Qantas
Annual Report
2021
QANTAS ANNUAL REPORT 2021
Contents
Financial Snapshot
Five-year History
Keeping the Spirit of Australia flying
Chairman’s Message
CEO’s Message
Board of Directors
Review of Operations
Condensed Corporate Governance Statement
Directors’ Report
Financial Report
Shareholder Information
Financial Calendar and Additional Information
02
03
04
06
08
10
14
29
31
65
141
142
Cover image: Qantas employees who operated flights to repatriate
Australians and to carry essential freight during the pandemic.
01
QANTAS ANNUAL REPORT 2021
Financial Snapshot1
($1.83) billion
($2.35) billion
UNDERLYING LOSS
BEFORE TA X
STATUTORY LOSS
BEFORE TA X
$410 million
UNDERLYING EBITDA
$267 million
NET FREE
CASH FLOW 2H21
$650 million
ANNUALISED STRUCTURAL
COST BENEFITS DELIVERED
$3.8 billion
TOTAL LIQUIDIT Y
Other Highlights
95%
OF DOMESTIC
FLYING CASH
POSITIVE
46
NEW DOMESTIC ROUTES
ANNOUNCED SINCE
THE PANDEMIC BEGAN
30%
INCREASE IN FREQUENT
FLYER DOMESTIC FLIGHT
REDEMPTIONS IN 2H21
COMPARED WITH
PRE-COVID LEVELS
1 Refer to the Review of Operations section in the Qantas Annual Report 2021 for definitions and explanations
of non-statutory measures. Unless otherwise stated, amounts are reported on an underlying basis.
02
QANTAS ANNUAL REPORT 2021
Five-year History
FINANCIAL PERFORMANCE 1
Revenue and Other Income
Statutory (Loss)/Profit Before Tax
Statutory (Loss)/Profit After Tax
Underlying (Loss)/Profit Before Tax
Underlying Earnings Before Interest
and Tax (EBIT)
Operating Margin
Underlying Earnings
per Share
Statutory Earnings
per Share
Return on Invested Capital (ROIC)
Share Price at 30 June
Dividend per Share3
Cash flow from operations
Net Free Cash Flow
Net on balance sheet debt
Net Debt
Net capital expenditure
Unit Revenue (RASK)
Total unit cost4
Ex-fuel unit cost4
STATISTICS
Available Seat
Kilometres (ASK)
Revenue Passenger
Kilometres (RPK)
Passengers carried
Revenue Seat Factor
Aircraft at end of period
$M
$M
$M
$M
$M
%
cents
per share
cents
per share
%
$
cents
per share
$M
$M
$M
$M
$M
c/ASK
c/ASK
c/ASK
2021
5,934
2020
14,257
(2,351)
(2,708)
(1,728)
(1,964)
(1,826)
(1,525)
(25.7)
(71.3)
124
395
2.8
5.9
(91.8)
(129.6)
(23.3)
4.66
–
(386)
(1,108)
4,609
5,890
693
9.72
(15.94)
(12.67)
5.8
3.78
–
1,083
(488)
3,173
4,734
1,571
8.99
(8.87)
(4.41)
20192
17,966
1,192
840
1,326
1,608
9.0
57.3
51.5
19.2
5.40
25
3,164
1,601
2,980
4,710
1,563
8.85
(7.97)
(4.23)
20182
20172
17,128
16,057
1,352
953
1,565
1,747
10.2
63.0
54.4
21.4
6.16
17
3,413
1,442
3,054
4,903
1,971
8.40
(7.37)
(5.37)
1,181
853
1,401
1,590
9.9
54.6
46.0
20.1
5.72
14
2,704
1,309
3,062
5,212
1,534
8.00
(7.07)
(5.03)
M
M
‘000
%
2021
2020
2019
2018
2017
29,374
111,870
151,430
152,428
150,323
18,557
92,027
127,492
126,814
121,178
15,866
40,475
55,813
55,273
53,659
63.2
311
82.3
314
84.2
314
83.2
313
80.6
309
1 Refer to the Review of Operations section in the Qantas Annual Report 2021 for definitions and explanations of non-statutory measures.
Unless otherwise stated, amounts are reported on an underlying basis.
2 2019 has been restated for the impact of the adoption of AASB 16 Leases and the IFRIC agenda decision in relation to fair value hedges.
2018 has been restated for the impact of AASB 15 Revenue from Contracts with Customers, however 2017 continues to be reported under
previous accounting standards.
3 Dividend per share is calculated as the interim and final dividend in relation to the relevant financial year.
4 The comparative period has been adjusted for foreign exchange movements to make it comparable to the current year. 2020 and 2021
reflect the foreign exchange rates as presented in the 2021 Annual Report. The same applies for 2019, 2018, 2017 which have been
adjusted for foreign exchange in line with the 2020, 2019 and 2018 Annual Reports respectively. 2020 and 2019 have also been adjusted
for the impact of the sale of domestic terminal leases and depreciation and amortisation.
03
QANTAS ANNUAL REPORT 2021
Keeping the Spirit of Australia flying
The Qantas Group has a proud history of supporting
Australia in times of crisis. From Cyclone Tracy
and the Egyptian revolution to the Bali Bombings,
the national carrier has been there to help.
Throughout the COVID pandemic this legacy
has continued, working closely with the Federal
Government to bring Australians home, support
our export industries and share medical aid with
our neighbours.
400
FLIGHTS TO REPATRIATE AUSTRALIANS
AND MAINTAIN VITAL LINKS
WITH PACIFIC ISLAND NATIONS
AND TIMOR-LESTE
30,000
AUSTRALIANS WHO HAVE
RETURNED HOME ON QANTAS
REPATRIATION FLIGHTS
>2000
FREIGHT FLIGHTS OPERATED,
HELPING SUPPORT MORE
THAN 130,000 JOBS
IN EXPORT INDUSTRIES
18 million
KILOGRAMS OF AUSTRALIAN EXPORTS,
INCLUDING FRESH MILK AND ABALONE
TO CHINA, BEEF AND CHEESE TO JAPAN,
FRUIT AND VEGGIES TO THAIL AND,
AND LOBSTERS AND FLOWERS TO THE USA
04
Qantas employees assisting with passenger coordination
farewelling a repatriation flight.
Customer Service Supervisor (CSS) Adrienne Innes and Customer Service Manager
(CSM) Paul Wason on a repatriation flight from Delhi to Darwin.
Vaccines being loaded onto aircraft bound for Delhi, India.
Crew about to depart London on a repatriation flight to Sydney.
A delivery of over 50,000 AstraZeneca vaccines to Dili, Timor-Leste
in partnership with the Australian Government.
05
Chairman’s Message
“Amidst all the COVID-related
uncertainty, the Group has done
an amazing job of delivering safe
and reliable essential services.”
This past year has been one of
ongoing challenge for the Qantas
Group, as Australia and the world
continued to battle against the
COVID-19 pandemic.
The impact on aviation — and on the
national carrier — has been stark.
Our international flights remained at
a virtual standstill and there were only
about 30 days across the year when
we didn’t face some form of domestic
travel restriction. Thousands of people
lost months of work and, in many
cases, their jobs.
Unsurprisingly, the Group’s revenue
fell by two-thirds compared with
pre-COVID. To date, the pandemic
has cost us more than $16 billion
in lost revenue to the end of FY21.
That number will keep growing
as we wait for travel demand
to materially recover.
These are the worst trading conditions
we’ve ever faced and they resulted in
a $2.35 billion statutory loss before
tax in FY21. But these headline figures
don’t properly reflect the progress the
Group made nor the essential services
it kept delivering during the year.
Relatively early in the crisis, when
the scale of its impact became clear,
we announced a three-year recovery
plan to make sure the company would
first endure, then quickly recover and
repair. I’m pleased to say that plan —
which included a lot of hard decisions
— is working.
In the first year of the plan we
delivered $650 million of annual cost
benefits, which will ultimately grow
to $1 billion from FY23 onwards.
The efficiency improvements that sit
behind these numbers helped drive
positive cash flow in the second half
of FY21, which enabled us to start
paying back our COVID-related debt.
That gives us a lot of confidence that
when we move beyond lockdowns and
border closures, the Qantas Group will
perform strongly.
06
QANTAS ANNUAL REPORT 2021 Amidst all the COVID-related
uncertainty, the Group has done an
amazing job of delivering safe and
reliable essential services. That has
ranged from moving domestic and
international freight, to bringing
thousands of Australians home
on special repatriation flights and
keeping regional towns connected.
Those services were strongly
supported by the Australian
Government, who effectively
chartered Qantas, Jetstar and
other airlines to provide flights
that were necessary but otherwise
commercially unviable. As well as
delivering services to the community,
this also provided work to many
across the industry and helped
retain critical skills.
I want to recognise the incredible
efforts of people across the Group,
who have shown tremendous
professionalism and resilience in
the face of much uncertainty and
conditions that were challenging
to say the least. That includes
the considerable efforts of the
Executive Team led by Alan Joyce,
who have steered this company
through unchartered territory and
are setting it up for recovery.
You need only look at many airlines
around the world to see things
could have gone very differently.
The COVID crisis has thrown up
many unexpected challenges,
but with vaccines rolling out globally,
we have confidence that the worst
of the pandemic is behind us.
The Qantas Group has a big role
to play in helping Australia recover
and reunite, which in turn, is the
source of our own recovery.
Richard Goyder AO
I’d also like to thank my fellow
Directors for their ongoing dedication
to a company that spent much of the
year in acute crisis mode. In particular,
I’d like to recognise the service of
Barbara Ward and Paul Rayner,
who are both retiring at this year’s
AGM. Barbara and Paul both joined
the Qantas Board in 2008 and have
provided excellent guidance through
some of the biggest challenges the
national carrier has faced since
privatisation. They leave with our
profound gratitude. These retirements
take the number of Directors from
10 to eight for the foreseeable future.
07
QANTAS ANNUAL REPORT 2021 CEO’s Message
“Qantas has always shown leadership
on issues important to Australia.
The public health issues around the
pandemic have been no different.”
