Qantas 2016 Annual Report Download - page 7

Disciplined investment in product
and service continues to secure
record levels of satisfaction from
customers, and the Qantas Loyalty
business is increasingly a source
of new ventures and diversified
revenue streams.
Productivity and financial discipline
underpin everything the Group
does. This was recognised by
Moody’s Investor Services, as well
as Standard and Poor’s, when they
restored our investment grade
credit rating.
Shareholder Value
The Group has increased net free
cash flow, grown return on invested
capital and further strengthened
its balance sheet, remaining in an
optimal capital position throughout
2015/16.
I’m especially pleased that we have
been able to return more than
$1 billion in cash to shareholders
over the past 12 months. Over the
same period, earnings per share
have almost doubled to reach
49 cents.
Shareholder returns will continue in
2016/17 with Qantas’ first ordinary
dividend since 2009, and a further
on-market share buy-back. Ordinary
dividends will be our first choice
for future capital management
initiatives, in conjunction with
other options including buy-backs,
special dividends and capital
returns, as appropriate.
Economic Conditions
Consumer confidence and travel
demand softened in the domestic
market through the middle of 2016.
However, Australia’s economic
fundamentals are strong and
demand in non-mining sectors is
solid; the resurgence of inbound
tourism with the lower Australian
dollar has been particularly
welcome.
Internationally, growth in our key
Asia-Pacific trading partners is
healthy, and Asia will be an engine
room of air travel demand and
Qantas Group growth for decades to
come.
The UK Brexit decision had little
direct impact on the Group, but did
create short-term volatility in global
markets, as other geopolitical
events have done over recent years.
This underlines the importance of
the Group’s focus on cost control
and diversifying revenue.
Global Forces
Looking to the long term, it’s
clear that global businesses are
dealing with accelerating change
in technology, geopolitics and
demographics.
The Board believes Qantas’ ability
to deliver sustainable growth over
the long term rests on its ability
to understand and navigate these
global forces, incorporating them
into strategic planning.
At the same time, the Board is
focused on measuring progress
against non-financial value drivers
across environmental, social and
governance issues.
The Qantas Annual Review sets
out the Group’s approach to
sustainability, its view of the
global forces most relevant to the
business, and its strategic priorities
in responding to both the challenges
and opportunities they present.
Board Update
I was pleased to welcome Michael
L’Estrange AO to the Board as a
Non-Executive Director in April this
year. Michael was a senior public
servant and diplomat with the
Australian Government for more
than 27 years, as well as holding
academic posts and directorships.
His experience in global affairs will
be invaluable to the Board given the
wide range of geopolitical issues
influencing the Group.
Looking forward
The Group’s efforts in 2016/17 will
be focused on continuing to advance
its strategy and grow shareholder
value. In doing so, Qantas will
continue to drive trade and tourism,
serve communities, support small
business and champion Australia
on the world stage – as only the
national carrier can do.
As it moves towards 100 years
of serving Australia, Qantas is in
a position of strength. Again, I
congratulate employees on a year
of achievement and success.
Leigh Clifford AO
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QANTAS ANNUAL REPORT 2016