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Annual Report 2011
Building a stronger Qantas

Table of contents

  • Page 1
    Building a stronger Qantas Annual Report 2011

  • Page 2
    4 6 8 10 14 16 22 31 49 110 120 Chairman's Report CEO's Report Financial Performance Board of Directors Information on Qantas Review of Operations Corporate Governance Statement Directors' Report Financial Report Sustainability Report Financial Calendar

  • Page 3
    A STRONG PERFORMANCE IN CHALLENGING CONDITIONS THE QANTAS GROUP IN 2011 In 2010/2011 the Qantas Group reported a strong result in a complex and challenging global operating environment, with increased revenue across all business segments. The result was achieved while overcoming a series of natural ...

  • Page 4
    ... swiftly and decisively. We invest hundreds of millions of dollars in training to ensure that when incidents do occur our people react calmly under pressure. Nothing is more important to us than the safety of our customers and employees. THE QANTAS GROUP FACES NEW CHALLENGES AND NEW OPPORTUNITIES...

  • Page 5
    ...The Qantas Group builds business resilience and crisis management into strategic planning, enabling us to respond and recover quickly and effectively when the unexpected happens. AUSTRALIA IS LOCATED WITHIN THE FASTEST GROWING ECONOMIC ZONE IN THE WORLD NEW REALITIES, NEW OPPORTUNITIES - THE GROWTH...

  • Page 6
    ... to maintain an investment-grade credit rating and overall operating conditions. I am pleased to report a strong result for the Qantas Group during 2010/2011, with a 46 per cent improvement in Underlying Profit Before Tax (Underlying PBT) over the prior financial year. Highlights - Underlying PBT...

  • Page 7
    5 ANNUAL REPORT 2011 $14.9bn Revenue $552m Underlying Profit Before Tax

  • Page 8
    THE QANTAS GROUP 6 CEO's Report This year's strong financial performance reflects the power of the Qantas Group's portfolio strategy.

  • Page 9
    ...asset. We have reported a substantially improved result for Qantas driven by our domestic and regional businesses, continued revenue growth and record results for Jetstar and Qantas Frequent Flyer. Fleet During the year the Qantas Group fleet expanded by 29 aircraft to a total of 283 at 30 June 2011...

  • Page 10
    ... for global travellers Building a strong, viable business With a balanced portfolio of business and investments, the Qantas Group remains well-positioned to capitalise on growth opportunities and continue to improve the network, product and service it offers customers. The QFuture business change...

  • Page 11
    9 ANNUAL REPORT 2011 Underlying Profit Before Tax* ($m) 07 Revenue ($m) 07 965 08 08 15,060 1,408 15,627 09 09 100 10 10 14,552 13,772 11 377 11 552 *Figures for 2007-2009 are approximations based on Statutory PBT. 14,894 Operating Cash Flow ($m) 07 Cash Held ($m) 07 2,353 08 08 3,363...

  • Page 12
    ... Chief Executive Officer and Managing Director of Qantas in November 2008. He is a Member of the Safety, Health, Environment & Security Committee. Mr Joyce is a Director of a number of controlled and associated entities of the Qantas Group and a former Director of Jetstar Pacific Airlines Aviation...

  • Page 13
    ... Non-Executive Director Barbara Ward was appointed to the Qantas Board in June 2008. She is a Member of the Safety, Health, Environment & Security Committee and the Audit Committee. Ms Ward is the Chairman of Essential Energy, a Director of a number of Brookfield Multiplex Group companies and...

  • Page 14
    THE QANTAS GROUP 12

  • Page 15
    13 ANNUAL REPORT 2011 INFORMATION ON QANTAS REVIEW OF OPERATIONS CORPORATE GOVERNANCE STATEMENT

  • Page 16
    ... of businesses and investments, including Qantas Frequent Flyer and Qantas Freight Enterprises, generate diverse revenue streams and adds value for customers and investors. The Group employs almost 36,000 people, 92 per cent of them based in Australia. ORGANISATIONAL STRUCTURE Executive Committee...

  • Page 17
    ...per cent share of the domestic air travel market. The Group retains the flexibility to adjust planned capacity growth and capital expenditure to match demand. A review of Qantas' international operations was carried out and established a new five-year plan to restore the business's profitability and...