Many times over the past year,
when asked how the Qantas Group
was coping with COVID, I’ve explained
that airlines normally have a new
flight schedule every six months
— a summer schedule and a winter
schedule. But with sudden border
changes and restrictions, we’ve had
a new schedule almost every week.
In many ways, that example sums up
our response to this crisis. We’ve had
to meet it with a level of flexibility that
was unthinkable beforehand. We did
that when we had to move quickly
to take costs out of the business
given the sudden drop in revenue.
And we’ve done it by making the most
of the windows of opportunity when
we could fly, such as by introducing
46 new domestic routes to tap into
changing demand patterns.
This more agile way of working is also
how we managed to pull together
complex repatriation and freight
missions, often at short notice,
including to 19 overseas cities that
weren’t normally part of our network.
While the circumstances have been
terrible, they led us to build new
capabilities. That’s something we’ll
carry out of the pandemic and will
help us recover faster.
Even under the diabolical trading
conditions we faced in FY21, there
were some standout performances
from different segments.
Domestically, 95 per cent of the flying
by Qantas and Jetstar was cash
positive. Rather than keep aircraft
on the ground, we wanted to get our
people back to work and encourage
our customers to fly again — and the
fact we managed to generate positive
cash flow virtually every time we
did this was remarkable when you
consider the uncertainty we faced.
Qantas Loyalty grew its member base,
satisfaction levels and its second half
profit, despite the limited opportunities
for people to use their points for
flights during lockdowns. Frequent
Flyers were kept engaged through new
retail partners, offers to retain their
status and a 50 per cent increase in
redemption seats when we could fly.
08
QANTAS ANNUAL REPORT 2021 Delivering those services relies on
our 22,000 people. They are critical
to our success and have been through
so much in the past 18 months.
We look forward to welcoming them
back to work as Australia, and the
world, reopen.
Alan Joyce AC
The huge growth in online shopping
domestically, plus the loss of cargo
space on cancelled international
passenger flights, created an
opportunity for Qantas Freight.
Yields and volumes grew, which
drove a record performance and
helped to significantly offset the
costs of carrying our own grounded
international passenger operations.
Qantas has always shown leadership
on issues important to Australia.
The public health issues around the
pandemic have been no different.
In 2021, we were the first major
company to announce a reward
scheme to customers who were fully
vaccinated. And we were the first
ASX-listed company to make
the vaccine a requirement for all
employees. Both initiatives are
based on our absolute commitment
to safety.
Sustainability is another key issue.
In response to climate change we’ve
set some tough goals, including
capping our emissions at 2019 levels,
helping to create a local industry
for sustainable aviation fuel and
reaching net zero emissions by
2050. The pandemic has slowed our
progress but to help accelerate it
we’ve created the position of Chief
Sustainability Officer, reporting to me,
to give this fundamental challenge
the focus it needs.
Throughout the pandemic the support
of customers, industry partners,
shareholders and a wide range of
stakeholders — both in Australia and
overseas — has been remarkable.
It reflects the important place this
company has, and the critical services
it delivers.
09
QANTAS ANNUAL REPORT 2021 Board of Directors
RICHARD GOYDER AO
ALAN JOYCE AC
BCom, FAICD
Chairman and Independent
Non-Executive Director
Richard Goyder was appointed to the
Qantas Board in November 2017 and
as Chairman in October 2018.
He is Chairman of the Nominations
Committee.
Mr Goyder is Chairman of Woodside
Petroleum Limited, the Australian
Football League Commission,
JDRF Australia, the West Australian
Symphony Orchestra, and the Channel
7 Telethon Trust. He is an honorary
Member of the Business Council of
Australia and a Fellow of the AICD.
Mr Goyder was the Managing Director
and CEO of Wesfarmers Limited from
July 2005 to November 2017. He also
previously held the roles of Finance
Director between 2002 and 2004, and
Deputy Managing Director and CFO
between 2004 and 2005.
Mr Goyder was also formerly Chairman
of the Australian B20 (the key business
advisory body to the World Economic
Forum that includes business leaders
from all G20 economies).
Age: 61
BSc, MSc, MA, FRAeS, FTSE
Chief Executive Officer
Alan Joyce was appointed Chief
Executive Officer and Managing
Director of Qantas in November 2008.
He is a Member of the Safety, Health,
Environment and Security Committee.
Mr Joyce is a Director of the Business
Council of Australia, a Member of the
International Air Transport Association’s
Board of Governors, having served
as Chairman from 2012 to 2013
and a Director of the Museum of
Contemporary Art Australia. He is also
a Director of a number of controlled
entities of the Qantas Group.
Mr Joyce was the Chief Executive
Officer of Jetstar from 2003 to 2008.
Before that, he spent over 15 years
in leadership positions with Qantas,
Ansett and Aer Lingus.
At both Qantas and Ansett, he led the
network planning, schedules planning
and network strategy functions.
Prior to that, Mr Joyce spent eight
years at Aer Lingus, where he held
roles in sales, marketing, IT, network
planning, operations research, revenue
management and fleet planning.
Age: 55
10
QANTAS ANNUAL REPORT 2021 Board of Directors continued
MAXINE BRENNER
JACQUELINE HEY
BELINDA HUTCHINSON AC
BA, LLB
BCom, Grad Cert (Mgmt), GAICD
BEc, FCA, FAICD
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Maxine Brenner was appointed to the
Qantas Board in August 2013.
Jacqueline Hey was appointed to the
Qantas Board in August 2013.
Belinda Hutchinson was appointed
to the Qantas Board in April 2018.
She is a Member of the Remuneration
Committee and the Audit Committee.
She is a Member of the Audit
Committee.
Ms Brenner is a Director of Origin
Energy Limited, Orica Limited and
Woolworths Group Limited. She is a
Member of the Council of the University
of New South Wales.
Ms Hey is Chair of Bendigo and
Adelaide Bank Limited, a Director of
AGL Energy Limited and Chairman of
its Safety, Customer and Corporate
Responsibility Committee.
Ms Hey was also formerly a Director of
Cricket Australia from 2012 to 2020,
the Australian Foundation Investment
Company Limited from 2013 to 2019,
Melbourne Business School from 2013
to 2018, the Special Broadcasting
Service from 2011 to 2016 and a
Member of the ASIC Directory Advisory
Panel from 2013 to 2016.
Between 2004 and 2010, Ms Hey was
Managing Director of various Ericsson
entities in Australia and New Zealand,
the United Kingdom and Ireland, and
the Middle East. Her executive career
with Ericsson spanned more than
20 years in which she held finance,
marketing, sales and leadership roles.
Age: 55
Ms Brenner was formerly a Managing
Director of Investment Banking at
Investec Bank (Australia) Limited.
She has extensive experience in
corporate advisory work, particularly
in relation to mergers and acquisitions,
corporate restructures and general
corporate activity. She also practised
as a lawyer with Freehill Hollingdale
& Page (now Herbert Smith Freehills),
where she specialised in corporate
work, and spent several years as
a lecturer in the Faculty of Law at
both the University of NSW and the
University of Sydney.
Ms Brenner was the Deputy Chairman
of the Federal Airports Corporation
and a Director of Neverfail Springwater
Limited, Bulmer Australia Limited,
Treasury Corporation of NSW and
Growthpoint Properties Australia
Limited. She also served as a Member
of the Australian Government’s
Takeovers Panel.
Age: 59
She is a Member of the Audit
Committee and the Safety, Health,
Environment and Security Committee.
Ms Hutchinson is currently Chancellor
of the University of Sydney and
Chairman of Thales Australia.
Ms Hutchinson was also Chairman
of the Future Generation Global
Investment Company between
May 2015 and June 2021.
She has over 30 years’ experience
in the financial services sector,
working in senior roles at Citibank
and Macquarie Group. Ms Hutchinson
also has extensive board experience.
She was formerly Chairman of QBE
Insurance Limited, a Director of Telstra
Corporation Limited, Coles Group
Limited, Crane Group Limited, Energy
Australia Limited, TAB Limited, Snowy
Hydro Trading Limited, Sydney Water
and AGL Energy.
Ms Hutchinson was awarded a
Companion of the Order of Australia
(AC) in 2020 in recognition of her
service to business, tertiary education
and scientific research, and for her
philanthropic endeavours to address
social disadvantage.
Age: 68
11
QANTAS ANNUAL REPORT 2021 Board of Directors continued
MICHAEL L’ESTRANGE AO
PAUL RAYNER
BA (Syd), MA (Oxon)
BEc, MAdmin, FAICD
TODD SAMPSON
MBA, BA(Hons)
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Michael L’Estrange was appointed to
the Qantas Board in April 2016.
Paul Rayner was appointed to the
Qantas Board in July 2008.
Todd Sampson was appointed to the
Qantas Board in February 2015.
He is a Member of the Remuneration
Committee.
Mr Sampson was Executive Chairman
of the Leo Burnett Group from
September 2015 to January 2017,
and National Chief Executive Officer
from 2008 to 2015. He was also a
Director of Fairfax Media Limited from
2014 to 2018.
Mr Sampson has over 20 years’
experience across marketing,
communication, new media and digital
transformation. He has held senior
leadership and strategy roles for a
number of leading communication
companies in Australia and overseas,
including as Managing Partner
for D’Arcy, Strategy Director for
The Campaign Palace and Head of
Strategy for DDB Needham Worldwide.
Age: 51
He is a Member of the Remuneration
Committee and the Safety, Health,
Environment and Security Committee.
He is Chairman of the Remuneration
Committee and a Member of the
Nominations Committee.
Mr Rayner is Chairman of Treasury Wine
Estates Limited, a Director of Boral
Limited and Chairman of its Audit and
Risk Committee, and a Director of the
Murdoch Children’s Research Institute.
Mr Rayner was formerly a Director of
Centrica plc from 2004 to 2014 and
Chairman of its Audit Committee from
2004 to 2013. From 2002 to 2008,
Mr Rayner was Finance Director of
British American Tobacco plc based in
London. Mr Rayner joined Rothmans
Holdings Limited in 1991 as its Chief
Financial Officer and held other senior
executive positions within the Group,
including Chief Operating Officer of
British American Tobacco Australasia
Limited from 1999 to 2001.
