Qantas 2008 Annual Report Download - page 10

To establish a platform for the Qantas Group’s future prosperity,
Qantas has made a series of strategic decisions over recent years.
We have worked hard to achieve the underlying efficiencies that
will enable Qantas to cope with a higher cost base caused by fuel
price rises. We have invested to provide the best range and quality
of product and service offerings for our customers and we have
progressively put in place stronger commercial arrangements,
both internally and externally.
Key Decisions
• In 2000, we committed ourselves to new generation aircraft
that should give Qantas one of the most fuel efficient fleets
in the world over the coming decade.
• In 2003, we committed ourselves to becoming more efficient –
and stripped billions out of our cost base.
• Again in 2003, we commenced a major program to invest over
$2 billion in Qantas international and domestic product and
services – an investment that has consistently placed Qantas
in the world’s top five premium airlines.
• We initiated a two-brand strategy with the establishment of
Jetstar in 2004 – providing unrivalled flexibility to adjust fleet,
routes and service offerings to the specific needs of our
customers and to maximise returns.
• More recently we commenced segmenting all areas of our
business to maximise each area’s operating efficiency and
growth potential. The emergent Frequent Flyer, Holidays and
Freight businesses are the result.
These decisions ensure Qantas is well placed to survive and succeed
as the new world aviation order – based on higher fuel prices and a
stronger drive towards globalisation – unfolds.
Efficiency and Fleet
Through the Sustainable Future Program, Qantas was able to achieve
the targeted result of $3 billion in savings over the five years from
2003 to 2008. This has given Qantas a strong balance sheet and
made possible the strategic spending necessary to achieve further
productivity gains.
The recent arrival of the first of our 20 big, quiet, fuel efficient A380s
has been a milestone for Qantas – and will be a joy for Australian
travellers.
The arrival of the B787s from next year will be a major contributor
to efficiency and, as the cornerstone of the 21st century Qantas fleet,
should ensure Qantas has one of the world’s most fuel efficient fleets.
Qantas has the largest order into Boeing of any airline in the world,
with 65 firm orders for the B787 and purchase rights for another 50.
Qantas is undertaking a range of related fuel and environmental
initiatives to reduce fuel costs and minimise our impact on the
environment.
Two-Brand Strategy
The Qantas Group is still the only legacy airline to have successfully
introduced a low cost carrier into markets alongside its premium
brand and grown both businesses.
Jetstar is delivering cost leadership in the Australian market and
is emerging as a true Pan-Asian brand.
Flowing into service over the coming two years, Qantas customers
will experience the results of years of hard work and investment.
Fantastic new aircraft, but also a complete design philosophy
orchestrated by Creative Director Marc Newson, ports and facilities
upgraded, a seamless experience from the ground into the air, new
lounges, and a new level of service excellence – taking the Qantas
standard of premium flying to a whole new level.
Operational Reliability
In July 2008, an oxygen cylinder failed on the B747-400 operating
flight QF30 from Hong Kong to Melbourne and the flight diverted to
Manila. The outstanding performance of the QF30 pilots and crew,
backed up by the Qantas Care Team, was testament to their training
and professionalism. This incident resulted in extensive reporting of a
huge range of engineering matters affecting Qantas flights that all
airlines routinely deal with. The Civil Aviation Safety Authority
(CASA) subsequently conducted a review of Qantas’ engineering
and maintenance operations and its key findings showed there had
been no significant change in Qantas’ rate of reported incidents over
the past two years and that there was no direct link between any of
these incidents.
During the final quarter of the year, an industrial dispute between
Qantas and the Australian Licensed Aircraft Engineers Association
affected the reliability of the network. We are now working to
bring our network performance back to the standards which have
earned us a reputation as one of the best and most reliable airlines
in the world.
Qantas’ system of airworthiness checks and performance targets
remains as rigorous as ever and our policy of safety before schedule
will always be sacrosanct.
Commercial Arrangements
The Group is now well-advanced in the segmentation process,
which is contributing to greater efficiency and global competitiveness.
Today we have our two flying businesses. But we also have our
Frequent Flyer program, a freight company, a holidays business, an
engineering business, a flight training school and a catering business.
Each one of these businesses now has a sharpened focus on its own
commercial opportunities, including organic growth, acquisitions,
global cost-competitiveness and attracting customers beyond the
Qantas Group.
In the past Qantas has faced regulatory obstacles to full consolidation.
But the global trend towards consolidation is strengthening.
Meanwhile, we have valuable relationships with other airlines –
Qantas is a major player in oneworld and has important bilateral
partnerships with British Airways, American Airlines and many others.
As I close my tenure at Qantas, I would like to thank all my colleagues
for their professionalism over many years of unrelenting change.
Qantas people have risen magnificently to the challenges put before
them so far and their contribution has been integral to the Group’s
success.
I am delighted to hand over to Alan Joyce as my successor. I have
no doubt that, with Alan’s leadership, a great new chapter will be
written in the Qantas story.
For my own part, I leave Qantas with gratitude and satisfaction.
I have every confidence that this great Australian company has built
a platform of strength, flexibility and dynamism to be a successful
global player in the new aviation world that will unfold over the
coming years.
Chief Executive Officer’s Report
I have every confidence that this great Australian
company has built a platform of strength, flexibility
and dynamism to be a successful global player in
the new aviation world.
8Qantas Annual Report 2008
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