  • Page 18
    ...engine failure on Qantas flight 32 and the subsequent temporary grounding of the Airbus A380 fleet. The results also include the settlement agreed with Rolls-Royce ($95 million) which offsets the direct financial losses incurred. 1. Underlying PBT is the primary reporting measure used by Management...

  • Page 19
    ... the expansion of the Group's fleet by 29 aircraft to 283 at 30 June 2011. This includes the significant growth of the Jetstar business and the acquisition of the Network Aviation Group. The Group's revenue performance has been supported by maintaining the Group's profit maximising domestic capacity...

  • Page 20
    ...cash flows and capital position remain strong. A conservative approach to capital management and strengthening Operating cash flows provide ongoing flexibility to support capital expenditure and other funding requirements, while supporting an investment grade credit rating. At 30 June 2011 the Group...

  • Page 21
    ... return on the $5 billion of capital invested in the business. Management is focused on addressing the performance of Qantas International and executing its strategy to restore competitiveness and profitability. Investment in Product and Service Qantas Airlines continues to invest in customer...

  • Page 22
    ... year to 7.9 million members as at 30 June 2011. Investment in Product and Service Qantas Frequent Flyer's strategy is to continue to grow membership numbers and partners, and to broaden the business into new products and revenue streams. New partners and products announced in the last year include...

  • Page 23
    ... less than half of this resulting in cash outflows in the period. On 16 August 2011 the Group announced the purchase of between 106 and 110 A320 aircraft with 194 purchase rights and options. Included in the 110 aircraft are 32 "classic" A320 aircraft and 78 A320neo, being Airbus' new engine option...

  • Page 24
    ... Officer (CFO) - Developing Board and Executive Management and succession planning - Ensuring a clear relationship between performance and executive remuneration - Monitoring the Group's system of risk management and internal compliance and control - Ensuring that the market and shareholders...

  • Page 25
    ... on the Board of Directors Qantas is currently developing and formalising targets for diversity in line with the requirements under the ASX Principles, which will be disclosed in the 2012 Annual Report. The Diversity Statement is available in the Corporate Governance section on the Qantas website...

  • Page 26
    ... to manage investigations and report to the Board and Audit Committee. The Policy is available to all Qantas Group employees and is summarised in the Qantas Group Business Practices Document which is available in the Corporate Governance section on the Qantas website. Other Policies and Statements...

  • Page 27
    ... risk policies are included in the Qantas Group Business Practices Document available in the Corporate Governance section on the Qantas website. The Qantas risk management and internal control system aligns to the principles included in the Australian/New Zealand Standard on Risk Management...

  • Page 28
    ... Audit and Risk assist the Audit Committee and the CHESS to promote sound risk management and good corporate governance. Group Audit and Risk assesses the design and operating effectiveness of controls for key business processes to mitigate risks identified in the Qantas risk profile. Management is...

  • Page 29
    27 ANNUAL REPORT 2011 Corporate Governance Statement continued for the year ended 30 June 2011 THE BOARD REMUNERATES FAIRLY AND RESPONSIBLY The Qantas Executive Remuneration Objectives and Approach is set out in full in the Directors' Report (from page 36). Remuneration Committee The Board has a ...

  • Page 30
    THE QANTAS GROUP 28

  • Page 31
    29 ANNUAL REPORT 2011 FINANCIAL REPORT

  • Page 32
    ...Statement of Significant Accounting Policies 2. Underlying PBT and Operating Segments 3. Other Revenue and Expenditure 4. Statutory Profit Before Income Tax Expense and Net Finance Costs 5. Net Finance Costs 6. Income Tax 7. Auditor's Remuneration 8. Earnings per Share 9. Dividends 10. Cash and Cash...

  • Page 33
    ...this Directors' Report because disclosure of the information is likely to result in unreasonable prejudice to the Qantas Group. DIRECTORS' MEETINGS The number of Directors' Meetings held (including Meetings of Committees of Directors) during 2010/2011 are as follows: Audit Committee1 Safety, Health...