Previously, Mr Rayner worked for 17
years in various finance and project
roles with General Electric, Rank
Industries and the Elders IXL Group.
Age: 67
Mr L’Estrange was Head of the National
Security College at the Australian
National University from 2009 to 2015.
Prior to this, he was the Secretary of
the Department of Foreign Affairs and
Trade for almost five years and the
Australian High Commissioner to the
UK between 2000 and 2005. He served
as Secretary to Cabinet and was Head
of the Cabinet Policy Unit from 1996 for
more than four years and, prior to that,
as Executive Director of the Menzies
Research Centre.
Mr L’Estrange was also a Non-Executive
Director of Rio Tinto plc and Rio Tinto
Limited between September 2014 and
May 2021.
He has been a Director of the University
of Notre Dame, Australia since 2014
and was appointed Deputy Chancellor
of the University of Notre Dame,
Australia in 2017.
Mr L’Estrange studied at the University
of Sydney and later as a Rhodes
Scholar at Oxford University, where he
graduated with a Master of Arts with
First Class Honours.
Age: 68
12
QANTAS ANNUAL REPORT 2021 Board of Directors continued
ANTONY TYLER
BA (Jurisprudence)
BARBARA WARD AM
BEc, MPolEc
Independent Non-Executive Director
Independent Non-Executive Director
Antony Tyler was appointed to the
Qantas Board in October 2018.
Barbara Ward was appointed to the
Qantas Board in June 2008.
He is Chairman of the Safety, Health,
Environment and Security Committee
and a Member of the Nominations
Committee.
Mr Tyler was Director General and
Chief Executive of the International
Air Transport Association from 2011 to
2016. Prior to this, Mr Tyler spent over
30 years with Cathay Pacific Airways
Limited. His career includes several
management and executive roles
in Hong Kong, the UK, Italy, Japan,
Canada, the Philippines and Australia
before serving in the role of Chief
Executive Officer from 2007 to 2011.
He is a Non-Executive Director of
Bombardier Inc, BOC Aviation Limited
and Trans Maldivian Airways Limited
and a Fellow of the Royal Aeronautical
Society.
Age: 66
She is Chairman of the Audit
Committee, a Member of the Safety,
Health, Environment and Security
Committee and a Member of the
Nominations Committee. She is also
a Director of Crestone Holdings Limited.
She was formerly a Director of
Ampol Limited (previously Caltex
Australia Limited), Brookfield
Capital Management Limited, the
Commonwealth Bank of Australia, Lion
Nathan Limited, Multiplex Limited, Data
Advantage Limited, O’Connell Street
Associates Pty Ltd, Allco Finance Group
Limited, Rail Infrastructure Corporation,
Delta Electricity, Ausgrid, Endeavour
Energy and Essential Energy.
She was also Chairman of Country
Energy, NorthPower and HWW Limited,
a Board Member of Allens Arthur
Robinson, the Sydney Opera House
Trust and the Sydney Children’s
Hospital Foundation, and on the
Advisory Board of LEK Consulting.
Ms Ward was Chief Executive Officer
of Ansett Worldwide Aviation Services
from 1993 to 1998. Before that, Ms Ward
held various positions at TNT Limited,
including General Manager Finance,
and also served as a Senior Ministerial
Advisor to The Hon PJ Keating.
Age: 67
13
QANTAS ANNUAL REPORT 2021 Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations
For the year ended 30 June 2021
RESULTS HIGHLIGHTS
The performance of the Group and individual segments will be compared to the corresponding prior period (financial year 2019/20) and
the financial year 2018/19, which represents a proxy for ‘pre-COVID’ operations. It indicates the degree to which the Group’s performance
is recovering to pre-COVID levels as the 2018/19 financial year represents the most recent complete financial period not affected by
the pandemic.
In the financial year 2020/21, the operations of the Qantas Group continued to be severely impacted by the actions taken by governments to
address the health impacts of the COVID-19 global pandemic. This included ongoing travel restrictions and international and domestic border
closures which have significantly disrupted air travel. This has led to the Qantas Group losing approximately $16 billion in revenue
cumulatively since the start of the pandemic.
The first half of financial year 2020/21 was heavily impacted by the second wave in Victoria, which resulted in a protracted lockdown and
nationwide domestic border closures. As the situation in Victoria improved, travel and border restrictions progressively eased, which led to a
surge in domestic travel. Towards the end of the first half, a third wave struck Sydney’s Northern Beaches and Brisbane, initiating another
round of border closures. Once these outbreaks were contained and borders were once again reopened, the Group saw a significant increase
in domestic travel which peaked in the early months of quarter four of financial year 2020/21. During the second half, domestic capacity
reached a high of 92 per cent of pre-COVID levels, generating Net Free Cash Flow to commence balance sheet repair. This period
demonstrated the speed at which balance sheet repair can take place when domestic borders are open. Unfortunately, since June 2021,
Australia has been impacted by a series of further COVID-19 outbreaks across the country, which again has seen the majority of domestic
borders closed. The Group’s focus on preserving liquidity, restructuring its cost base and protecting its balance sheet has positioned it well to
weather ongoing disruptions to travel demand during the recovery period.
The Qantas Group reported an Underlying Loss Before Tax 1 (Underlying LBT) of ($1,826) million for the 12 months ended 30 June 2021, a decrease
of $3,152 million compared to 2018/19 pre-COVID (down $1,950 million compared to 2019/20). The Group’s Statutory Loss Before Tax of
($2,351) million was adverse $3,543 million from 2018/19 pre-COVID (improved $357 million compared to 2019/20). The Statutory Loss Before
Tax for 2020/21 financial year included a net $525 million of costs, mostly non-cash impairments and redundancy expenses, which were not
included in the Underlying result. Items outside of Underlying LBT included redundancies and restructuring costs associated with the
Recovery Plan, asset impairments including to the A380 fleet, partially offset by the gain on sale of assets and net de-designation of fuel and
foreign exchange hedges.
Group total revenue was $5,934 million, down $12.0 billion or 67 per cent compared with 2018/19 pre-COVID (down $8.3 billion or 58 per cent
compared to 2019/20). Swift action was taken to reduce the Group’s costs to respond to the significant decline in revenue. Net operating
expenses, 2 a good proxy for the Group’s operating cash costs, reduced by 62 per cent compared with 2018/19 pre-COVID. As activity declined,
there was a commensurate reduction in fuel consumption, aircraft operating variable expenses and manpower costs as a significant number of
employees were stood down. Recovery Plan restructuring benefits of $650 million were delivered during financial year 2020/21 and also
contributed to the reduction in the Group’s cost base. The total savings from activity-based reductions, rightsizing and restructuring totalled $8.9
billion compared to 2018/19 pre-COVID. Depreciation, amortisation and underlying impairment non-cash charges continued to impact the Group’s
profitability resulting in an Underlying EBIT loss of ($1,525) million for the financial year 2020/21. Despite a disrupted recovery, the Group’s focus
on reducing and variabilising its cost base has delivered a profit at an Underlying EBITDA 3 level of $410 million, a decrease of $3,134 million
compared to 2018/19 pre-COVID and $2,027 million to the prior year.
During the period, the Group’s Domestic airlines flew approximately 51 per cent of their pre-COVID network but remained profitable,
contributing $304 million Underlying EBITDA. The Group’s International operations fell into losses, contributing an Underlying EBITDA loss
of ($157) million, as the Group’s International passenger operations were largely grounded. Qantas Freight delivered a record Underlying
EBITDA, providing a natural hedge to the impact of the grounding of the passenger business and thereby limiting the losses from Group
International. The resilience of the Qantas Loyalty business was again demonstrated as it generated a significant positive cash flow
contribution for the Group and Underlying EBITDA of $333 million (Underlying EBIT of $272 million). This reinforces the benefit of the
diversification of earnings it provides.
1. Underlying Loss/Profit Before Tax (Underlying LBT/PBT) is the primary reporting measure used by the Qantas Group’s Chief Operating Decision-Making bodies (CODM), being the
Chief Executive Officer, Group Management Committee and the Board of Directors, for the purpose of assessing the performance of the Group. The primary reporting measure of the
Qantas Domestic, Qantas International, Jetstar Group and Qantas Loyalty operating segments is Underlying Earnings Before Net Finance Costs and Income Tax Expense (Underlying
EBIT). The primary reporting measure of the Corporate segment is Underlying PBT as net finance costs are managed centrally. Refer to the reconciliation of Underlying LBT/ PBT to
Statutory (Loss)/Profit Before Tax on page 25.
2. Group gross expenditure excluding depreciation and amortisation, impairment/(reversal of impairment) of assets and related costs, share of net loss/(profit) of investments
accounted for under the equity method and discount rate changes impact on provisions.
3. Earnings before interest, tax, depreciation, amortisation and impairments (EBITDA).
14
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
RESULTS HIGHLIGHTS (CONTINUED)
The financial metrics for 2020/21 financial year are:
– Statutory Earnings Per Share was a loss of 91.8 cents per share, reflecting the statutory loss and the increase in average shares on issue
from the Institutional Placement in late June 2020 and the associated retail Share Purchase Plan completed in August 2020
– Operating cash outflow of ($386) million including one-off outflows for restructuring, redundancies, refunds and deferred payables. The
underlying operations generated positive cash flow, which was offset by these significant one-off cash outflows on a full year basis
– Net capital expenditure 4 of $0.7 billion was invested in the business
– The Group delivered positive Statutory Net Free Cash Flow 5 in the second half of 2020/21 financial year, enabling debt reduction to
commence.
The Australian Government implemented various programs to support businesses and employees severely affected by the pandemic.
Programs which provided direct support to employees or offset costs of the Group included:
– The JobKeeper Payment (JobKeeper)
– International Aviation Support (IAS) Package, including the International Readiness Payment (IRP) provided as support to employees
– The Australian Aviation Financial Relief Package (AAFRP).
Details on these Australian Government programs can be found in Note 24 of the Financial Report.
