Qantas 2009 Annual Report Download

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Table of contents

  • Page 1

  • Page 2

  • Page 3
    ...'s Report Our People Our Network Our Fleet Qantas QantasLink Two Brands Jetstar Alliances Online Customer Journey Frequent Flyer Jetset Travelworld Group Freight Sustainable Transformation Safety and Security Environment and Climate Change Community Board of Directors Corporate Governance Statement...

  • Page 4
    ... its industry leadership in domestic on-time performance. In March 2009, on the basis of its preliminary investigations, the Australian Transport Safety Bureau found the inflight incidents were related to manufacturing faults beyond Qantas' control. And in June 2009, monthly customer satisfaction...

  • Page 5
    ... economic downturn. Medium term (up to three years) returning profitability to pre-crisis levels and generating strong cash flow to enable investment in fleet renewal and growth. Longer term (beyond three years) generating sustainable returns through the economic cycle. 3 Qantas Annual Report 2009

  • Page 6
    ... Fares Airlines Sustainable Returns to Shareholders Safety is our First Priority Unwavering commitment to world's best safety practices and reporting Right Aircraft Right Routes Fleet renewal delivering one of the world's most effective fleets flying on an optimal route network Customer Service...

  • Page 7
    ... Team Alan Joyce Chief Executive Officer and Managing Director Colin Storrie Chief Financial Officer and Finance Director Bruce Buchanan Chief Executive Officer Jetstar David Epstein Group Executive Government and Corporate Affairs Lesley Grant Executive Manager Qantas Customer and Marketing...

  • Page 8
    ... Earnings per share 5.6 cents Operating cash flow $1.1 billion Cash held at year end $3.6 billion New financing in place $3.4 billion CASH HELD $M 05 06 07 08 09 2,599 3,617 1,904 2,902 3,363 SALES AND OTHER INCOME $M 05 06 07 08 09 12,564 13,661 15,060 15,627 14,552 6 Qantas Annual Report 2009

  • Page 9
    PROFIT BEFORE RELATED INCOME TAX EXPENSE $M 05 06 07 08 09 181 671 965 1,408 914 CASH FLOWS FROM OPERATING ACTIVITIES $M 05 06 07 08 09 1,129 2,128 2,102 2,026 2,424 7 Qantas Annual Report 2009

  • Page 10
    ... scale, deep experience and exceptional people. 334,000 ï¬,ights over 530 million kilometres* 38 million passengers carried 36 million meals prepared 18 per cent more Frequent Flyer points redeemed 575,000 tonnes of freight handled 490,000 engineering tasks undertaken 8 Qantas Annual Report 2009

  • Page 11
    9 Qantas Annual Report 2009

  • Page 12
    10 Qantas Annual Report 2009

  • Page 13
    ... equivalent of a further 1,250 full time positions. Executive pay has been frozen. People This year the Qantas Group underwent major change in its senior management, with the appointment of Chief Executive Officer Alan Joyce and a new management team. The team has shown great resolve and judgement...

  • Page 14
    ... last year we opened our $10 million Centre of Service Excellence to ensure our people deliver consistently excellent service. The introduction of the A380 during the year was a clear success, achieving exceptional customer satisfaction ratings. Jetstar is the Qantas Group's low fares brand and...

  • Page 15
    13 Qantas Annual Report 2009

  • Page 16
    "Our Centre of Service Excellence helps us to perform consistently at our best, and this means higher levels of service for our customers." Our People QANTAS FLIGHT ATTENDANT CASEY BEAZLEY 14 Qantas Annual Report 2009

  • Page 17
    ... and Industry Thought Leader for Executive Manager Suzanne Young. These awards recognised outstanding work delivering the full range of in-house services that support all Qantas people and help business units perform better. Embracing Diversity As a major Australian employer, the Qantas Group seeks...

  • Page 18
    ... Qantas operates more than 4,700 ï¬,ights each week to 72 destinations in Australia and around the world - to every continent but Antarctica. 16 Qantas Annual Report 2009 The Jetstar brands operate around 1,900 ï¬,ights each week to 50 destinations in Australia, New Zealand, Asia and the United...

  • Page 19
    ... Auckland Buenos Aires Cairns Townsville Noumea Sao Paulo Nadi Papeete Dedicated freighter services offer wide-body cargo capacity to key ports in Asia, the Pacific and North America. 17 Qantas Annual Report 2009 Routes operated by Qantas' partner airlines, including codeshare services, provide...

  • Page 20
    ... network. The arrival of this new aircraft type will allow for the retirement of Qantas' B767 fleet. The expected range of the B787s means that Qantas and Jetstar can fly more point-to-point services without the need to operate via hubs, a key advantage for 'end of the line' carriers. In 2008/09...

  • Page 21
    ... A380-800 3 B747-400ER 6 B747-400 24 B767-300ER 29 A330-300 10 A330-200* 6 A330-200* 6 A321-200 4 A320-200 33 B737-800 38 B737-400 21 B737-300 3 B717-200 11 Q400 14 Dash 8 21 *A330-200 aircraft are operated by both Qantas and Jetstar 19 Qantas Annual Report 2009

  • Page 22
    ...from its two brand strategy, Group - from Engineering, Airports and IT with Jetstar commencing services in select through to Cabin Crew, Flight Training and leisure markets. Product Development. China: Sydney-Shanghai services increased On 30 September 2008, the first Qantas to daily; withdrawal of...

  • Page 23
    ... flight for the return trip to Rome of His Holiness Pope Benedict XVI in July 2008, as part of our support for World Youth Day. Qantas also flew more than 20,000 pilgrims to Sydney for the event and operated eight special services from Rome and Los Angeles to Sydney. And in August 2008, Qantas...