  • Page 34
    ... Australia Opportunities Fund, each a listed Australian registered managed investment scheme. QUALIFICATIONS AND EXPERIENCE OF EACH PERSON WHO IS A COMPANY SECRETARY OF QANTAS Cassandra Hamlin - Company Secretary, BCom, CA, FCIS - Joined Qantas in January 1996 - Appointed as a Secretary of Qantas...

  • Page 35
    ... 30 June 2013 to determine whether any Rights vest to Mr Joyce. 7. As a result of the outcome of the 2011 Short Term Incentive Plan, Mr Joyce will be allocated an indirect interest in 375,014 Qantas shares held in trust. These shares have not been allocated to Mr Joyce as at the date of this report.

  • Page 36
    THE QANTAS GROUP 34 Directors' Report continued for the year ended 30 June 2011 RIGHTS Performance Rights are awarded to select Qantas Group Executives under the Qantas Deferred Share Plan (DSP) and the Qantas Employee Share Plan (ESP). Refer to pages 37 to 39 for further details. The following ...

  • Page 37
    ... deferral of short term incentive awards are key features of the Qantas Executive Reward framework. These features support the Board's aim of appropriate alignment between business outcomes, pay outcomes and returns to shareholders. In taking the decisions I have outlined around the pay of its CEO...

  • Page 38
    ... Report sets out remuneration information for Non-Executive Directors, the Chief Executive Officer (CEO) and Executive Committee. The Key Management Personnel (KMP) and five highest remunerated Executives for the 2010/2011 financial year are members of the Executive Committee (full membership...

  • Page 39
    37 ANNUAL REPORT 2011 Directors' Report continued for the year ended 30 June 2011 Remuneration Report (Audited) continued Short Term Incentive Plan (STIP) What is the STIP? The STIP is the annual "at risk" incentive plan for senior Executives at Qantas. Each year Executives may receive an award ...

  • Page 40
    ... of Global Listed Airlines has been selected with regard to financial standing, level of government involvement and its representation of Qantas' key competitor markets. The basket of Global Listed Airlines contains the following full-service and value-based airlines: Air France/KLM, Air New Zealand...

  • Page 41
    ... management shareholding requirements are not imposed, the CEO has a material holding in Qantas shares, currently valued at greater than two times FAR. The potential equity awards under the STIP and the LTIP will assist Executives in maintaining shareholdings in Qantas. Summary of Key Contract Terms...

  • Page 42
    ...GROUP 40 Directors' Report continued for the year ended 30 June 2011 Remuneration Report (Audited) continued - Further expansion by Jetstar in Asia, including the growth in its presence in China to nine key ports - Increase in membership of the Qantas Frequent Flyer program to 7.9 million members...

  • Page 43
    ... Simon Hickey 2011 CEO Qantas 2010 Frequent Flyer Jayne Hrdlicka10 2011 Group Executive 2010 Strategy and Technology (1 Feb 11 - 30 Jun 11) Lyell Strambi 2011 Group Executive 2010 Qantas Operations Rob Kella11 2011 Qantas Chief 2010 Risk Officer Total - Executives 2011 2010 Key Management Personnel...

  • Page 44
    THE QANTAS GROUP 42 Directors' Report continued for the year ended 30 June 2011 Remuneration Report (Audited) continued 10. Ms Hrdlicka was appointed to the role of Group Executive Strategy and Technology effective 1 February 2011 and her key contract terms are outlined on page 39. 11. The ...

  • Page 45
    ... Employee Share Ownership Plan allows Non-Executive Directors to purchase shares at no discount to market price on a salary sacrifice basis, and operates under the DSP Terms and Conditions. General Cosgrove participated in this plan from July 2008 to June 2011. The value of shares is included above...

  • Page 46
    ...of fuel price changes and restructuring charges. Operational / Punctuality Punctuality is measured against on-time departures and arrivals targets. For Qantas Airlines' and Jetstar's Executives, the measure relevant to their business unit is used. Customer Service For Corporate Executives a combined...

  • Page 47
    45 ANNUAL REPORT 2011 Directors' Report continued for the year ended 30 June 2011 Remuneration Report (Audited) continued Other Benefits Non-cash Benefits Travel Non-cash benefits, as disclosed in the remuneration tables, include travel entitlements while employed and other benefits. Travel ...