In addition, the Australian Government commissioned Qantas Airways to conduct various charter repatriation flights in order to return
Australians home. Along with other Australian domestic airlines, the Group performed several domestic and regional flights as part of the
Regional Airline Network Support (RANS) and Domestic Aviation Network Support (DANS) programs intended to maintain vital air transport
links as well as participated in the Tourism Aviation Network Support (TANS) scheme, which offers discounted fares to 15 key tourist regions
in Australia to support domestic tourism. Qantas Freight was contracted to conduct freight services under the International Freight
Assistance Mechanism (IFAM) to ensure import and export freight routes remained open.
The Group’s conservative approach to securing additional liquidity was a prudent measure given the extended border closures in response to
localised outbreaks. During the year, $937 million new debt funding was raised, $759 million of debt was repaid and $58 million in net
proceeds was recognised from the retail Share Purchase Plan. The Group also secured a further $0.6 billion in committed undrawn funding,
increasing the undrawn facility to $1.6 billion.
At 30 June 2021, cash and cash equivalents totalled $2.2 billion with total liquidity at $3.8 billion including $1.6 billion in committed undrawn
facilities. The Group also maintains an unencumbered asset base of more than $2.5 billion. This ensures that the Group has significant
financial flexibility to manage through the recovery phase.
At the end of financial year 2020/21, Net Debt 6 was $5.9 billion, above the Net Debt target range of $4.5 billion to $5.6 billion, however, it was
lower than the closing Net Debt at 31 December 2020 of $6.05 billion. The reduction in the second half of 2020/21 was a product of increased
domestic operations generating positive Net Free Cash Flow and the prioritisation of debt reduction. Importantly, the Group maintained its
investment grade credit rating of Baa2 from Moody’s Investor Services.
Giving consideration to the requirement to protect the strength of the balance sheet, maintain a minimum level of liquidity and the
uncertainty of the near-term outlook for the business, the Board has decided not to make further shareholder distributions until the Group’s
earnings and balance sheet have fully recovered in accordance with the Financial Framework.
4. Net capital expenditure is equal to net investing cash flows in the Consolidated Cash Flow Statement and the impact to Invested Capital from the disposals/acquisitions of
leased aircraft.
5. Net cash from operating activities less net cash used in investing activities.
6. Net Debt under the Group’s Financial Framework includes net on balance sheet debt and capitalised aircraft lease liabilities.
15
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
THREE-YEAR RECOVERY PLAN
The Recovery Plan delivered $650 million in savings in financial year 2020/21 ahead of its $600 million target. The program is on track to
deliver $850 million by the end of financial year 2021/22 and greater than $1 billion in ongoing savings by the end of financial year 2022/23.
Initiatives to achieve the 2022/23 targets are greater than 90 per cent complete or initiated.
Target
Metrics
Timeframe
As at end of June 2021
Key Area
of Focus
Cost savings
Restructuring cost benefits of $0.6b in FY21, $0.8b by FY22,
$1.0b by FY23
Increased target to at least 8,500 exits
Group Unit Cost (ex-fuel and depreciation) 10% less than
FY20
Deleverage the
balance sheet
Gross debt reduction of $1.75b
Net Debt/EBITDA <2.5 times
Cash flow
Sustainable positive Net Free Cash Flow
Flying activity is contribution positive (RASK-Variable
cost/ASK >0)
FY23
FY21
FY23
FY23
FY22
FY22
onwards
From FY21
Achieved $650m of cost benefits in FY21; Targeting $850m
by FY22
~9,400 exits completed
Restructuring in progress
Debt reduction commenced in 4Q21
Debt reduction commenced in 4Q21; Restructuring in progress;
Net Debt/EBITDA <2.5 times now expected by end of CY22
Statutory Net Free Cash Flow positive achieved in 2H21
95% of Domestic flights cash flow positive
Domestic airlines generated positive underlying operating
cash flow in FY21
Capex 7 for FY21 ~$0.75b
FY21
FY21 spend of $693m
Defer deliveries of A321neos and 787-9 aircraft
June 2020
Complete
Fleet
management
Retire 6 x 747s; 12 x A380s in long-term storage
Customer
and brand
Maintain Customer Advocacy (NPS) premium to domestic
competitor
December
2020
Ongoing
Complete
On track, NPS at historical highs across Qantas, Jetstar and
Loyalty
Maintain brand and reputation
Ongoing
On track, Qantas remains most trusted airline in region
Qantas Loyalty
Return to double digit growth
Employee
engagement
Employee sentiment
FY22
Ongoing
Returned to growth in 2H21
Double digit growth now expected by end of CY22
Impacted by stand downs and restructuring but expected
to continue to improve, aligned to Group recovery and
international borders reopening
7. Equal to net investing cash flows included in the Consolidated Cash Flow Statement and the impact to Invested Capital from the disposals/acquisitions of leased aircraft.
16
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
FINANCIAL FRAMEWORK ALIGNED WITH SHAREHOLDER OBJECTIVES
Qantas’ Financial Framework aligns our objectives with those of our shareholders. With the aim of generating maintainable Earnings Per
Share (EPS) growth over the cycle, which in turn should generate Total Shareholder Returns (TSR) in the top quartile of the ASX100 and a
basket of global airlines, 8 the Financial Framework has three clear priorities and associated long-term targets:
1. Maintaining an Optimal Capital Structure
2. ROIC > WACC 10 Through the Cycle
3. Disciplined Allocation of Capital
Minimise cost of capital by targeting
a Net Debt range of $4.5 billion to $5.6 billion 9
Deliver ROIC > 10 per cent 11
through the cycle
Grow Invested Capital with disciplined
investment, return surplus capital
MAINTAINABLE EPS 12 GROWTH OVER THE CYCLE
TOTAL SHAREHOLDER RETURNS IN THE TOP QUARTILE
Maintaining an Optimal Capital Structure
– The Group’s Financial Framework targets an optimal capital structure to achieve the lowest cost of capital. This results in a Net Debt target
range of $4.5 billion to $5.6 billion, based conservatively on the Invested Capital as at 30 June 2020 of approximately $6 billion. It is
defined as Net Debt/ROIC EBITDA range of 2.0-2.5 times where ROIC is fixed at 10 per cent. This capital structure optimises the Group’s
cost of capital and preserves financial strength with the objective of enhancing long-term shareholder value. The Group’s optimal capital
structure is consistent with investment grade credit metrics. The Group is rated Baa2 with Moody’s Investor Services.
– At 30 June 2021, Net Debt was $5.9 billion, which is above the Net Debt target range, with debt reduction a priority as recovery progresses.
Net Debt of $5.9 billion is however, lower than 31 December 2020 of $6.05 billion due to the positive Net Free Cash Flow generated in the
second half of 2020/21 financial year.
ROIC > WACC Through the Cycle
Return on Invested Capital (ROIC) for the 12 months to 30 June 2021 was less than zero, below the Group’s target for value creation of 10 per
cent. This was due primarily to the impact of government-imposed travel restrictions and border closures on earnings.
Disciplined Allocation of Capital
The Qantas Group takes a disciplined approach to allocating capital with the aim to grow Invested Capital and return surplus capital to
shareholders where earnings permit. Giving consideration to the requirement to protect the strength of the balance sheet, maintain a
minimum level of liquidity and the uncertainty of the near-term outlook for the business, the Board has decided not to make further
shareholder distributions until the Group’s earnings and balance sheet have fully recovered in accordance with the Financial Framework.
Maintainable EPS Growth Over the Cycle
Statutory Earnings Per Share was a loss of (91.8) cents per share due to the significant Statutory Loss After Tax and increase in average
shares from the Institutional Placement in late June 2020 and the associated retail Share Purchase Plan completed in August 2020.
8. Target Total Shareholder Returns within the top quartile of the ASX100 and the global listed airline peer group as stated in the 2020 Annual Report, with reference to the 2020-2022
Long Term Incentive Plan (LTIP).
9. Based on the Invested Capital of approximately $6 billion as at 30 June 2020.
10. Weighted Average Cost of Capital, calculated on a pre-tax basis.
11. Target of greater than 10 per cent ROIC allows ROIC to be greater than pre-tax WACC through the cycle.
12. Earnings Per Share.
17
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
GROUP PERFORMANCE
The Underlying Profit Before Tax for 2020/21 financial year was a loss of ($1,826) million, including the impact of government-imposed travel
restrictions and border closures due to the COVID-19 pandemic. This compares with Underlying Profit Before Tax of $1,326 million for 2018/19
pre-COVID and $124 million in 2019/20. Net passenger revenue declined by 76 per cent compared to 2018/19 pre-COVID levels as the
domestic airlines operated only 51 per cent of pre-COVID flying and the international scheduled passenger businesses remained largely
grounded. Net freight revenue increased due to a surge in e-commerce and a significant reduction in available passenger aircraft belly space.
Other revenue declined primarily due to the decrease in third-party service revenues and the reduced revenue earned by Qantas Loyalty.
Actions taken to reduce and variabilise costs decreased total underlying expenditure by $8.9 billion compared to 2018/19 pre-COVID, which
helped to partially offset the steep decline in revenue.
Group Underlying Income Statement Summary 13
Net passenger revenue
Net freight revenue
Other revenue
Revenue and other income
Operating expenses (excluding fuel)13
Fuel
Impairment13
Depreciation and amortisation13
Share of net (loss)/profit of investments accounted for under the equity method
Total underlying expenditure
Underlying EBIT
Net finance costs
Underlying PBT
Operating Statistics
Available Seat Kilometres (ASK) 14
Revenue Passenger Kilometres (RPK) 15
Passengers carried
Revenue Seat Factor 16
Operating Margin 17
Unit Revenue (RASK) 18
Total Unit Cost 19
June 2021
$M
3,766
1,316
852
5,934
(4,560)
(835)
(13)
(1,922)
(129)
(7,459)
(1,525)
(301)
(1,826)
June 2020
$M
12,183
1,045
1,029
14,257
(8,872)
(2,895)
(21)
(2,021)
(53)
June 2019
$M
15,696
971
1,299
17,966
(10,599)
(3,846)
–
(1,936)
23
(13,862)
(16,358)
395
(271)
124
1,608
(282)
1,326
M
M
000
%
%
c/ASK
c/ASK
June 2021
June 2020
June 2019
29,374
18,557
15,866
63.2
(25.7)
9.72
(15.94)
111,870
92,027
40,475
82.3
2.8
8.99
(8.87)
151,430
127,492
55,813
84.2
9.0
8.85
(7.97)
Group capacity (ASK) decreased by 81 per cent compared to 2018/19 pre-COVID, mainly due to the international passenger businesses being
largely grounded and the slow recovery of domestic capacity to 51 per cent of pre-COVID levels for the financial year. Revenue Passenger
Kilometres decreased by 85 per cent compared to 2018/19 pre-COVID as the Group’s Revenue Seat Factor fell to 63 per cent. Group Unit
Revenue increased to 9.72 c/ASK, due to the increased mix of domestic revenue to international revenue compared to pre-COVID. The Group’s
Total Unit Cost increased to 15.94 c/ASK as a result of the significant decline in ASKs and the Group’s fixed cost base including depreciation
and amortisation charges.
