept in international air travel...

  • Page 15
    ...betw een Australia and the United Kingdom. The arrangement also gives Qantas customers access to codeshared flights operated by British Airw ays across the United Kingdom and Europe. Qantas and British Airw ays continued to coordinate sales and marketing activities w orldw ide and to share all costs...

  • Page 16
    ... for travel to Australia from foreign markets; the airline continued its support for the Federal Government's See Australia domestic tourism initiative, w hich encourages Australians to holiday in their ow n country; and Qantas w as again the major sponsor of this year's Australian Tourism Exchange...

  • Page 17
    ...the day before travel for all fares, and right up to departure for flexible fares. The new domestic fare structure complements significant enhancements to the qantas.com internet site, w ith a booking engine that has made it faster to book online, and w hich ensures customers have access to the full...

  • Page 18
    ... departure gates nearest to airport security screening and Qantas Club lounges; complimentary new spapers for early morning flights; dedicated baggage carousels; and free bar service after 4.00pm. Dash 8 line maintenance facilities in M ildura, Sydney, Brisbane and M elbourne; and a Boeing 717...

  • Page 19
    ...at all major Australian airports, including a dedicated express and mail handling unit in Sydney. Qantas Freight is an industry leader in e-commerce, w ith the majority of bookings now made online, and a range of services on hand to provide fast and easy access to accurate information on w orldw ide...

  • Page 20
    ...Qantas Flight Catering Limited (QFCL) and Caterair Airport Services Proprietary Limited (Caterair). QFCL has catering centres in five Australian ports - Sydney, M elbourne, Brisbane, Adelaide and Perth. Caterair has catering centres in Cairns and Sydney and is a joint venture w hich is fully managed...

  • Page 21
    ... cater for grow th of the Qantas fleet. Line maintenance hangars w ere also acquired in Brisbane and Adelaide over the last year to support future fleet grow th. Qantas' engineering and maintenance is currently in the advanced stages of planning to provide future maintenance support for new aircraft...

  • Page 22
    ...; delivery of the first Qantas Airbus aircraft, an A330-200, in December 2002. Qantas now has four A330-200s in service and the A330 fleet w ill increase to 13 over the next three years. The Airbus A330 offers the flexibility to meet changing requirements in both domestic and international markets...

  • Page 23
    ...22 21 14 4 15 33 Total Qantas Fleet 140 56 196 * includes 4 x Boeing 767-300ERs operated by Qantas subsidiary Australian Airlines Betw een 30 June 2003 and the date of this annual report, an additional tw o Boeing 747-400ERs, one Boeing 737-800 and tw o de Havilland Dash 8-Q300s have joined the...

  • Page 24
    ... implemented: the eQ Program, w hich provides Qantas w ith new human resources, finance, payroll, purchasing and customer systems to help increase productivity and efficiency. eQ uses a managed service model that involves Qantas staff w orking closely w ith IBM Global Services Australia (w hich is...

  • Page 25
    ... and community groups, implementing online environmental training for staff and developing further w aste management initiatives. CREDIT RISK Credit risk arises primarily from financial instruments and security deposits entered into as part of long term aircraft financing structures and long term...

  • Page 26
    ... of corporate social responsibility. During the year, Qantas acted quickly to assist customers and other Australians in need on numerous occasions. The airline is a proud financial and hands on supporter of a w ide range of community, arts and sporting organisations, in keeping w ith the company...

  • Page 27
    ... Foundation CARE Australia M ission Australia Spinal Injury Research Australian Formula One Grand Prix Starlight Tennis Cup National Rugby League 75th Anniversary Re-enactment of the first trans-Pacific Flight Landcare Australia Clean Up Australia Leaders for Indigenous Employment program...

  • Page 28
    ... Chief Executive Officer in M arch 2001 M ember of the Safety, Environment & Security Committee and Chairman of a number of controlled entities of Qantas Director of Leighton Holdings Limited and Air Pacific Limited M ember of the International M arketing Institute of Australia M ember of the Boards...

  • Page 29
    ... of M anagement Limited, the Great Barrier Reef Research Foundation and the Salvation Army Advisory Board John Borghetti Executive General M anager Sales and M arketing Kevin Brown Executive General M anager Human Resources Paul Edwards Executive General M anager Airline Strategy and Netw ork...

  • Page 30
    ...the market and shareholders are fully informed of material developments recognises the legitimate interests of stakeholders a Qantas Non-Executive Director w ill be considered to be independent if they: are not a substantial shareholder of Qantas, or an officer of, or otherw ise associated directly...