  • Page 24
    ... for customer meetings in domestic terminals around the country, with services benchmarked against premium hotel providers. After the initial success of the Sydney and Melbourne Meeting Rooms, facilities opened in Brisbane in October 2008 and in Adelaide in July 2009." Qantas MANAGER QANTAS MEETING...

  • Page 25
    ...product offering - from the seats and curtains to the crockery and cutlery - inspired by Qantas Creative Director and world-renowned industrial designer Marc Newson. Customer research shows satisfaction with the A380 is very high at 84 per cent. From late 2009, new B737-800 aircraft with Marc Newson...

  • Page 26
    ... 2008. Other terminal works include major developments at Cairns and Gold Coast Airports to improve the check-in, baggage collection and departure lounge facilities used by Jetstar. For the entry into service of the new A380, Qantas Airports commissioned two additional gates at Sydney International...

  • Page 27
    ... 66 engineering apprentices in 2008/09. Associated Businesses delivers specialist services to the Qantas Group and third party customers. With annual revenues of $117 million, Qantas Defence Services (QDS) provides expert support for the Royal Australian Air Force's (RAAF) C130 Hercules aircraft at...

  • Page 28
    ... 2009. The QantasLink fleet of B717 aircraft continues to provide essential capacity in Western and Central Australia and North Queensland, servicing mining communities, coastal and tourist destinations. AdelaideKalgoorlie B717 services were introduced in March 2009. 26 Qantas Annual Report 2009

  • Page 29
    ...the Jetstar CEO and other senior executives. It is responsible for managing the Group's portfolio of flying assets and allocating capital to achieve the highest returns for shareholders and the best outcomes for customers. The current economic climate has left most conventional full-service airlines...

  • Page 30
    JETSTAR FLIGHT ATTENDANT DANIELLA ECKERT "Washing aircraft reduces drag, fuel consumption and emissions. We aim to conserve water wherever possible and the Qantas Group has set a water reduction target of 25 per cent by 2011." 28 Qantas Annual Report 2009

  • Page 31
    ... the Qantas Group's low fares airline and the world's largest low fares long haul carrier. It has achieved exceptional growth over five years and cemented its lowest fares market position through its direct sales model, self-service and user-pays offerings, simplified fleet, and lean and accountable...

  • Page 32
    Jetstar Jetstar Passenger Revenue Split 2008/09 International Domestic 43% 57% 30 Qantas Annual Report 2009

  • Page 33
    ... Gold Coast. Jetstar replaced Qantas in the domestic New Zealand market in June 2009, operating 84 services a week between Auckland, Christchurch, Queenstown and Wellington and reshaping the market with one-way launch fares from NZ$29 and a special sale of NZ$1 seats. International Jetstar's growth...

  • Page 34
    ... interline partner in March 2009; followed by Etihad in April; and Air Tahiti Nui, Air Calin, Royal Jordanian, Qatar and Air Pacific. Jetstar began codesharing with Japan Airlines on Osaka-Gold Coast-Sydney from October 2008 and Tokyo-Cairns services from December 2008. 32 Qantas Annual Report 2009

  • Page 35
    ...bookings and all customers can retrieve flight information and check fares. Jetstar was one of the world's first airlines to trial mobile phone SMS boarding pass technology for its Australian and New Zealand domestic services, developed by Jetstar and the Sissit Group. Jetstar's 'Fifth Birthday Sale...

  • Page 36
    ...Flyer points - Plan your trip with Travel Insider on qantas.com - 'Advance Seat Selection' available online to Platinum and Gold Frequent Flyers on international flights and to all travellers on domestic flights - Purchase an exit row seat for selected Qantas international flights* - Check-in online...

  • Page 37
    ... Economy seat won Australia's premier international design award in June 2009 15.05 3K675 Singapore-Penang - A network of 17 Asian destinations available through Jetstar Asia from its Singapore hub - Seamless transfers from Qantas to Jetstar Asia from Singapore and Bangkok 35 Qantas Annual Report...

  • Page 38
    ... expansion of its program partners, and is planning investments in systems and data analytics to support its anticipated growth in members. A minority Australian initial public offering of the Qantas Frequent Flyer business has now been ruled out. Frequent Flyer Key Figures 2008/09 2007/08 Revenue...

  • Page 39
    ... Group partnership, by using a Qantas Frequent Flyer Direct Earn card and a Woolworths Everyday Rewards card, an average family of four could clock up enough points each year for a return flight from Melbourne to the Gold Coast or from Sydney to Hamilton Island." 37 Qantas Annual Report 2009

  • Page 40
    ... is on managing through the crisis and positioning the business for recovery by building scale, online presence and cost competitiveness. 38 Qantas Annual Report 2009 Qantas Freight Enterprises (QFE) markets the freight capacity of all Qantas and Jetstar international aircraft and a fleet of three...

  • Page 41
    HEAD OF QANTAS FREIGHT COMMERCIAL THEO TRIANTAFILLIDES "This year, Qantas Freight began replacing aluminium cargo containers with a lightweight Twintex version, which will save more than 20,000 tonnes of CO2 emissions over seven years." 39 Qantas Annual Report 2009

  • Page 42
    Sustainable Transformation 9 40 Qantas Annual Report 2009

  • Page 43
    ... our customers and the wider community. Sustainability is an important part of the Qantas Group's Risk Management Framework and is governed by the Board. The Corporate Governance Statement (page 52 to 56) provides further information on governance structures and risk management. Selected performance...

  • Page 44
    ...analysis of key performance indicators, frequency rate trends and updated risk management plans. As Chairman of the Qantas Airlines Safety Committee and the Qantas AOC holder, Alan Joyce leads a monthly review of safety issues. A robust system is in place for reporting safety concerns, with a strong...