13. Underlying expenses differ from equivalent statutory expenses due to items excluded from Underlying PBT such as those items identified by Management as not representing the
underlying performance of the business. Refer to the reconciliation on page 25.
14. ASK – total number of seats available for passengers, multiplied by the number of kilometres flown.
15. RPK – total number of passengers carried, multiplied by the number of kilometres flown.
16. Revenue Seat Factor – RPKs divided by ASKs. Also known as seat factor, load factor or load.
17. Operating Margin is Group Underlying EBIT divided by Group total revenue.
18. Unit Revenue (RASK) is calculated as ticketed passenger revenue divided by Available Seat Kilometres (ASK).
19. Total Unit Cost is Underlying PBT less ticketed passenger revenue per ASK.
18
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
CASH GENERATION
Cash Flow Summary
Operating cash flows
Investing cash flows
Net Free Cash Flow
Financing cash flows
Cash at beginning of year
Effect of foreign exchange on cash
Cash at end of year
Debt Analysis
Net on balance sheet debt 20
Capitalised aircraft lease liabilities 21
Net Debt 22
June
2021
$M
(386)
(722)
(1,108)
(181)
3,520
(10)
2,221
June
2021
$M
(4,609)
(1,281)
(5,890)
June
2020
$M
1,083
(1,571)
(488)
1,853
2,157
(2)
3,520
June
2020
$M
(3,173)
(1,561)
(4,734)
Change
$M
(1,469)
849
(620)
(2,034)
1,363
(8)
(1,299)
Change
$M
(1,436)
280
(1,156)
Change
%
(136)
54
(127)
(110)
63
(>100)
(37)
Change
%
(45)
18
(24)
$M
$M
Operating cash outflows for 2020/21 were $386 million, with positive cash flow generated impacted by one-off outflows for restructuring,
redundancies, refunds and deferred payables.
Investing cash outflows for 2020/21 of $722 million. Net capital expenditure 23 was $693 million including the impact of lease returns
on capitalised aircraft leases. Capital expenditure was primarily directed to capitalised maintenance and the delivery of an A321P2F freighter.
Net financing cash outflows of ($181) million included a $937 million draw down of debt and $58 million in net proceeds from the retail Share
Purchase Plan, offset by scheduled debt repayments of $759 million and $417 million in net aircraft and non-aircraft lease repayments.
At 30 June 2021, the Group’s unencumbered asset base was greater than $2.5 billion, 24 including 41 per cent of the Group’s fleet, 25 land,
spare engines and other assets.
Qantas continues to retain significant flexibility in its financial position, funding strategies and fleet plan to ensure that it can respond
to changes in market conditions and earnings scenarios.
20. Net on balance sheet debt includes interest-bearing liabilities reduced by cash and cash equivalents.
21. Capitalised aircraft lease liabilities are a non-statutory measure. It is measured at fair value at the lease commencement date and remeasured over the lease term on a principal
and interest basis. Residual value of capitalised aircraft lease liability denominated in foreign currency is translated at a long-term exchange rate.
22. Net Debt is a non-statutory measure. It includes on balance sheet debt and capitalised aircraft lease liabilities under the Group’s Financial Framework.
23. Net capital expenditure is equal to net investing cash flows in the Consolidated Cash Flow Statement and the impact to Invested Capital from the disposals/acquisitions of
leased aircraft.
24. Aircraft valuations based on the average of AVAC and AVITAS market values as at 30 June 2021.
25. Based on number of aircraft as at 30 June 2021. The Group’s fleet totalled 311 aircraft including Jetstar Asia (Singapore) owned fleet and excludes Pacific Airlines (formerly
Jetstar Pacific) and Jetstar Japan.
19
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
FLEET
The determination of the optimal fleet age for the Qantas Group balances a number of factors and varies by fleet type, including the
availability of any new technology, the level of capacity growth required in the markets that it serves, the competitive landscape and whether
the investment is earnings accretive.
At all times, the Group retains significant flexibility to respond to changes in market conditions and the competitive landscape by deploying
several strategies including fleet redeployment, refurbishment, renewal and retirement. Reduced flying due to COVID-19 enables deferral of
the Group’s fleet replacement program.
In financial year 2020/21, four 747-400ERs were disposed (completing the retirement of the 747 fleet), six A320-200s were transferred from
Jetstar to QantasLink, one A320-200 has exited Jetstar for lease return to Pacific Airlines and the Group took delivery of an A321-200P2F for
Qantas Freight as well as a F100 for Network Aviation. Two Jetstar A321-200s are currently undergoing conversion to freighters with
expected completion in the first half of 2021/22 financial year. In addition, the Group made the decision that two A380s that were in storage
would not be returned to operations.
At 30 June 2021, the Qantas Group fleet 26 totalled 311 aircraft.
Fleet Summary (Number of Aircraft)
June
2021
June
2020
A380 27
747-400/400ER
A330-200/300
737-800
787-9
717-200
Q200/300/400
F100
A320-200
Total Qantas (including QantasLink and Network Aviation)
A320/A321-200
787-8
Total Jetstar Group
737-300/400F
767-300F
A321-200P2F
A321-200
Total Freight
Total Group
12
–
28
75
11
20
50
18
10
224
67
11
78
5
1
1
2
9
12
4
28
75
11
20
50
17
4
221
76
11
87
5
1
–
–
6
311
314
Through the 2020/21 financial year, the Group’s fleet strategy adjusted to the new demand environment. The Group completed the disposal of
the 747-400ERs after accelerating retirement as part of the Recovery Plan. The A380 fleet remained in storage with 10 of the 12 aircraft
expected to return to service progressively from financial year 2022/23. Jetstar Asia’s fleet reduced from 18 to 13 through a mixture of lease
returns and aircraft redeployment to Australia. Jetstar Group A320ceos/A321ceos continued to be transferred to QantasLink for redeployment into
the growing resources sector market in Western Australia as well as being converted to freighter aircraft to be utilised in Qantas Freight. To
ensure operational readiness, grounded passenger A330-300s were redeployed as freighters to support IFAM. Qantas’ 787-9s were flown for
repatriation flights and Jetstar’s 787-8 fleet was being utilised by the domestic network.
26. Includes Qantas Airways, Jetstar Australia and New Zealand, Jetstar Asia (Singapore), Qantas Freight and Network Aviation and excludes aircraft operated by Jetstar Japan and
Pacific Airlines (formerly Jetstar Pacific).
27. Total fleet of 12 A380s. At 30 June 2021, all aircraft were in storage. 10 aircraft are expected to be returned to service.
20
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
SEGMENT PERFORMANCE
Segment Performance Summary (EBIT)
Qantas Domestic
Qantas International
Jetstar Group
Qantas Loyalty
Corporate
Unallocated/Eliminations
Underlying EBIT
Net finance costs
Underlying PBT
QANTAS DOMESTIC
June
2021
$M
(590)
(575)
(550)
272
(99)
17
(1,525)
(301)
(1,826)
June
2020
$M
173
56
(26)
341
(134)
(15)
395
(271)
124
June
2019
$M
778
323
400
376
(171)
(98)
1,608
(282)
1,326
Metrics
ASKs
Seat factor
June 2021
June 2020
June 2019
M
%
16,951
58.3
25,773
75.9
33,866
77.8
Qantas Domestic remained profitable, reporting Underlying EBITDA of $159 million for financial year 2020/21 despite material impacts from
border closures. This was achieved through agile network management and the delivery of substantial recovery program benefits as
variabilisation of costs aided its ability to respond to border closures.
With the objective of generating cash and returning people back to work, Qantas Domestic launched 27 new routes in the financial year,
growing capacity to 86 per cent of pre-COVID flying in May 2021. Flying included a mixture of commercial routes (including those supported
by TANS) and routes where demand was insufficient to fly without the government-sponsored RANS and DANS. This combined network
provided vital links to regional Australia and between capital cities with a significant amount of intra-state travel while borders were closed.
Over the year, 95 per cent of flights were cash flow positive.
The corporate and SME markets recovered ahead of expectations, with 34 new accounts won over the financial year.
In response to the changing demand, Qantas Domestic has:
– Consolidated the 717 and Turboprop base on the East Coast
– Deployed 11 A320s into Western Australia to meet strong resource market demand
– Expanded the Alliance Aviation deal to up to 18 aircraft to capture emerging Central Australia and Northern Territory demand
– Maintained support of vital transport links and domestic tourism through government sponsored RANS, DANS and TANS
– Extended the ‘Fly Flexible’ program to February 2022, giving customers confidence to book and fly by providing more flexible booking
terms and conditions
– Maintained high levels of customer Net Promoter Scores.
Through its multi-gauge fleet, the benefit of significant cost restructuring driving a margin advantage, and clear leadership in the corporate
market, Qantas Domestic continues to extend its leading premium position in the market.
21
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
QANTAS INTERNATIONAL
Metrics
ASKs
Seat factor
June 2021
June 2020
June 2019
M
%
640
42.8
50,484
84.1
69,571
86.0
Qantas International’s passenger business was largely grounded, except for the travel bubble with New Zealand and Australian Government-
sponsored repatriation charter flights, bringing home thousands of Australians who were stranded overseas.