  • Page 31
    ...approve the strategy and financial plan for the next financial year STANDARDS annual review of Board performance active participation by all Directors at all meetings open access to information regular management presentations and visits to interstate/offshore operations Chief Executive Officer and...

  • Page 32
    ... w ebsite all equity-based executive remuneration made in accordance w ith plans approved by shareholders formal Continuous Disclosure Policy - ensures compliance w ith the Listing Rules and Corporations Act and that all shareholders and the market has equal access to material information. A copy of...

  • Page 33
    ...ith the realisation of the short, medium and long term strategic objectives approved by the Board. CONCESSIONARY TRAVEL BENEFITS, SERVICE PAYMENTS AND RETENTION ARRANGEMENTS Concessionary travel benefits are available to executives w ithin Qantas. This travel is on a sub-load (standby) basis. There...

  • Page 34
    ... M anpow er 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 Capacity hire Other Share of net profit of associates Expenditure 2,689.2 608...

  • Page 35
    ... and analysis of the statement of cash flows Notes to the financial statements 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Basis of preparation of the concise financial report Change in accounting policies Revenue from ordinary activities Retained profits Dividends Total equity reconciliation Segment information...

  • Page 36
    ... course of the financial year w ere the operation of international and domestic air transportation services, the sale of w orldw ide and domestic holiday tours, and associated support activities including information technology, catering, ground handling and engineering and maintenance. There w ere...

  • Page 37
    Spirit of Australia page 35 DIRECTORS' REPORT continued for the year ended 30 June 2003 DIRECTORS' INTERESTS AND BENEFITS Particulars of Directors' interests in the share capital of Qantas at the date of this Report are as follow s: Ordinary Shares Directors M argaret Jackson Geoff Dixon 1 ...

  • Page 38
    ...during the year includes limited free air travel for recreational purposes. Non-Cash Benefits are included in remuneration on a cost to the company basis as incurred. The cost of travel benefits includes the incremental cost of providing the flight and the associated Fringe Benefits Tax. Short-Term...

  • Page 39
    Spirit of Australia page 37 DIRECTORS' REPORT continued for the year ended 30 June 2003 NON-VESTED REMUNERATION Long-Term Incentive Plans Qantas Long-Term Incentive Deferred Share Plan (LTIDSP) During the year, Executive Directors and Senior Executives w ere granted Qantas shares under the ...

  • Page 40
    ... for the payment of a bonus on the completion of five years service. This bonus is payable w hen the Executive Director or Senior Executive ceases employment w ith the Qantas Group and is included in remuneration at that time. Post-Retirement Benefits A limited number of free of charge flights are...

  • Page 41
    ...' and Officers' insurance policies are not disclosed, as such disclosure is prohibited under the terms of the contracts. ROUNDING Qantas is a company of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance w ith that Class Order, amounts in the Concise Financial Report...

  • Page 42
    ... M anpow er 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 Capacity hire Other# Share of net profit of associates Expenditure 3,017.7 546...

  • Page 43
    ... by Qantas Holidays, QantasLink and Qantas Flight Catering. Australian Airlines, w hich commenced operations during the year, recorded an EBIT loss $14.7 million after being severely impacted by the effects of the SARS virus on international air travel in the final quarter. REVIEW OF SALES AND...

  • Page 44
    ... depreciation due to new aircraft deliveries and the w rite dow n of the 767-200 fleet, higher manpow er costs follow ing the settlement of Enterprise Bargaining Agreements (EBAs), higher superannuation contributions, and redundancy costs arising from the reorganisation program announced in April...

  • Page 45
    ... Australia page 43 STATEMENT OF FINANCIAL POSITION as at 30 June 2003 Qantas Group Notes 2003 $M 2002 $M CURRENT ASSETS Cash Receivables Net receivables under hedge/sw ap contracts Inventories Other 121.9 2,867.0 330.9 430.3 204.3 3,954.4 112.5 2,386.6 697.7 385.4 173.5 3,755.7 Total current...

  • Page 46
    ... a result of the significant capital investment in product and fleet, partially offset by strong operating cash flow s and equity raisings. Gearing is determined by dividing the book value of the Qantas Group's net debt (short and long-term plus the present value of non-cancellable operating leases...