  • Page 45
    QANTAS CHIEF PILOT CAPTAIN PETER WILSON "Each year our 2,200 Qantas pilots undergo more than 33,000 hours of simulator training and assessment to maintain our exemplary standards of flying safety." 43 Qantas Annual Report 2009

  • Page 46
    Safety and Security 44 Qantas Annual Report 2009

  • Page 47
    ... in India and Thailand and more than 1,000 passengers travelled from Thailand to Singapore on special relief flights. Qantas has a dedicated medical services team which provides expert advice on aviation and occupational health issues for passengers and employees. 45 Qantas Annual Report 2009

  • Page 48
    ...reporting framework has been established and data will be reported in 2009/10. **Performance against baseline year of 2008/09 in alignment with the International Air Transport Association's agreed improvement target of an average of 1.5% per annum between 2009 and 2020. 46 Qantas Annual Report 2009

  • Page 49
    ... Qantas. - The inaugural A380 service between Los The Qantas Group continues to press for harmonised and equitable global climate Angeles and Melbourne on 20 October 2008 flew a 'perfect flight path gate to gate', saving change policies to reduce competitive distortions between airlines, industries...

  • Page 50
    ... employees and the Group of $481,000, largely under the auspices of the Qantas Foundation - A Qantas $100,000 air travel fund for drawing down by the Victorian Government - Qantas and Jetstar flights for the Country Fire Association and to transport interstate Emergency Services personnel to assist...

  • Page 51
    ..., the Royal Flying Doctor Service of Australia was granted $100,000. Also, Landcare Australia and the Great Barrier Reef Foundation each received $100,000 to combat water degradation and coral reef bleaching as part of the Foundation's Environment Sustainability Fund." 49 Qantas Annual Report 2009

  • Page 52
    ... Sales, Marketing, IT, Network Planning, Operations Research, Revenue Management and Fleet Planning. Age: 43 Richard Goodmanson BEng(Civil), BCom, BEc, MBA Independent Non-Executive Director Richard Goodmanson was appointed to the Qantas Board in June 2008. He is a Member of the Qantas Remuneration...

  • Page 53
    ... Member of the Federal Government's Australian Financial Centre Forum. Mrs Cross was previously Chairman of Qantas Superannuation Limited and Deputy Chairman of Victoria's Transport Accident Commission. She has served on a variety of publicly listed, government, university and private company boards...

  • Page 54
    ... performance and executive remuneration; • monitoring the Group's system of risk management and internal compliance and control; and • ensuring that the market and shareholders are fully informed of material developments. The CEO is responsible for the day-to-day management of the Qantas...

  • Page 55
    ... of the Qantas website; and • meets as required to assist the Board in fulfilling its corporate governance responsibilities in regard to: âˆ' Board appointments and performance; âˆ' Directors' induction program; âˆ' Committee Membership; âˆ' Executive Management succession planning, appointments...

  • Page 56
    ... statements; • conflict of interest; • use of inside information; and • director and employee share trading. The Qantas Code of Conduct & Ethics is available on the Corporate Governance section of the Qantas website. The Qantas Code of Conduct & Ethics contains Qantas' Share Trading Policy...

  • Page 57
    ...their area of responsibility each quarter. Internal Audit and Executive Management report to the Board and relevant Board Committees that there is an effective risk management process in place for the financial period and up to the date of signing the Financial Report. 55 Qantas Annual Report 2009

  • Page 58
    ... across Qantas. The Audit Committee reviews and approves the plan on a bi-annual basis. Audit projects performed by Internal Audit assist the Audit Committee to promote sound risk management and good corporate governance. Internal Audit assesses the design and operating effectiveness of controls for...

  • Page 59
    ... Summary for the year ended 30 June 2009 Qantas Group CONDENSED INCOME STATEMENT Net passenger revenue Net freight revenue Other Sales and other income Manpower and staff related Aircraft operating variable Fuel Ineffective and non-designated derivatives Share of net loss/(profit) of associates...

  • Page 60
    ... both domestic and international markets as well as strong competition. • A number of significant items were included in the results for the year. These items included a profit on sale of Qantas Holidays of $86 million, a change in Frequent Flyer accounting estimates which increased revenue by...

  • Page 61
    ...Qantas Group increased by $30 million to $5.8 billion at year end. The major movements are discussed below. REVIEW OF TOTAL ASSETS • Cash and cash equivalents have increased by $1.0 billion, predominantly due to the capital raised in February 2009, new debt financing and effective working capital...

  • Page 62
    ...adversely affected costs. JETSET TRAVELWORLD GROUP Revenue Underlying EBIT EBIT Total assets 2009 $M 145 16 16 364 2008 $M 99 19 19 240 Increase/ (Decrease) % 46.5 (15.8) (15.8) 51.7 • Jetset Travelworld Group became part of the consolidated group on 25 July 2008. The prior year comparatives...

  • Page 63
    Financial Report for the year ended 30 June 2009 61 Qantas Annual Report 2009

  • Page 64
    ...to Controlled Entities as at 30 June 2009 33. Deed of Cross Guarantee 34. Financial Risk Management 35. Events Subsequent to Balance Date DIRECTORS' DECLARATION INDEPENDENT AUDITOR'S REPORT SHAREHOLDER INFORMATION SUSTAINABILITY STATISTICS AND POLICIES (INCLUDING INDEPENDENT REVIEW REPORT) FINANCIAL...

  • Page 65
    ... Qantas Group during the course of the year were the operation of international and domestic air transportation services, the provision of time definite freight services, the operation of a Frequent Flyer loyalty program, the sale of international and domestic holiday tours and associated support...

  • Page 66
    Directors' Report for the year ended 30 June 2009 DIRECTORSHIPS OF LISTED COMPANIES HELD BY MEMBERS OF THE BOARD AS AT 30 JUNE 2009 - FOR THE PERIOD 1 JULY 2006 TO 30 JUNE 2009 Leigh Clifford Qantas Airways Limited Barclays Bank plc Rio Tinto Limited 1 Rio Tinto plc Alan Joyce Qantas Airways ...