The restart of Trans-Tasman flying was impacted by directional demand and border closures resulted in an average of 40 per cent of pre-
COVID flying in the fourth quarter of 2020/21.
The current freight and repatriation activities and utilisation of the traditionally international fleet in the domestic network are maintaining
most of the fleet in operational readiness and a base level of technical and cabin crew recency. The A330 and 787 fleets operated 8 per cent
of pre-COVID block hours for freight and repatriation activity in financial year 2020/21. This will assist with a low-cost restart of the
commercial passenger network when international borders reopen.
The Freight business provided a valuable natural hedge to the performance of the Qantas International passenger business, helping to offset
the cash holding costs. This resulted in an Underlying EBITDA profit of $117 million for the combined operations including the delivery of
substantial recovery program benefits in financial year 2020/21.
As airlines globally responded to the pandemic by grounding and retiring aircraft, a shortage of international belly space emerged.
This combined with surging e-commerce trends drove record profits for Qantas Freight. The Group supplemented lost belly space and helped
to ensure international restart readiness by redeploying A330-300 passenger aircraft to freight activities, transporting vital medical supplies
and other high priority freight. Qantas Freight also continued to support IFAM, assisting Australian businesses to reach their export markets
and ensure import supply lines remained open.
Domestically, Qantas Freight maintained its leadership position in the market, gaining key new customers from its competitors. The Group
also took delivery of the first of three A321-200P2F freighters and wet leased additional dedicated freighter capacity.
The fleet plan for Qantas International has been realigned to the recovery profile:
– Retirement of the remaining 747-400ER fleet in the 2020/21 financial year
– Deferred delivery of three 787-9 Dreamliners in line with the Group’s requirements
– Took delivery of the first A321-200P2F freighter in October 2020 to meet demand for increased dedicated freighter capacity and wet
leased additional capacity as required
– Two A380s are not expected to return to service, with the remaining 10 aircraft expected to return from financial year 2022/23.
22
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
JETSTAR GROUP
Metrics
ASKs
Seat factor
June 2021
June 2020
June 2019
M
%
11,783
71.3
35,613
84.3
47,993
86.1
The Jetstar Group reported an Underlying EBITDA loss of ($129) million. When adjusted to exclude the share of losses of associates, the
Jetstar Group reported an Underlying EBITDA profit of $2 million.
Jetstar’s Australian Domestic business delivered an Underlying EBITDA profit of $145 million of which $102 million was delivered in
the second half of 2020/21 financial year. The result was driven through an increase in flying activity compared to the first half of the
2020/21 financial year as well as its highly variable cost base and restructuring program benefits. Jetstar’s Australian Domestic low fares
leadership, high customer satisfaction and flexible response drove leisure demand when borders opened. The business extended its domestic
network advantage with seven new routes announced in the financial year, resulting in second half capacity growing to 102 per cent of pre-
COVID levels in May 2021. Seat factor of 74 per cent was achieved in the domestic business and ancillary revenue per passenger grew 33 per
cent compared to the 2018/19 financial year pre-COVID.
The Jetstar Australia, New Zealand and Jetstar Asia (Singapore) international operations have effectively been grounded and fell into losses
due to costs for maintenance on stored aircraft, overheads and non-cash employee provisions. Together they added $143 million to Jetstar
Group’s EBITDA losses.
Jetstar Asia has been undergoing a restructuring program to respond to the impacts of the pandemic. Given its fully international operation,
Jetstar Asia’s fleet has reduced from 18 to 13 by transferring aircraft to Australia and through a lease return. Jetstar Asia has also announced
the transfer of a further three aircraft temporarily to Australia and another expected lease return, reducing its fleet to nine aircraft.
Jetstar Japan is implementing its own restructuring program in response to the impacts of the pandemic but due to higher fixed costs, a fully
leased fleet and multiple states of emergency in Japan, incurred losses in the 2020/21 financial year. Jetstar Group’s result includes
$131 million attributable to the share of statutory losses for Jetstar Japan. Jetstar Japan is temporarily transferring six aircraft to Australia to
support domestic growth and reduce Jetstar Japan’s fixed costs.
Through its highly variable cost base, the benefit of further cost restructuring through the recovery program and its clear leadership in the
price sensitive leisure market, the Jetstar Group is uniquely positioned to capture and scale up for the leisure-led recovery in travel demand.
23
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
QANTAS LOYALTY
Metrics
QFF members
June 2021
June 2020
June 2019
M
13.6
13.4
12.9
Qantas Loyalty provided an important source of diversified earnings and positive cash flow as the Group’s international passenger airlines
were largely grounded and domestic airlines were operating at significantly reduced capacity. Cash contribution to the Group was greater
than $1 billion from gross sales to external parties. Earnings were $333 million at an Underlying EBITDA level and Underlying EBIT was
$272 million as the strategy to diversify earnings lessened the impact of the significant decline in air travel.
Qantas Loyalty continued its leadership position in the total share of the credit card market with spend on Qantas Points-earning credit cards
returning to pre-COVID levels in the fourth quarter of 2020/21 financial year. Retail partnerships continued to be strong with over 500,000
members earning Qantas Points with bp Australia since the partnership launched in April 2020.
Retail businesses such as Qantas Wine and Qantas Rewards Store saw redemptions at peak levels as members turned to online shopping and
sought ways to burn points on the ground. The Qantas Insurance portfolio continues to perform well with continued growth in the financial
year.
Travel-related products remain sensitive to border announcements. The underlying demand for the program and travel was evident in the
second half of 2020/21 with record domestic flight redemptions in March 2021, as border restrictions eased.
Despite the significantly reduced flying of the Group’s airlines, the program maintained its relevance with continued strength in member
engagement supported by ongoing program generosity resulting in record Net Promoter Score. This included the status accelerator offer for
Gold members of other loyalty programs, status tier extensions, new ways to earn on the ground (including status credits) and increased
Classic Reward seat availability across popular Australian destinations.
Qantas Loyalty’s earnings are expected to accelerate on resumption of consistent travel activity and Qantas Loyalty remains committed to
achieving the target of $500-600 million Underlying EBIT by financial year 2023/24.
24
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
RECONCILIATION OF UNDERLYING PBT TO STATUTORY PROFIT BEFORE TAX
The Statutory Loss Before Tax of ($2,351) million for 2020/21 compares to a Statutory Loss Before Tax of ($2,708) million for 2019/20 and a
Statutory Profit Before Tax of $1,192 million for 2018/19.
Underlying PBT
Underlying PBT is a non-statutory measure and is the primary reporting measure used by the Qantas Group’s Chief Operating Decision-Making
bodies (CODM) for the purpose of assessing the performance of the Group. The objective of measuring and reporting Underlying PBT is to
provide a meaningful and consistent representation of the underlying performance of each operating segment and the Qantas Group.
Underlying PBT includes the impact of COVID-19 on the operating performance of the Group. Group revenue for the year ended 30 June 2021,
as recognised within Underlying PBT, is down $12.0 billion compared to the 2018/19 financial year pre-COVID (down $8.3 billion compared to
the 2019/20 financial year), which is consistent with the reduction of revenue within the Group’s Statutory Loss.
Likewise, the impact of the decisive actions taken by the Group to mitigate the impact of COVID-19, including a reduction in flight capacity
domestically and internationally (including a reduction in costs from fuel and variable cost reductions), workforce stand downs and
operational cost-out measures, have also been recognised in Underlying PBT. Government support to mitigate the impact of COVID-19 from
travel restrictions and border closures including the AAFRP, JobKeeper, IAS, RANS, DANS, TANS, government repatriation flights and IFAM
payments, together with costs to operate or payments to employees, are also recorded in Underlying PBT.
Items which are identified by Management and reported to the CODM bodies as not representing the underlying performance of the business
are not included in Underlying PBT. The determination of these items is made after consideration of their nature and materiality and is applied
consistently from period-to-period.
Items not included in Underlying PBT primarily result from revenues or expenses relating to business activities in other reporting periods,
restructuring/transformational initiatives, transactions involving investments, impairments of assets and other transactions outside the
ordinary course of business.
The impact of COVID-19 and the Group’s Recovery Plan have resulted in items not included in Underlying PBT, including asset impairments,
Recovery Plan restructuring costs (including redundancies) and de-designated hedging due to a significant decrease in flying activity.
Reconciliation of Underlying PBT to statutory (loss)/profit before tax
Underlying PBT
Items not included in Underlying PBT
– Transformation costs and discretionary bonuses for non-executive employees 28
– Recovery Plan restructuring costs 29
– (Impairment)/reversal of impairment of assets and related costs
– De-designation of fuel and foreign exchange hedges
– Net gain on disposal of assets
– Unrealised foreign exchange movements from the adoption of AASB 16 and the
IFRIC Fair value hedging agenda decision
Total items not included in Underlying PBT
Statutory (Loss)/Profit Before Income Tax Expense
June
2021
$M
(1,826)
–
(319)
(257)
33
18
–
(525)
(2,351)
June
2020
$M
124
(191)
(642)
(1,428)
(571)
–
–
(2,832)
(2,708)
June
2019
$M
1,326
(260)
–
39
–
192
(105)
(134)
1,192
28. Costs incurred under the Transformation Program in previous years are reported under Transformation costs.
29. Costs incurred in relation to the Group’s Recovery Plan are reported under Recovery Plan restructuring costs.
25
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
Underlying PBT (continued)
In the 2020/21 financial year, the items outside of Underlying PBT included:
Item Outside of
Underlying PBT
Recovery Plan
restructuring costs
Impairment of assets and
related costs
Description
$319 million included people restructuring costs of $297 million and other restructuring costs of $22 million.
People restructuring costs include redundancy costs related to announced restructuring initiatives. Other
restructuring costs primarily resulted from changes to fleet strategy as a result of the Recovery Plan. Included
in other restructuring costs is $7 million of non-cash accelerated depreciation.