  • Page 47
    Spirit of Australia page 45 STATEMENT OF CASH FLOWS for the year ended 30 June 2003 Qantas Group 2003 $M 2002 $M CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations Cash payments in the course of operations Interest received Borrow ing costs paid Dividends received ...

  • Page 48
    2003 Qantas Annual Report page 46 DISCUSSION AND ANALYSIS OF THE STATEMENT OF CASH FLOWS for the year ended 30 June 2003 For the purposes of the Statement of Cash Flow s, cash includes cash at bank and on hand, bank overdrafts, cash at call, short-term money market securities and term deposits....

  • Page 49
    ...at each reporting date, not w age and salary rates current at reporting date. The initial adjustments to the Consolidated Financial Statements as at 1 July 2002 as a result of this change are: $5.3 million increase in provision for employee benefits; $3.7 million decrease in opening retained profits...

  • Page 50
    ... Report page 48 NOTES TO THE FINANCIAL STATEMENTS continued for the year ended 30 June 2003 Qantas Group 2003 $M 2002 $M 3. Revenue from ordinary activities REVENUE FROM OPERATING ACTIVITIES Sales and operating revenue Related parties - associates - other related parties Other parties Dividend...

  • Page 51
    Spirit of Australia page 49 NOTES TO THE FINANCIAL STATEMENTS continued for the year ended 30 June 2003 5. Dividends Dividends recognised in the current year by Qantas are: Type Cents per Share Total Amount $M Date of Payment Franked Tax Rate % Percentage Franked % 2003 Interim - ordinary...

  • Page 52
    ..., fully paid 3,757.9 2,946.6 7. Segment information Qantas operates predominantly in three business segments, being Aircraft Operations, Tours and Travel, and Catering: Aircraft Operations - operation of aircraft for passenger and freight services. Tours and Travel - sale of packaged holidays...

  • Page 53
    ... do so. Qantas Group 2003 $M 2002 $M ANALYSIS OF TOTAL REVENUE BY GEOGRAPHIC REGION PASSENGER, FREIGHT AND OTHER SERVICES REVENUE Australia United Kingdom and Europe Japan South-East Asia/North-East Asia The Americas and the Pacific New Zealand Other regions (Africa and South America) 6,449.0 904...

  • Page 54
    ... acquisition of aircraft, the Qantas Group has provided certain guarantees and indemnities to various lenders and equity participants in leveraged lease transactions. In certain circumstances, including the insolvency of major international banks, Qantas Group may be required to make payments under...

  • Page 55
    Spirit of Australia page 53 NOTES TO THE FINANCIAL STATEMENTS continued for the year ended 30 June 2003 Qantas Group 2003 $M 2002 $M 9. Capital expenditure commitments Capital expenditure commitments contracted but not provided for in the Financial Statements: Aircraft Building w orks Other 5,...

  • Page 56
    ... Geoff Dixon Chief Executive Officer INDEPENDENT AUDIT REPORT ON THE CONCISE FINANCIAL REPORT to the Members of Qantas Airways Limited SCOPE We have audited the Concise Financial Report of Qantas Airw ays Limited (" the Company" ) and its controlled entities for the financial year ended 30 June...

  • Page 57
    ... is no current on-market buy-back. TWENTY LARGEST SHAREHOLDERS Shareholders British Airw ays Investments (Australia) Pty Ltd J P M organ Nominees Australia Ltd Westpac Custodian Nominees Ltd National Nominees Limited ANZ Nominees Limited RBC Global Services Australia Nominees Pty Limited Citicorp...

  • Page 58
    ... 31 December Net profit/(loss) attributable to members of the Company for the six months to 30 June SHARE INFORMATION Earnings per share Dividends per share Dividend payout ratio Share price - high Share price - low Share price - closing Weighted average number of ordinary shares Net tangible asset...

  • Page 59
    Spirit of Australia page 57 QANTAS GROUP FIVE-YEAR SUMMARY continued for the year ended 30 June Unit 2003 2002 2001 2000 1999 STATEMENT OF FINANCIAL POSITION STATISTICS Net debt on balance sheet Net debt including off balance sheet debt Net debt including off balance sheet debt and revenue...

  • Page 60
    ... Qantas Centre Level 9, Building A 203 Coward Street Mascot NSW 2020 Australia Telephone Facsimile Website 61 2 9691 3636 61 2 9691 3339 www.qantas.com QANTAS SHARE REGISTRY Level 8 580 George Street Sydney NSW 2000 Australia or Locked Bag A14 Sydney South NSW 1235 Australia Free call International...