  • Page 67
    ... Manager of Company Administration Services; and • admitted as a solicitor in 2003 and undertaking Chartered Secretaries Australia's Graduate Diploma in Applied Corporate Governance. DIRECTORS' INTERESTS AND BENEFITS Particulars of Directors' interests in the issued capital of Qantas at the date...

  • Page 68
    ... Rights to be converted to Qantas shares. To the extent performance hurdles are achieved upon testing over the next two years, the remaining balance may be called for. 4. Shareholders approved this award on 28 November 2008 and the Rights were awarded on 4 May 2009. 66 Qantas Annual Report 2009

  • Page 69
    Directors' Report for the year ended 30 June 2009 RIGHTS Performance Rights are awarded to select Qantas Group Executives under the Qantas DSP. Refer to pages 71 and 72 for further details. The following table outlines the movements in Rights during the year: 2009 Performance Rights Reconciliation ...

  • Page 70
    ... Unit cost; • Non-financial measures. Performance Rights are awarded, with vesting determined by performance against three year financial targets: • Total Shareholder Return (TSR) vs S&P/ASX100 index; • Earnings Per Share (EPS) performance. In fulfilling its role, the Remuneration Committee...

  • Page 71
    ... permanent disablement), then shares are released, otherwise shares are forfeited on termination. Year 3 • Any Shares awarded at the end of year 1 vest at the end of year 3. • Shares may then be sold, subject to compliance with the employee Share Trading Policy. 69 Qantas Annual Report 2009

  • Page 72
    ...: Customer Service Qantas performance in Skytrax World Airline Awards. Skytrax is a global, independent passenger survey of airline standards. In the 2009 survey, Qantas ranked sixth overall out of the 203 airlines rated by Skytrax. Punctuality is measured against on-time departures and arrivals...

  • Page 73
    ... performance is an important part of the approach to performance management at Qantas. At the beginning of each year, KPIs for individual Executives are set in the areas of customer service, operational performance, people achievements and financial performance. At the end of the year, performance...

  • Page 74
    ... airline industry, Directors and a small number of Senior Executives and their specified direct family members or parties are entitled to a number of trips for personal purposes at no cost to the individual. Eligibility for new participants is generally restricted to members of the Qantas Executive...

  • Page 75
    ... Executive ceases employment with the Qantas Group. The grant date and number of deferred shares awarded to Key Management Personnel are outlined on pages 132 and 133. PSP Balanced Scorecard Category Customer Service Performance Measure Qantas performance in Skytrax World Airline Awards. Skytrax...

  • Page 76
    ... page 76. 2. Mr Clifford's 2008 remuneration reï¬,ects his appointment as a Non-Executive Director on 9 August 2007 and as Chairman on 14 November 2007. 3. The Employee Share Ownership Plan allows Non-Executive Directors to purchase shares at no discount to market price on a salary sacrifice basis...

  • Page 77
    ...,960 n/a n/a 108,125 1,665,184 - 3,852,412 David Cox 3 Executive Manager Qantas Engineering 2009 Curtis Davies 2, 3 Executive Manager Services 2008 Grant Fenn 4 Group Executive Strategy & Investments Total - Executives not continuing at 30 June 2009 2008 174,830 920,335 210,615 1,593,305 748,152...

  • Page 78
    ... share price used to determine the accounting value of grants issued under the Retention Plan to Executive Directors in 2008 was $5.82 (and to other Executives in 2008 was $5.45). The supplemental market value at year end of sharebased payments is based on the closing share price at 30 June 2009...

  • Page 79
    Directors' Report for the year ended 30 June 2009 Remuneration Report (Audited) continued CHANGES TO QANTAS MANAGEMENT TEAM 2008/09 was a year of generational change in the Qantas management team, with the new leadership team comprising a mix of internal promotions and external hires. Mr Dixon ...

  • Page 80
    ...682 114,638 Information on vesting and forfeiture of performance related remuneration during the year is provided on pages 80 and 81. SUMMARY OF PERFORMANCE CONDITIONS Link between Remuneration Policy and Qantas' Performance Relationship between Fixed Annual Remuneration and Qantas' Performance An...

  • Page 81
    ... to one international trip and three domestic trips for each year of service. Executive Directors The key contract and other terms of the Executive Directors, including 2009/10 STIP and LTIP participation, are set out below: Contract Details Contract Length Fixed Annual Remuneration Alan Joyce...

  • Page 82
    .... The Rights were awarded on 4 May 2009 with a nil exercise price. All Rights are redeemable on a one-for-one basis for Qantas shares, subject to the achievement of the performance hurdle. The weighted average fair value of Rights granted during the year was $1.64. 2009 Number of Rights Alan Joyce...

  • Page 83
    ... under the relevant equity plan, participants are free to deal with their shareholdings subject to the Qantas Code of Conduct & Ethics and Employee Share Trading Policy. In April 2008, the Board amended the Qantas Code of Conduct & Ethics to prohibit certain Nominated Qantas Employees from entering...

  • Page 84
    Directors' Report for the year ended 30 June 2009 ENVIRONMENTAL OBLIGATIONS The Qantas Group's operations are subject to a range of Commonwealth, State, Territory and international environmental legislation. The Qantas Group is committed to being environmentally responsible with high standards of ...

  • Page 85
    ...KPMG Sydney, 31 August 2009 Martin Sheppard Partner ROUNDING Qantas is a company of a kind referred to in Australian Securities and Investments Commission (ASIC) Class Order 98/100 dated 10 July 1998 and in accordance with the Class Order, amounts in this Directors' Report and the Financial Report...