Impairments of assets and related costs of $257 million includes:
– $155 million impairment of the Group’s A380 fleet resulting from changes in the recoverable amount or net
realisable value of the assets including from changes in the market value of the aircraft, changes in the
onerous contractual commitments and movement in foreign exchange rates since 30 June 2020
– $73 million impairment of property, plant and equipment and right of use assets relating to aircraft in the
Jetstar Asia cash generating unit
– $3 million impairment relating to the early retirement of the Group’s 747 fleet driven by movement in
foreign exchange rates since 30 June 2020
– $27 million impairment of property, plant and equipment, intangible assets and other assets from the
implementation of restructuring initiatives in the Recovery Plan
– ($1) million of net impairment reversal of assets in relation to the Group’s associates.
Refer to Note 25 for details on impairment of assets and related costs.
De-designation of fuel and
foreign exchange hedges
The Group hedges fuel price risk in accordance with the Treasury Risk Management Policy. Hedge accounting
is applied when the requirements of AASB 9 Financial Instruments are met. Where the forecast fuel purchase
transaction is no longer expected to occur, then hedge accounting is discontinued prospectively and the
amount accumulated in equity is reclassified to the Consolidated Income Statement.
The significant decrease in flying activity compared to expectations at 30 June 2020 has resulted in hedge
accounting being discontinued where forecast fuel purchases are no longer expected to occur.
Where the underlying derivatives, while de-designated for hedge accounting purposes, had remained
unrealised or unsettled, foreign exchange and mark-to-market movements have occurred. These movements
have also been recognised as ineffectiveness in the Consolidated Income Statement.
De-designation and ineffectiveness of fuel and foreign exchange hedges of $33 million has been recognised
immediately in the Consolidated Income Statement. Refer to Note 27 for further details.
Net gain on disposal
of assets
$18 million net gain on disposal primarily relates to a $15 million gain on sale of Qantas’ interest in the Joint
User Hydrant Installation.
Refer to Note 2(B) of the Financial Report for details of items not included in Underlying PBT.
26
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
MATERIAL BUSINESS RISKS
The aviation industry is subject to numerous inherent risks that can impact operations if left untreated. In rare circumstances ‘black swan’
risk events can materialise, resulting in unexpected consequences such as those that the aviation industry is experiencing due to COVID-19.
The COVID-19 pandemic has impacted Qantas’ operations significantly, including its strategic and financial objectives.
Material business risks arising from COVID-19, notably liquidity risks, are being critically managed to ensure the ongoing sustainability of the
Group. The Recovery Plan delivered $650 million of cost restructuring benefits in financial year 2020/21 and is on track to deliver the targeted $1
billion of ongoing structural cost benefits by financial year 2022/23. As the impact of COVID-19 evolves, the Group continues to plan for a wide
range of scenarios and risks to ensure the Group is well-positioned to achieve the required level of transformation to support target outcomes.
Other inherent risks that can impact the Group’s operations include exposure to changes in economic conditions, changes in government
regulations, fuel and foreign exchange volatility and other exogenous events such as aviation incidents, natural disasters or international
conflicts.
COVID-19 outbreak management: Although Australia has recorded low levels of community transmission of COVID-19 when compared with
other jurisdictions, outbreaks have occurred in most states, with the risk of future outbreaks ever present given the new virus variants and the
status of the vaccine roll out in Australia. Through its ‘Fly Well’ and ‘Work Well’ programs, Qantas has introduced initiatives aimed at preventing
the introduction and spread of COVID-19 in workplaces and aircraft for the protection of our people and our customers. COVID-19 community
transmission case numbers are closely monitored by the Group with a layered response framework in place to ensure controls are rapidly
deployed in line with the level of risk posed. These controls not only seek to protect health but also support business continuity.
General economic conditions post-crisis: As air travel is closely linked with economic growth, the Qantas Group’s operating and financial
performance is influenced by a variety of general economic and business conditions in Australia and overseas. A sustained decline in
consumer and business demand as part of a broader deterioration of economic conditions is likely to have a materially adverse effect on the
financial condition and business of the Qantas Group.
COVID-19 has created considerable uncertainty and volatility surrounding these macroeconomic factors, and any further deterioration may
have a materially adverse impact on the business, financial condition and prospects of the Qantas Group.
Employee relations: The Qantas Group operates in a highly regulated employment market and a portion of the Qantas Group’s employees are
represented by unions and are party to collective bargaining arrangements. Any significant enterprise bargaining dispute between the Qantas
Group and its employees, including in relation to the Recovery Plan, could lead employees to take industrial action, including work
stoppages. This could disrupt the Qantas Group’s day-to-day operations and adversely affect business performance, potentially leading to
reputational damage.
The slower rate of vaccine roll out and the prolonged closure of the Australian border due to the COVID-19 crisis has necessitated the
extended stand down of the majority of the Qantas and Jetstar International workforce. In addition, the domestic lockdowns and the knock-
on impact of border closures by states and territories due to the Delta variant has resulted in the stand down of certain Domestic work
groups. The Group recognises that this situation requires increased efforts to ensure that our people remain connected to the organisation,
and their health and wellbeing is supported. Relevant information continues to be communicated to our people through a series of channels,
including regular Town Hall meetings hosted by the Group Executive Committee, with several thousand employees remotely joining these
sessions. Employee mental health continues to be a key area of focus, with enhanced services provided through our Employee Assistance
Program as well as manager toolkits to assist with increasing awareness, identification, support and monitoring of employee mental health.
The Qantas Group also has certain key management personnel whose institutional knowledge, expertise, relationships and experience are
considered important to the continued success of the business. The loss of key personnel could adversely impact the Qantas Group’s business
and future performance.
Customer risk: The ongoing success of the Qantas Group depends to a large degree on customer satisfaction and loyalty, particularly in light
of the significant competition for passengers that characterises the aviation industry.
The significant financial and operational challenges posed by COVID-19, the impact of the pandemic on the travel industry, the opening and
closing of domestic and international borders and the response of the Qantas Group to these challenges could also impact customer
satisfaction and loyalty. In particular, a diminution of customer satisfaction due to the cancellation and refund policies of the Qantas Group in
the context of COVID-19 may impact the Qantas Group’s reputation and its ability to attract customers in the future, exacerbated by a
potential decline in customer confidence in travelling due to border restrictions and health risks.
In addition, the Qantas Group is vulnerable to longer-term changes in consumer preferences in relation to its service offerings, the markets in
which it operates, and consumer and business sentiment towards travel, including environmental considerations. Any failure by the Qantas
Group to predict or respond to such changes in a timely and cost-effective manner may adversely impact the Qantas Group’s future operating
and financial performance.
Climate change: The Qantas Group is subject to short-term and long-term climate-related physical and transition risks (including both
increasing customer and investor climate change expectations and government climate change policy risks). These risks are an inherent part
of the operations of an airline and are managed by undertaking scenario analysis, strengthening governance, technology, operational and
market-based controls, including proactive consideration of how changing factors (including global climate policies) impact the proximity of
climate-related risks. The Qantas Group has also set ambitious but achievable targets to reduce our emissions by capping emissions at 2019
levels and achieving net-zero emissions by 2050, while also investing in the development of sustainable aviation fuels. The Qantas Group is
responding to increased demand for transparency on identification and management of climate-related risks by aligning our corporate
disclosures with the Taskforce on Climate-Related Financial Disclosures (TCFD).
These disclosures are available at https://www.qantas.com/au/en/qantas-group/acting-responsibly/our-planet.html.
27
Q AN T A S A N NU A L R E POR T 2 0 21
Review of Operations continued
For the year ended 30 June 2021
MATERIAL BUSINESS RISKS (CONTINUED)
Competitive intensity: Ordinarily, the international and domestic aviation markets in which the Qantas Group operates are highly
competitive, and growth in market capacity ahead of underlying demand impacts profitability on an industry-wide basis. Its competitors
include many major foreign airlines (including government-owned or controlled airlines), some with more financial resources or lower cost
structures than Qantas. This competition may increase with the expansion of existing airlines, the consolidation of existing airlines and/or the
creation of alliances between airlines, or new airlines entering the market.
Australia’s aviation policies favour the creation of a more competitive environment, including more liberal rights of entry into Australian
domestic and international markets. These policies have attracted offshore competitors (predominantly state-sponsored airlines) to the
Australian international aviation market, which has further increased competition for passengers on international routes. Additionally, the
Qantas Group ordinarily faces high levels of price competition in the markets in which it operates, which places significant pressure on the
Qantas Group to price match by offering heavily discounted fares. Aggressive pricing by competitors seeking to gain market share can
adversely affect the Qantas Group’s revenues and yield performance. The financial impact of any discounting of fares as a result of
competitive pressures is exacerbated by the high fixed costs and low profit margins that characterise the aviation industry. The combined
effect of these factors may have a materially adverse effect on the revenue and financial condition of the Group.
Brand reputation: The Qantas brand carries significant commercial value, and the continued success of the Qantas Group relies on the
maintenance of a positive reputation and brand recognition among customers, suppliers, strategic partners and governments. Any negative
publicity (for example, due to a safety incident, labour dispute, regulatory investigation or public customer complaint) may damage Qantas’
reputation and have a negative impact on its business operations and financial performance. The Customer Insights team constantly
monitors customer satisfaction through post-flight surveys and regularly monitors trust in the Qantas Group brands alongside ongoing
research and development of Qantas Group products to mitigate this risk.
Fuel and foreign exchange volatility: The Qantas Group is subject to fuel and foreign exchange risks. These risks are an inherent part of the
operations of an airline. The continued focus on forecasting and the operational agility of our aviation operations are supporting the Group to
manage the residual uncertainty. Accordingly, the size of the Group’s fuel and foreign exchange risk will vary in line with operational changes.
The Qantas Group manages fuel and foreign exchange risks through a comprehensive hedging program. Qantas will continue to hedge its fuel
and foreign exchange risk in line with this program. The Group has a mix of collars and outright options in place to cover fuel price risk and is
actively managed for changes in capacity due to border closures.