  • Page 48
    THE QANTAS GROUP 46 Directors' Report continued for the year ended 30 June 2011 Remuneration Report (Audited) continued Performance Related Remuneration Performance Remuneration Affecting Future Periods The fair value of share-based payments granted is amortised over the service period and ...

  • Page 49
    ...an officer of Qantas. The Directors listed on page 31, the Company Secretary and Assistant Company Secretary listed on page 32 and certain individuals who formerly held any one of these positions, have the benefit of the indemnity in the Qantas Constitution. Members of the Qantas Executive Committee...

  • Page 50
    ... KPMG Sydney 5 September 2011 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. In accordance with the Class Order, amounts in this Directors' Report and the Financial Report...

  • Page 51
    49 ANNUAL REPORT 2011 Consolidated Income Statement for the year ended 30 June 2011 Qantas Group Notes 2011 $M 2010 $M REVENUE AND OTHER INCOME Net passenger revenue Net freight revenue Other Revenue and other income EXPENDITURE Manpower and staff related Fuel Aircraft operating variable ...

  • Page 52
    ... 2011 Qantas Group 2011 $M 2010 $M Statutory profit for the year Effective portion of changes in fair value of cash flow hedges, net of tax Transfer of hedge reserve to the Income Statement, net of tax1 Recognition of effective cash flow hedges on capitalised assets, net of tax Foreign currency...

  • Page 53
    ... Revenue received in advance Interest-bearing liabilities Other financial liabilities Provisions Deferred tax liabilities Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Treasury shares Reserves Retained earnings Equity attributable to the members of Qantas...

  • Page 54
    ...the year Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Transfer of hedge reserve to the Income Statement, net of tax Recognition of effective cash flow hedges on capitalised assets, net of tax Foreign currency translation of controlled entities...

  • Page 55
    ...the year Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Transfer of hedge reserve to the Income Statement, net of tax Recognition of effective cash flow hedges on capitalised assets, net of tax Foreign currency translation of controlled entities...

  • Page 56
    ... Cash payments in the course of operations Interest received Interest paid Dividends received from associates and jointly controlled entities Income tax refunded Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment and intangible assets...

  • Page 57
    55 ANNUAL REPORT 2011 Notes to the Financial Statements for the year ended 30 June 2011 1. Statement of Significant Accounting Policies Qantas Airways Limited (Qantas) is a company limited by shares, incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange ...

  • Page 58
    ... Foreign Operations Assets and liabilities of foreign operations, including controlled entities and investments in associates and jointly controlled entities, are translated at the rates of exchange prevailing at balance date. The Income Statements of foreign operations are translated to Australian...

  • Page 59
    ... in lease and hire purchase liabilities. Dividend Revenue Dividends are recognised as revenue when the right to receive payment is established. Dividends from foreign entities are recognised net of withholding tax. (H) GOODS AND SERVICES TAX (GST) Revenues, expenses and assets are recognised net of...

  • Page 60
    THE QANTAS GROUP 58 Notes to the Financial Statements continued for the year ended 30 June 2011 1. Statement of Significant Accounting Policies continued (J) TAX CONSOLIDATION Qantas and its Australian wholly-owned controlled entities, trusts and partnerships are part of a tax consolidated group....

  • Page 61
    ... rates and residual values are reviewed annually and reassessed having regard to commercial and technological developments, the estimated useful life of assets to the Qantas Group and the long-term fleet plan. Finance Leased and Hire Purchase Assets Leased assets under which the Qantas Group...

  • Page 62
    ... return for their service in the current and prior periods, which is discounted to determine its present value and the fair value of any plan assets is deducted. The discount rate used is the yield at balance date on government bonds that have maturity dates approximating to the terms of the Qantas...

  • Page 63
    ...Financial Statements. If the defined benefit balances as at 30 June 2011 remained at adoption, the Qantas Group would report a defined benefit liability instead of a defined benefit asset as a result of the immediate recognition of the unrecognised actuarial losses through other comprehensive income...

  • Page 64
    ... the equity accounted result of the Group's investment in Jetset Travelworld Group is included in the Qantas segment. 2. EBITDAR (Underlying earnings before income tax expense, depreciation, amortisation, non-cancellable operating lease rentals and net finance costs) includes $55 million (Qantas $40...