  • Page 86
    Income Statements for the year ended 30 June 2009 Qantas Group SALES AND OTHER INCOME Net passenger revenue Net freight revenue Tours and travel revenue Contract work revenue Other Sales and other income EXPENDITURE Manpower and staff related Aircraft operating variable Fuel Selling and marketing ...

  • Page 87
    ...liabilities Provisions Deferred tax liabilities Deferred lease benefits/income Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Treasury shares Reserves Retained earnings Equity attributable to members of Qantas Minority interest Total equity 23 23 4,729 (58) 7 1,043...

  • Page 88
    ...QANTAS GROUP $M al y In Balance as at 1 July 2007 4,481 Profit for the year - Share-based payments - Transfer of hedge reserve to the Income Statement1 - Recognition of effective cash ï¬,ow hedges on capitalised assets - Effective portion of changes in fair value of cash ï¬,ow hedges - Foreign...

  • Page 89
    ...hedges on capitalised assets Effective portion of changes in fair value of cash ï¬,ow hedges Total recognised income and expense Shares bought back Own shares acquired Shares vested to employees Dividends declared Balance as at 30 June 2008 Profit for the year Share-based payments Transfer of hedge...

  • Page 90
    ... 2,441 3,404 - (505) (69) - (825) 342 85 (637) (1,609) (968) 3,409 2,441 1. During the year, 83 million (2008: nil) shares were issued under the Dividend Reinvestment Plan. Dividends settled in shares rather than cash during the year totalled $236 million (2008: nil). 88 Qantas Annual Report 2009

  • Page 91
    ...company limited by shares, incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX) and which is subject to the operation of the Qantas Sale Act as described in the Corporate Governance Statement. The consolidated Financial Report of Qantas for the year ended...

  • Page 92
    ...ficant effect on the Financial Report and estimates with a significant risk of material adjustment in the next year are highlighted in the specific accounting policies detailed below. Change in accounting estimates - Qantas Frequent Flyer (i) Fair value of points On 1 July 2008 Qantas Frequent...

  • Page 93
    Notes to the Financial Statements for the year ended 30 June 2009 1. Statement of Significant Accounting Policies continued (E) FOREIGN CURRENCY TRANSACTIONS Transactions Foreign currency transactions are translated to Australian dollars at the rates of exchange prevailing at the date of each ...

  • Page 94
    ... for the year ended 30 June 2009 1. Statement of Significant Accounting Policies continued (G) REVENUE RECOGNITION Passenger, Freight and Tours and Travel Revenue Passenger and freight revenue is included in the Income Statement at the fair value of the consideration received net of sales discount...

  • Page 95
    ...ows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash ï¬,ows discounted at the original effective interest rate. 93 Qantas Annual Report 2009

  • Page 96
    Notes to the Financial Statements for the year ended 30 June 2009 1. Statement of Significant Accounting Policies continued (P) PROPERTY, PLANT AND EQUIPMENT Owned Assets Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. ...

  • Page 97
    ... of this liability is based on remuneration wage and salary rates that the Qantas Group expects to pay as at balance date including related on-costs, such as workers' compensation insurance, superannuation and payroll tax. Employee Share Plans The fair value of equity-based entitlements granted to...

  • Page 98
    ...When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. In Qantas' Financial Report, the transactions of the Qantas sponsored employee share plan trust are treated as being executed...

  • Page 99
    Notes to the Financial Statements for the year ended 30 June 2009 2. Change in Accounting Policy On 1 July 2008, the Qantas Group revised its accounting policy in relation to accounting for Tours and travel revenue and cost of goods sold to be reported on a net basis rather than a gross basis. The ...

  • Page 100
    Notes to the Financial Statements for the year ended 30 June 2009 3. Segment Reporting continued Co Q Je an ta sF ts et rp or at Q e/ a Tr ANALYSIS BY BUSINESS SEGMENT 2009 $M Sales and other income External segment revenue Intersegment revenue Total segment revenue Share of net (loss)/profit ...

  • Page 101
    Notes to the Financial Statements for the year ended 30 June 2009 3. Segment Reporting continued Co Q an ta sF Q rp or at Q an e/ ANALYSIS BY BUSINESS SEGMENT 2008 $M Sales and other income External segment revenue Intersegment revenue Total segment revenue Share of net profit/(loss) of ...

  • Page 102
    ..., 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 Other income Tours and travel Contract work Other unallocated Sales and other income Finance income Total income 2009 $M 2008...

  • Page 103
    ... Travel Pty Limited to Jetset Travelworld Ltd. Refer to Note 27 for further details. 2. During the year ended 30 June 2009, the Qantas Group changed its estimate of the fair value of a frequent ï¬,yer point and breakage which resulted in $164 million (Qantas: $157 million) of additional revenue...

  • Page 104
    ... the Financial Statements for the year ended 30 June 2009 5. Net Finance (Costs)/Income Qantas Group Finance income Related parties - associates and jointly controlled entities Unwinding of discount on receivables Other parties - interest income on financial assets measured at amortised cost Total...

  • Page 105
    ...tax expense Income tax using the domestic corporate tax rate of 30 per cent Add/(less) adjustments for (non-assessable income)/non-deductible expenditure: - non-assessable gain on sale of Qantas Holidays Group - non-taxable Australian and foreign dividends - share of net loss/(profit) of associates...

  • Page 106
    ... for the year ended 30 June 2009 7. Auditors' Remuneration Qantas Group 2009 $000 Audit services Auditors of Qantas - KPMG Australia - audit and review of Financial Reports - Qantas - audit and review of Financial Reports - Jetset Travelworld Group - other regulatory audit services Overseas KPMG...

