Qantas 2014 Annual Report Download - page 12

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In February 2014, the Group announced
the detail of its accelerated Qantas
Transformation program, with a target of
$2 billion in benefits over three years to
2016/2017.
As at 30 June 2014, $204 million in
accelerated transformation benefits had
already been realised. Major pillars of
Qantas Transformation include:
– Accelerating cost reduction;
– Right-sizing fleet and network;
– Working existing assets harder;
– Deferring growth;
– Aligning capital expenditure to financial
performance; and
– Accelerating simplification.
Alongside cost base transformation, the
Group has also refinanced near-term debt
to extend maturity through two well-
subscribed transactions in the unsecured
markets.
With no significant debt falling due until
April 2016, we can focus on strengthening
our balance sheet through both earnings
recovery and debt reduction.
Planned capital investment in 2014/2015
and 2015/2016 has been reduced by
$1.3billion since 30 June 2013, while core
investment in customer projects and fleet
simplification has been preserved. Capital
expenditure net of movements in lease
liabilities was $874 million in 2013/2014, with
a forecast of $700 million in 2014/2015 and
$800 million in 2015/2016.
STRENGTHENING
OUR BUSINESS
1 Total annual cash benefit, realised one year after completion of initiative. 2 Includes FTEs that had exited or received notice by 30 June 2014.
3 Costs include cash payments for redundancy, annual leave, long service leave and other termination benefits.
– 1,000 of 1,500FTE
reduction actioned2
by end FY14
– Remainder to exit in
1H15
Total one-off redundancy3
costs: $165m
Total annual benefit1:
$175m
– Head office restructure
to reduce management
layers and improve
efficiency
– Simplified organisation
structures for all
reporting segments
– Stringent controls on
recruitment, consultants
and contractors
BACKGROUND COSTBENEFIT TIMELINE
QANTAS TRANSFORMATION CASE STUDY
Consolidation initiative: 1,500 management and non-operational FTE reduction
We are making the hard but necessary
decisions that will protect this great
company, and ensure its return to a
profitable and sustainable future.
Qantas CEO
Alan Joyce
10
QANTAS ANNUAL REPORT 2014