  • Page 65
    ... Freight Jetset Travelworld Group Corporate/ Unallocated Consolidated Underlying Qantas Jetstar Eliminations REVENUE AND OTHER INCOME External segment revenue Intersegment revenue Total segment revenue and other income Share of net (loss)/profit of associates and jointly controlled entities...

  • Page 66
    ...in the table below. Qantas Group Notes 2011 $M 2010 $M Statutory profit before income tax expense and net finance costs (Statutory EBIT) Ineffectiveness and non-designated derivatives relating to other reporting periods Exclude current year derivative mark-to-market movements relating to underlying...

  • Page 67
    65 ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 3. Other Revenue and Expenditure Qantas Group 2011 $M 2010 $M OTHER REVENUE Contract work revenue Passenger service fees Frequent Flyer store and other redemption revenue1 Frequent Flyer marketing ...

  • Page 68
    ... Statements continued for the year ended 30 June 2011 5. Net Finance Costs Qantas Group 2011 $M 2010 $M FINANCE INCOME Interest income on financial assets measured at amortised cost Interest income from jointly controlled entity Unwind of discount on receivables Total finance income FINANCE COSTS...

  • Page 69
    ... ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 7. Auditor's Remuneration Qantas Group 2011 $000 2010 $000 AUDIT SERVICES Auditors of Qantas - KPMG Australia - Audit and review of Financial Report - Qantas Group (excluding Jetset Travelworld Group...

  • Page 70
    ...ACCOUNT Qantas Group 2011 $M 2010 $M Total franking account balance at 30 per cent The above amount represents the balance of the franking account as at 30 June, after taking into account adjustments for: - Franking credits that will arise from the payment of income tax payable for the current year...

  • Page 71
    ...ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 11. Receivables Qantas Group 2011 $M 2010 $M CURRENT Trade debtors Associates and jointly controlled entities Other parties Less: provision for impairment losses Other loans Sundry debtors Total current...

  • Page 72
    ... Financial Statements continued for the year ended 30 June 2011 12. Inventories Qantas Group 2011 $M 2010 $M Engineering expendables Consumable stores Work in progress Total inventories 310 53 9 372 270 42 7 319 13. Assets and Liabilities Classified as Held for Sale Assets Property, plant and...

  • Page 73
    ... ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 15. Investments Accounted for Using the Equity Method Qantas Group 2011 $M 2010 $M Share of net profit/(loss) of associates and jointly controlled entities Associates Jointly controlled entities Total...

  • Page 74
    ... to the Financial Statements continued for the year ended 30 June 2011 15. Investments Accounted for Using the Equity Method continued Qantas Group 2011 $M 2010 $M RESULTS OF ASSOCIATES Revenues Expenditure Profit/(loss) before income tax expense Income tax (expense)/benefit Net profit/(loss) of...

  • Page 75
    .... Qantas Group 2011 $M 2010 $M RESULTS OF JOINTLY CONTROLLED ENTITIES Revenues Expenditure Profit before income tax expense Income tax expense Net profit of jointly controlled entities Qantas Group's share of net profit of jointly controlled entities MOVEMENTS IN CARRYING AMOUNT OF INVESTMENTS IN...

  • Page 76
    THE QANTAS GROUP 74 Notes to the Financial Statements continued for the year ended 30 June 2011 16. Property, Plant and Equipment Qantas Group 2011 $M 2010 $M Freehold land - owned At cost Total freehold land Buildings - owned At cost Less: accumulated depreciation Buildings - leased At cost ...

  • Page 77
    ... Consolidated Cash Flow Statement as 'Payments for property, plant and equipment and intangible assets'. 2. Disposal of Controlled Entity includes controlled entity reclassified to associate. 3. Other includes foreign exchange movements, non-cash additions and net impairment of property, plant and...

  • Page 78
    ... cost Less: accumulated amortisation Total customer contracts/relationships at net book value Total intangible assets 164 164 219 219 35 35 35 35 770 396 374 678 350 328 20 20 30 30 - - - 593 66 10 56 668 Qantas Group 2011 $M Opening Net Book Value Acquisition Disposal of of Controlled...