  • Page 107
    ...en ta ge of Fr an d ke % Type 2009 2009 interim 2008 final Total amount 2008 2008 interim 2007 final Total amount No final dividend will be paid in relation to the year ended 30 June 2009. 6.0 17.0 23.0 18.0 15.0 33.0 As at 30 June 2009, Qantas does not have any franking credits available for...

  • Page 108
    Notes to the Financial Statements for the year ended 30 June 2009 11. Receivables Qantas Group CURRENT Trade debtors Controlled entities Associates and jointly controlled entities Other parties Less: impairment losses Other loans Controlled entities - interest-bearing - non-interest-bearing ...

  • Page 109
    ... 2009 $M 159 37 3 199 2008 $M 116 44 3 163 13. Assets Classified as Held for Sale Property, plant and equipment 26 41 23 28 14. Investments Accounted for Using the Equity Method Qantas Group Share of net (loss)/profit of associates and jointly controlled entities included in the Income Statement...

  • Page 110
    ... per cent of this company on 8 April 2009. As a result of the transaction, the Qantas Group gained accounting control (as defined by AASB 127 Consolidated and Separate Financial Statements) of this entity and ceased to equity account for this entity from this date. 108 Qantas Annual Report 2009

  • Page 111
    Notes to the Financial Statements for the year ended 30 June 2009 14. Investments Accounted for Using the Equity Method continued Qantas Group RESULTS OF JOINTLY CONTROLLED ENTITIES Revenues Expenses Profit before related income tax expense Income tax expense Share of net profit of jointly ...

  • Page 112
    Notes to the Financial Statements for the year ended 30 June 2009 16. Property, Plant and Equipment Qantas Group 2009 $M Freehold land - owned At cost Buildings - owned At cost Less: accumulated depreciation Buildings - leased At cost Less: accumulated amortisation Total buildings At cost Less: ...

  • Page 113
    ...Financial Statements for the year ended 30 June 2009 16. Property, Plant and Equipment continued Qantas Group 2009 $M Aircraft spare parts - owned At cost Less: accumulated depreciation 2008 $M Qantas 2009 $M 2008 $M 899 417 482 766 347 419 717 370 347 584 306 278 Aircraft spare parts - leased...

  • Page 114
    ...o O Bo QANTAS GROUP 2009 $M Reconciliations Freehold land - owned Buildings - owned Buildings - leased Total buildings Leasehold improvements Plant and equipment Aircraft and engines - owned Aircraft and engines - hire purchased Aircraft and engines - leased Aircraft and engines - maintenance Total...

  • Page 115
    ... Bo QANTAS 2009 $M Reconciliations Freehold land - owned Buildings - owned Buildings - leased Total buildings Leasehold improvements Plant and equipment Aircraft and engines - owned Aircraft and engines - hire purchased Aircraft and engines - leased Aircraft and engines - maintenance Total aircraft...

  • Page 116
    ... Assets Qantas Group 2009 $M Goodwill At cost Less: accumulated impairment Total goodwill at net book value Airport landing slots At cost Software At cost Less: accumulated amortisation Total software at net book value Brand names and trademarks At cost Customer contracts/relationships At cost...

  • Page 117
    ... 12 month average spot price. The average ï¬,eet age is forecast to remain between 8.5 and 8.9 years and is estimated having regard to the existing contractually committed long-term ï¬,eet plan for the Qantas Group. Discount rate Market share Fuel Currency Fleet age 115 Qantas Annual Report 2009

  • Page 118
    ... controlled entities (2008: nil). Movement in temporary differences during the year Re co e t h nt in e ed em i s t at gn S co m e Re co In Co f s o es on ti ti ti si En ui d cq e A oll r nt O pe gn Cl QANTAS GROUP 2009 $M Inventories Property, plant and equipment Intangible assets Payables...

  • Page 119
    ... to the Financial Statements for the year ended 30 June 2009 18. Deferred Tax Assets and Liabilities continued Movement in temporary differences during the year O pe Re co gn e t h nt in e ed em i s t at gn S co m e Re co In Co f s o es on ti ti ti si En ui d cq e A oll r nt Cl os QANTAS 2009...

  • Page 120
    ...Financial Statements for the year ended 30 June 2009 20. Revenue Received in Advance Qantas Group CURRENT Unavailed passenger revenue Unredeemed frequent ï¬,yer revenue 2009 $M 2,227 882 3,109 NON-CURRENT Unredeemed frequent ï¬,yer revenue 1,232 1,083 1,232 1,083 2008 $M 2,371 896 3,267 Qantas 2009...

  • Page 121
    ...the Financial Statements for the year ended 30 June 2009 22. Provisions Qantas Group CURRENT Dividends Employee benefits - annual leave - long service leave - restructuring Onerous contracts Insurance, legal and other 2009 $M 5 338 40 40 4 80 507 NON-CURRENT Employee benefits - long service leave...

  • Page 122
    ... the Financial Statements as follows: Current Non-current 166 51 (32) 185 80 105 185 Make good on leased assets The Qantas Group has leases that require the asset to be returned to the lessor in certain condition. A provision has been raised for the present value of the future expected cost at lease...

  • Page 123
    ...underlying shares vest in the employee. No gain or loss is recognised in the Qantas Group Income Statement on the purchase, sale, issue or cancellation of Qantas' own equity instruments. Hedge reserve The hedge reserve comprises the effective portion of the cumulative net change in the fair value of...

  • Page 124
    ... the year. Eligible employees may be awarded equity benefits under the Qantas Profitshare Scheme. Further details regarding the operation of equity plans for Executives are outlined in the Directors' Report. The total equity settled share-based payment expense for the year was $59 million (2008...

  • Page 125
    ... days up to and including the date of allocation. Expected dividends are not specifically taken into account when calculating the fair value but are implicit in the weighted average price of Qantas shares. Shares are transferred into the name of the employee and are subject to a three year trading...