  • Page 79
    ... not exceed the long-term average growth rate for the industry. Cash outflows include capital expenditure for the purchase of aircraft and other property, plant and equipment. These do not include capital expenditure that enhances the current performance of assets and related cash flows have been...

  • Page 80
    ... Property, plant and equipment and intangible assets Payables Revenue received in advance Interest-bearing liabilities Other financial assets/liabilities Provisions Other items Tax value of recognised tax losses Total deferred tax liabilities 1. Disposal of Controlled Entity includes controlled...

  • Page 81
    79 ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 19. Payables Qantas Group 2011 $M 2010 $M Trade creditors Associates and jointly controlled entities Other parties 1 596 597 1,141 1,738 6 594 600 1,150 1,750 Other creditors and accruals Total ...

  • Page 82
    ... to the Financial Statements continued for the year ended 30 June 2011 22. Provisions Qantas Group 2011 $M 2010 $M CURRENT Employee benefits - Annual leave - Long service leave - Redundancies, restructuring and other employee benefits Onerous contracts Make good on leased assets Insurance, legal...

  • Page 83
    ... of liabilities that form part of the Qantas Group's net investment in a foreign controlled entity. 24. Share-based Payments The Deferred Share Plan (DSP) Terms and Conditions were approved by shareholders at the 2002 AGM. The DSP governed equity benefits to Executives within the Qantas Group made...

  • Page 84
    ... 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 issued or purchased on-market and are held subject to a holding lock. For further detail on the operation of...

  • Page 85
    ... and Consolidated Income Statement. (A) OTHER FINANCIAL ASSETS AND LIABILITIES Qantas Group 2011 $M 2010 $M NET OTHER FINANCIAL LIABILITIES Derivatives Designated as cash flow hedges Designated as fair value hedges De-designated derivatives Not qualifying for hedge accounting Net other financial...

  • Page 86
    ... NET CASH FROM OPERATING ACTIVITIES Statutory profit for the year Add: depreciation and amortisation Add: dividends received from associates and jointly controlled entities Add: share-based payments Add: amortisation of deferred financing fees Add: net impairment of property, plant and equipment Add...

  • Page 87
    85 ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 26. Notes to the Cash Flow Statement continued (B) FINANCING FACILITIES The total amount of financing facilities available to the Qantas Group as at balance date is detailed below: Qantas Group 2011 ...

  • Page 88
    ... of the Network Aviation Group. The purchase consideration, net of cash acquired, was $21 million. The fair value of the net assets acquired includes property, plant and equipment of $26 million, interest-bearing liabilities of $18 million and net working capital and operating assets of $1 million...

  • Page 89
    ... later than five years Later than five years Less: future lease and hire purchase finance charges and deferred lease benefits Total finance lease and hire purchase liabilities Finance lease and hire purchase liabilities included in the Consolidated Financial Statements Current liabilities (refer to...

  • Page 90
    ... Consolidated Financial Statements Qantas leases out freighter aircraft under long-term operating leases with rentals received monthly. (C) CAPITAL EXPENDITURE COMMITMENTS Capital expenditure commitments contracted but not provided for in the Consolidated Financial Statements Aircraft Building works...

  • Page 91
    ... value of plan assets EXPENSE RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT Current service cost Past service cost Interest cost Contributions by plan participants Expected return on plan assets Actuarial losses Increase in allowance for contributions tax on net liability Expenses Total included...

  • Page 92
    ...Jetstar Gareth Evans, Chief Financial Officer (appointed as KMP effective 15 June 2010) Rob Gurney, Group Executive Qantas Commercial Simon Hickey, Chief Executive Officer Qantas Frequent Flyer Jayne Hrdlicka, Group Executive Strategy and Technology (appointed as KMP effective 1 February 2011) Lyell...

  • Page 93
    ... Directors' fees to purchase shares. (i) Short Term Incentive Plan (STIP) Key Management Personnel Opening Balance Number Granted Number Number Vested Forfeited and Transferred Closing Balance Alan Joyce Bruce Buchanan Gareth Evans Rob Gurney Simon Hickey Lyell Strambi 2011 Total 2010 Total 2011...

  • Page 94
    ...) Opening Balance Number Granted Number Forfeited Number Vested and Transferred Closing Balance Not Available to Call Available to Call Key Management Personnel Alan Joyce Bruce Buchanan Gareth Evans Rob Gurney Simon Hickey Lyell Strambi Colin Storrie1 2011 Total 2010 Total 2011 Total 2010 Total...

  • Page 95
    ... pays for seats utilised - The Qantas Group provides ramp handling services to AUX Investment Pty Limited and its controlled entities (AUX Investment Group) - The Qantas Group leases aircraft and domestic freight capacity and sub-leases certain property to the AUX Investment Group - The Qantas Group...

  • Page 96
    THE QANTAS GROUP 94 Notes to the Financial Statements continued for the year ended 30 June 2011 32. Controlled Entities Qantas Group Ownership Interest Controlled Entities Footnote ACN/ABN Country of Incorporation 2011 % 2010 % 738 Leasing 1 Pty Limited 738 Leasing 2 Pty Limited AAL Aviation ...

  • Page 97
    95 ANNUAL REPORT 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 32. Controlled Entities continued Qantas Group Ownership Interest Controlled Entities Footnote ACN/ABN Country of Incorporation 2011 % 2010 % Holiday Tours & Travel (Singapore) Pte. Ltd. PT Pacto ...

  • Page 98
    ... 2011 % 2010 % Qantas Foundation Trustee Limited Qantas Frequent Flyer Limited Qantas Frequent Flyer Operations Pty Limited Qantas Ground Services Pty Limited Qantas Group Flight Training Pty Limited Qantas Group Flight Training (Australia) Pty Limited Qantas Information Technology Ltd Qantas...

  • Page 99
    ... Travel Services Holdings Pty Limited and the Qantas Group's holding reduced from 58 per cent to 29 per cent. From this date these companies ceased to be consolidated and commenced to be equity accounted. 9. On 9 August 2010 a Revocation Deed was lodged with ASIC to remove Qantas Freight Holdings...

  • Page 100
    ...jointly controlled entities Other investments Property, plant and equipment Intangible assets Other Total non-current assets Total assets Current liabilities Payables Revenue received in advance Interest-bearing liabilities Other financial liabilities Provisions Total current liabilities Non-current...

  • Page 101
    ... timing of cash flows, including estimated interest payments, of financial liabilities and derivative instruments. Contractual amount assumes current interest rates and foreign exchange rates. Qantas Group 2011 $M Less than 1 Year 1 to 5 Years More than 5 Years Total FINANCIAL LIABILITIES Trade...

  • Page 102
    ... in foreign exchange rates. The source and nature of this risk arise from operations, capital expenditures and translation risks. Cross-currency swaps are used to convert long-term foreign currency borrowings to currencies in which the Qantas Group has forecast sufficient surplus net revenue to meet...

  • Page 103
    ... 2011 Notes to the Financial Statements continued for the year ended 30 June 2011 34. Financial Risk Management continued Qantas Group Profit before tax 2011 $M 2010 $M Equity (Before tax) 2011 $M 2010 $M 100bps increase in interest rates Variable rate interest-bearing instruments (net of cash...

  • Page 104
    THE QANTAS GROUP 102 Notes to the Financial Statements continued for the year ended 30 June 2011 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...

  • Page 105
    ... of dividend payments. The quantum and timing of this will depend on trading results, prevailing market conditions, the maintenance of an investment grade credit rating and the level of capital expenditure commitments. During the year ended 30 June 2011 the Qantas Group invested $2.4 billion...

  • Page 106
    ... FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011 Qantas 2011 $M 2010 $M CONDENSED INCOME STATEMENT Revenue and other income Expenditure Statutory profit before income tax expense and net finance cost Net finance costs Statutory loss before income tax expense Income tax benefit Statutory profit...

  • Page 107
    ... FLOW STATEMENT Net cash from operating activities Net cash used in investing activities Net cash (used)/from financing activities Net (decrease)/increase in cash and cash equivalents held Cash and cash equivalents held at the beginning of the year Effects of exchange rate changes on cash and cash...

  • Page 108
    ... in leveraged lease transactions. In certain circumstances, including the insolvency of major international banks and other AAA rated counterparties, Qantas may be required to make payments under these guarantees. Freight and Passenger Third Party Class Actions Qantas is a party to a number of third...