  • Page 126
    ...the Balance Sheet, Income Statement and Statement of Changes in Equity. (A) OTHER FINANCIAL ASSETS AND LIABILITIES Qantas Group DERIVATIVES Designated as cash ï¬,ow hedges Designated as fair value hedges De-designated derivatives Not qualifying for hedge accounting Total derivative liabilities Other...

  • Page 127
    ... Component of derivatives not hedge accounted (including time value of options) Ineffective and non-designated derivatives 2009 $M 72 33 105 2008 $M (61) 6 (55) 2009 $M 72 33 105 Qantas 2008 $M (61) 6 (55) 26. Notes to the Cash Flow Statements RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH FROM...

  • Page 128
    ... on 1 July 2008, the contribution of these businesses to the consolidated financial performance would not have been materially different. (B) ACQUISITION - JETSTAR ASIA (ORANGESTAR INVESTMENT HOLDINGS PTE LIMITED AND ITS CONTROLLED ENTITIES) On 8 April 2009, the Qantas Group increased its ownership...

  • Page 129
    ... Carrying values - (49) Jetstar Asia Group Fair value adjust - - Fair value 61 (49) 12 Qantas Group Fair value 68 (78) (10) 28. Commitments (A) FINANCE LEASE AND HIRE PURCHASE COMMITMENTS Qantas Group 2009 $M Included in the Financial Statements as finance lease and hire purchase liabilities...

  • Page 130
    ... Financial Statements Payable Not later than one year Later than one year but not later than five years Later than five years Less: provision for potential under recovery of rentals on unused premises available for sub-lease (included in onerous contract provision) Qantas Group 2009 $M 4,675 2008...

  • Page 131
    ... indemnities to the equity investors in certain leveraged leases. The indemnities effectively guarantee the after-tax rate of return of the investors and the Qantas Group may be subject to additional financing costs on future lease payments if certain assumptions made at the time of entering the...

  • Page 132
    ... years of membership and salary levels. The total plan assets include financial instruments issued by Qantas with a fair value of $6 million (2008: $18 million). Plan assets also include an investment in a trust which owns a 50 per cent interest in property occupied by the Qantas Group. The value...

  • Page 133
    ..., Chief Executive Officer Jetstar (appointed as KMP effective 1 October 2008) David Cox, Executive Manager Qantas Engineering (ceased as KMP effective 30 June 2009) Grant Fenn, Group Executive Strategy & Investments (ceased as KMP effective 30 June 2009) Rob Gurney, Group Executive Qantas Airlines...

  • Page 134
    Notes to the Financial Statements for the year ended 30 June 2009 31. Related Parties continued KEY MANAGEMENT PERSONNEL REMUNERATION The aggregate remuneration of the KMP of the Qantas Group and Qantas is set out below: Qantas Group 2009 $ Short-term employee benefits Post-employment benefits ...

  • Page 135
    ...2009 Total $5.82 2009 Total 2008 Total Geoff Dixon - 1,000,000 Peter Gregg 14 Nov 07 19 Oct 06 $5.82 $4.05 2009 Total 2008 Total John Borghetti 15 Aug 07 16 Aug 06 $5.45 $3.09 2009 Total 2008 Total Kevin Brown 15 Aug 07 16 Aug 06 $5.45 $3.09 2009 Total 2008 Total 133 Qantas Annual Report...

  • Page 136
    ...28 2009 Total 2008 Total Geoff Dixon 12 Dec 07 19 Oct 06 21 Oct 04 Peter Gregg 12 Dec 07 19 Oct 06 17 Aug 05 21 Oct 04 $4.42 $3.17 $1.98 $2.28 2009 Total 2008 Total John Borghetti 12 Dec 07 22 Aug 06 17 Aug 05 18 Aug 04 $4.42 $2.39 $1.98 $2.25 2009 Total 2008 Total 134 Qantas Annual Report...

  • Page 137
    ... been achieved. All Rights were granted with a nil exercise price and subject to the achievement of the performance hurdle may be converted on a one-for-one basis to Qantas shares. No amount has been paid, or is payable by, the Executive in relation to these Rights. 135 Qantas Annual Report 2009

  • Page 138
    Notes to the Financial Statements for the year ended 30 June 2009 31. Related Parties continued EQUITY HOLDINGS AND TRANSACTIONS No other KMP or related party directly, indirectly or beneficially held any other shares, options or rights in the Qantas Group other than as set out below. Other than ...

  • Page 139
    ... airline catering and related services to Qantas; • Qantas codeshares on certain Jetstar services for inbound international passengers and Qantas Frequent Flyers for which it pays capacity hire costs; • Q H Tours Ltd and controlled entities and Qantas act as an agent for each other's products...

  • Page 140
    ... Qantas leases aircraft and domestic freight capacity and sub-leases certain property to Australian air Express; • Qantas codeshares on certain Air Pacific services for which it pays capacity hire costs; • Australian air Express and the Star Track Express Group provide certain domestic freight...

  • Page 141
    ... Travelworld Ltd A.B.N. 23 124 732 136 Pty Limited Jetset Pty Ltd JTG Travel Insurance Pty Limited JTG Corporate Pty Limited JTG Services Pty Limited JTG Wholesale Pty Limited National Ticket Centre Pty Ltd 139 Qantas Annual Report 2009 Footnote ACN/ABN 33 099 119 641 71 099 119 801 83...

  • Page 142
    ... to the Financial Statements for the year ended 30 June 2009 32. Particulars in Relation to Controlled Entities as at 30 June 2009 continued Qantas Group Ownership Interest CONTROLLED ENTITIES continued Orient Pacific Holidays Pty Limited Qantas Holidays Limited Qantas Business Travel Pty Limited...

  • Page 143
    ... to the Financial Statements for the year ended 30 June 2009 32. Particulars in Relation to Controlled Entities as at 30 June 2009 continued Qantas Group Ownership Interest CONTROLLED ENTITIES continued QF BOC 2008-1 Pty Limited QF BOC 2008-2 Pty Limited QF Cabin Crew Australia Pty Limited...

  • Page 144
    Notes to the Financial Statements for the year ended 30 June 2009 33. Deed of Cross Guarantee continued Consolidated INCOME STATEMENT Profit before related income tax expense Income tax expense Profit for the year Retained earnings as at 1 July Shares vested to employees Impact of entities (...

  • Page 145
    ..., interest rate, foreign exchange, fuel price and credit risks. These risks are an inherent part of the operations of an international airline. The Qantas Group manages these risk exposures using various financial instruments, using a set of policies approved by the Board. Qantas Group policy is...

  • Page 146
    ...to the Financial Statements for the year ended 30 June 2009 34. Financial Risk Management continued FINANCIAL LIABILITIES QANTAS 2009 $M M Le ss 1 th an to 5 or e th an 5 Trade creditors Bank loans - secured1 Bank loans - unsecured1 Other loans - unsecured1 Lease and hire purchase liabilities1...

  • Page 147
    ... the year ended 30 June 2009, other financial assets and liabilities include fuel derivatives totalling $154 million (liability) (2008: $840 million (asset)). These are recognised at fair value in accordance with AASB139. (iv) Sensitivity on interest rate, foreign exchange and fuel price risk The...

  • Page 148
    ... credit risk through the application of stringent credit policies and accreditation of travel agents through industry programs; ii. Some other trade debtor counterparties are required to post cash collateral to support their transactions with the Qantas Group and Qantas. As at 30 June 2009 $32...

  • Page 149
    ... Financial Statements for the year ended 30 June 2009 34. Financial Risk Management continued (D) FAIR VALUE The fair value of cash, cash equivalents and non-interest-bearing financial assets and liabilities approximates their carrying value due to their short maturity. The fair value of financial...

  • Page 150
    ... Financial Statements for the year ended 30 June 2009 34. Financial Risk Management continued Carrying Amount QANTAS Financial assets Cash and cash equivalents Trade debtors Aircraft security deposits Sundry debtors Other loans Other financial assets Other investments Financial liabilities Trade...

  • Page 151
    ... (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (ii) g iving a true and fair view of the financial position of Qantas and the Qantas Group's financial position as at 30 June 2009 and of their performance, for the financial year ended on that...

  • Page 152
    ... of Qantas Airways Limited is in accordance with the Corporations Act 2001, including: (i) g iving a true and fair view of the Company's and the Group's financial position as at 30 June 2009 and of their performance for the year ended on that date; and (ii) complying with Australian Accounting...

  • Page 153
    ... shareholders of Qantas: Ordinary Shares Held 379,967,053 140,994,333 129,721,858 119,610,313 2 SHAREHOLDERS The Capital Group Companies, Inc.1 Balanced Equity Management Commonwealth Bank of Australia3 AXA Asia Pacific Holdings Limited4 1. Substantial shareholder notice dated 30 April 2009...

  • Page 154
    ...- Airports, Catering & Flight Training - Engineering - Freight - Holidays - Frequent Flyer Corporate support Total Diversity of employees % women % women in senior positions Average age % who work part-time % eligible for retirement in next five years Indigenous Notes Unit 2009 2008 2007...

  • Page 155
    Sustainability Statistics and Notes PERFORMANCE STATISTICS AND NOTES continued Notes Unit 2009 2008 2007 2006 2005 GRI Indicator1 3. Customer Domestic on-time arrivals (Australia) Qantas Group Qantas QantasLink Jetstar Mishandled bags files per 1,000 passengers (Qantas and QantasLink) ...

  • Page 156
    ...hire companies permanently to engineering or ramp services. Full time equivalent employees The total number of full time equivalent (FTE) employees as at 30 June, reported in total for each business unit of the Qantas Group in Australia and overseas. This is calculated using standard working hours...

  • Page 157
    ... the changing demographics of the workforce assists in workforce planning. Percentage of part-time employees A measure of workforce flexibility to report on the percentage of part-time positions across the Qantas Group in Australia and overseas as at 30 June. Percentage of employees eligible for...

  • Page 158
    ... Australia's March 2009 International Visitor Survey (latest available data)). This amount does not include the value of airfare and freight charges that accrue to Qantas from overseas sources which also represent export revenue. Domestic traveller expenditure is calculated as the number of Qantas...

  • Page 159
    ... The Qantas Group also fulfils its obligations in reporting to a diverse number of additional compulsory reporting requirements, both state based and international, for areas included in its sustainability landscape. These include annual reporting requirements to a number of Australian Government...

  • Page 160
    ... Our responsibility is to conduct an independent review of the Performance Statistics set out in the Sustainability Section of the Report for the year ended 30 June 2009, for Qantas' Group operations in Australia and overseas (unless otherwise stated). The selection and suitability of the...

  • Page 161
    ...Section of the Report for the year ended 30 June 2009, for Qantas' Group operations in Australia and overseas (unless otherwise stated) under the following headings: 1. Health and safety 2. People 3. Customer 4. Environment 5. Economic contribution (Australia) INDEPENDENCE In conducting our review...

  • Page 162
    ...on the Corporate Governance section of the Qantas website (at qantas.com) Registered Office Qantas Airways Limited ABN 16 009 661 901 Qantas Centre Level 9, Building A 203 Coward Street Mascot NSW 2020 Australia Telephone (612) 9691 3636 Facsimile (612) 9691 3339 www.qantas.com Qantas Share Registry...

  • Page 163
    Designed by Frost*Design, Sydney, Principal Photography Ant Geernaert

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