  • Page 109
    ... Limited (Qantas): (a) The Consolidated Financial Statements and Notes, and the Remuneration Report set out on pages 36 to 46 in the Directors' Report, are in accordance with the Corporations Act 2001, including: (i) Complying with Australian Accounting Standards (including the Australian Accounting...

  • Page 110
    ...the Consolidated Cash Flow Statement for the year ended on that date, notes 1 to 36 comprising a summary of significant accounting policies and other explanatory information and the Directors' declaration of the Group comprising Qantas and the entities it controlled at the year's end or from time to...

  • Page 111
    ...Qantas: Shareholders Ordinary Shares Held % of Issued Shares National Australia Bank Limited1 Commonwealth Bank of Australia2 Franklin Resources, Inc3 Balanced Equity Management Pty Limited4 The Capital Group Companies, Inc5 Westpac Banking Corporation Group6 1. Substantial shareholder notice dated...

  • Page 112
    ... of sustainable growth in returns to shareholders. As such, the Group has refined the selection of key performance indicators to ensure they are aligned to its business strategy. Key performance indicators in this Sustainability Report are divided into the following categories: 1. Safety and Health...

  • Page 113
    ...ANNUAL REPORT 2011 Sustainability Statistics and Notes continued 1. Safety and Health The Qantas Group's commitment to providing a safe workplace demonstrates care for our people. Safety and health programs across the business target the prevention of workplace injuries and the promotion of health...

  • Page 114
    ... operational measure is especially important for Qantas Airlines and QantasLink, whose services are targeted at premium customers. Key Performance Indicators Notes Unit 2011 2010 GRI Indicator 2011 Performance Australian domestic on-time departures Qantas Airlines QantasLink Jetstar Qantas Group...

  • Page 115
    ... evident within Qantas' Engineering, Airports, QCatering and Cabin Crew business units. The Group is actively managing the succession and continuity of the knowledge and experience of this valuable group of employees as they approach retirement. WORKPLACE FLEXIBILITY The Group values flexible...

  • Page 116
    ... annual improvement in fuel efficiency (measured as litres of fuel per Revenue Tonne Kilometre - RTK) through to 2020 against the 2008/2009 baseline. The Group has adopted this global aviation industry target. The Group is investing in newer, more fuel efficient aircraft. This is a highly effective...

  • Page 117
    ... aircraft fleet, which will directly improve customer experience and fuel efficiency. The Group's fleet strategy supports the Group's objectives of two strong complementary brands and provides for long-term fleet renewal, simplification and growth. Average fleet age - scheduled passenger fleet Years...

  • Page 118
    ...the Network Aviation group entities. Network Aviation data is only included in Aviation fuel consumption, CO2-e emissions from aviation (Group) and Australian domestic carbon emissions. 2. Absenteeism categories have been revised from those reported in 2009/2010 to reflect the Qantas Group operating...

  • Page 119
    .... Percentage of women in senior positions The percentage of female employees in senior management positions in the wholly-owned entities of the Qantas Group in Australia and overseas as at 30 June. During 2010/2011 senior positions was redefined to include Executive Job Grade 4 and above, which is...

  • Page 120
    ... domestic flights of Qantas, Jetstar, QantasLink, Network Aviation (included in 2010/2011 only), the Group's aircraft wetleased to Australian air Express and the Group's aircraft operated by Cobham Aviation Services Australia. For 2010/2011 the full year aviation fuel consumption by Network Aviation...

  • Page 121
    ... the Qantas Annual Report (the Report) for the year ended 30 June 2011. DIRECTORS' AND MANAGEMENT'S RESPONSIBILITIES FOR THE SUSTAINABILITY SECTION The Directors and Management of Qantas are responsible for the preparation and presentation of the Sustainability Section. This responsibility includes...

  • Page 122
    THE QANTAS GROUP 120 Financial Calendar and Additional Information 2011 2012 17 February 30 June 24 August 28 October Half year result announcement Year end Preliminary final result announcement Annual General Meeting 16 February 7 March 5 April 30 June 23 August 11 September 11 October 2 ...

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    Qantas Airways Limited ABN 16 009 661 901