Cyber security and data governance: As cyber breaches and attacks surge globally and remote ways of working continue due to COVID-19,
the Qantas Group remains focused on embedding cyber security, privacy and data governance into business processes, taking a security and
privacy by design approach and creating a cybersafe and privacy orientated culture that builds on an established safety culture. The Group is
also enhancing its Data Governance Framework to ensure ethical and commercial data risks are managed in addition to data protection and
privacy. Qantas has a defined Risk and Control Framework, aligned with industry standards, which is designed to protect the confidentiality,
integrity, availability and privacy of data and to maintain compliance with regulatory requirements. The Qantas Group's cyber security and data
privacy-related controls operate to reduce the likelihood and severity of cyber security and data privacy related incidents and related
impacts. The Group’s cyber and data privacy risks are continuously monitored by the Group Cyber and Privacy Committee and are subject to
independent assurance including for material third-party suppliers.
Key business partners and alliances: The Qantas Group has relationships with a number of key business partners. In order to continue to
maximise mutual benefit from both a financial and customer proposition perspective, governance structures are in place to track and report
performance against common strategic objectives. The Qantas Group continues to proactively build relationships with existing and new
industry partners through ongoing dialogue with relevant authorities and stakeholder groups.
Key supplier risk: The Qantas Group is dependent on third-party providers for some principal business processes that are integral to its business.
The failure of these providers to adequately perform their service obligations, or other unexpected interruptions of services, may cause significant
disruption to the Group’s operations and have an adverse impact on financial performance. Qantas uses its Business Continuity Plans to cover the
risk of supply failures and has contingency plans in place to respond to key supplier interruption.
Risk of increase in airport services-related costs or change in availability of airport facilities: The Qantas Group is exposed to the risk of
increases in airport services-related costs (including air traffic control, airport, transit, take-off and landing fees and security charges). The
availability and cost of airport facilities are fundamental to the ability of the Qantas Group to operate.
These costs represent a significant portion of the Qantas Group’s operating costs. Most Australian airports are privately owned, and owners
have flexibility to increase charges to airlines. There can be no assurance that major airport operators will not continue to increase their fees
or that the Qantas Group will not incur new costs in Australia or elsewhere (for example, additional fees assessed against environmental
criteria such as emissions levels or noise pollution). Further, it is likely that security and health measures around the world will continue to be
increased in response to the COVID-19 experience and the perceived threat of terrorism, which may lead to increases in airport clearance and
security charges. To the extent that the Qantas Group is unable to pass on any fee increases to its customers, these developments could have
a material adverse effect on the Qantas Group’s operational results and financial position.
In addition, health concerns during the COVID-19 crisis and in the period following it are likely to impact the availability of airport slots and
facilities in ways that are difficult to predict. This could have a materially adverse effect on the Qantas Group’s operations and Recovery Plan.
An overview of the Group Risk Management Framework is contained in the Qantas Group Business Practices Document available at
www.qantas.com.au.
28
Q AN T A S A N NU A L R E POR T 2 0 21
Condensed Corporate Governance Statement
For the year ended 30 June 2021
OVERVIEW
Corporate governance is core to ensuring the creation, protection
and enhancement of shareholder value. The Board maintains,
and requires that Qantas Management (Management) maintains,
the highest level of ethics at all times.
The Board comprises a majority of Independent Non-Executive
Directors who, together with the Executive Director, have an
appropriate balance of skills, knowledge, experience, independence
and diversity to enable the Board as a collective to effectively
discharge its responsibilities.
The Board has endorsed and adopted the ASX Corporate Governance
Principles and Recommendations (ASX Principles) 4th Edition
throughout 2020/21.
Accordingly, Qantas Airways Limited (Qantas) has disclosed
its 2021 Corporate Governance Statement in the Corporate
Governance section on the Qantas website. As required,
Qantas has also lodged its Corporate Governance Statement
with the ASX.
Following is a summary of the key aspects of the Corporate
Governance Statement.
THE BOARD LAYS SOLID FOUNDATIONS FOR MANAGEMENT
AND OVERSIGHT
The Board has adopted a formal Charter, which is available in
the Corporate Governance section on the Qantas website.
The Board is responsible for setting and reviewing the strategic
direction of Qantas and monitoring the implementation of that
strategy by Management.
The CEO is responsible for the day-to-day management of
the Qantas Group with all powers, discretions and delegations
authorised, from time to time, by the Board.
The Company Secretary is accountable directly to the Board,
through the Chairman, on all matters to do with the proper
functioning of the Board.
THE BOARD IS STRUCTURED TO BE EFFECTIVE AND TO ADD
VALUE
The Qantas Board currently has 10 Directors. Nine Directors are
Independent Non-Executive Directors elected by shareholders. The
Qantas CEO, who is an Executive Director, is not regarded
as independent.
Details of the current Directors, their qualifications, skills,
experience and tenure are set out on pages 10 to 13 of the Qantas
Annual Report 2021.
The Board has four committees:
– Audit Committee
– Nominations Committee
– Remuneration Committee
– Safety, Health, Environment and Security Committee.
Each of these committees assists the Board with specified
responsibilities that are set out in the Committee Charters,
as delegated and approved by the Board.
Membership of and attendance at 2020/21 Board and Committee
meetings are detailed on page 32 of the Qantas Annual Report 2021.
THE BOARD INSTILS A CULTURE OF ACTING LAWFULLY,
ETHICALLY AND RESPONSIBLY
The Board has established a Corporate Governance Framework,
comprising Non-Negotiable Business Principles (Principles) and
Group Policies, which forms the foundation for the way in which
Qantas and its controlled entities (Qantas Group or Group)
undertake business. The Principles and Group Policies, including the
Qantas Group Code of Conduct and Ethics, are detailed in
the Qantas Group Business Practices document. This framework
is supported by a rigorous Whistleblower Program, which provides a
protected disclosure process for all disclosing persons, and an
Anti-Bribery and Corruption Policy which outlines appropriate
behaviour for all employees of the Qantas Group.
The Qantas Group Employee Share Trading Policy sets out
guidelines designed to protect the Qantas Group Directors and
its employees from intentionally or unintentionally breaching
the law. The Qantas Group Employee Share Trading Policy
prohibits employees from dealing in the securities of any Qantas
Group listed or unlisted entity while in possession of material
non-public information.
In addition, certain nominated Qantas Group employees are also
prohibited from entering into any hedging or margin lending
arrangement or otherwise granting a charge over the securities
of any Qantas Group listed or unlisted entity, where control of
any sale process relating to those securities may be lost.
29
Q AN T A S A N NU A L R E POR T 2 0 21
Condensed Corporate Governance Statement continued
For the year ended 30 June 2021
THE BOARD RECOGNISES AND MANAGES RISK
Qantas is committed to embedding risk management practices
to support the achievement of business objectives and fulfil
corporate governance obligations. The Board is responsible for
reviewing and overseeing the risk management strategy for
the Qantas Group and for ensuring the Qantas Group has an
appropriate corporate governance structure. Within that overall
strategy, Management has designed and implemented a risk
management and internal control system to manage Qantas’
material business risks.
During 2020/21, the two Board committees responsible for
oversight of risk-related matters, the Audit Committee and the
Safety, Health, Environment and Security Committee, undertook
their annual review of the effectiveness of Qantas’
implementation of its risk management system and internal
control framework.
The internal audit function is carried out by Group Audit and Risk
and is independent of the external auditor. Group Audit and Risk
provides independent, objective assurance and consulting
services on Qantas’ system of risk management, internal control
and governance.
The Audit Committee approves the Group Audit and Risk Internal
Audit Charter, which provides Group Audit and Risk with full
access to Qantas Group functions, records, property and
personnel, and establishes independence requirements. The Audit
Committee also approves the appointment, replacement and
remuneration of the internal auditor. The internal auditor has a
direct reporting line to the Audit Committee and also provides
reporting to the Safety, Health, Environment and Security
Committee.
THE BOARD REMUNERATES FAIRLY AND RESPONSIBLY
The Qantas Executive remuneration objectives and approach are
set out below.
Information about the remuneration of Executive Management is
disclosed to the extent required, together with the process for
evaluating performance, in the Remuneration Report from
page 36 to 62 of the Qantas Annual Report 2021.
Qantas Non-Executive Directors are entitled to statutory
superannuation and certain travel entitlements (accrued during
service) that are reasonable and standard practice in the aviation
industry. Non-Executive Directors do not receive any performance-
based remuneration (see pages 60 to 62 of the Qantas Annual
Report 2021).
THE BOARD SAFEGUARDS THE INTEGRITY OF CORPORATE
FINANCIAL REPORTING
The Board and the Audit Committee closely monitor the integrity
of all corporate reports. Qantas has a sound system of risk
management and internal controls in place to verify the half-year
and annual financial reports and confirm the declarations
provided by the CEO and CFO to the Board.
The Board and the Audit Committee also monitor the
independence of the external auditor and Qantas rotates the lead
external audit partner every five years and imposes restrictions on
the employment of personnel previously employed by the external
auditor. Qantas last rotated its lead external audit partner during
the 2016/17 year.
The Qantas Group is committed to verifying the integrity of all
other periodic corporate reports it releases to the market that are
not audited or reviewed by the external auditor. Information
regarding the verification process is disclosed in our 2021
Corporate Governance Statement.
THE BOARD MAKES TIMELY AND BALANCED DISCLOSURE
Qantas is committed to ensuring that trading in its shares takes
place in an orderly and informed market, by having transparent
and consistent communication with all shareholders. Qantas
has an established process to ensure that it complies with its
continuous disclosure obligations at all times, including a bi-
annual confirmation by all Executive Management that the
areas for which they are responsible have complied with the
Group’s Continuous Disclosure Policy.
Qantas proactively communicates with its shareholders via the
ASX and its web-based Newsroom, with all materials released by
the Group made available to all shareholders at the same time.
Additionally, the Qantas Board receives copies of all material
market announcements for review and approval of release to the
market, as well as a final copy promptly after they have been
made.
THE BOARD RESPECTS THE RIGHTS OF SHAREHOLDERS
Qantas has a Shareholder Communications Policy which promotes
effective two-way communication with shareholders and the
wider investment community and encourages participation at
general meetings. Qantas actively maintains a corporate site and
investor portal which outlines the company’s corporate
governance policies and procedures and includes an array of
information to help assist investors to make informed decisions.
Additionally, Qantas actively conveys its publicly-disclosed
information and seeks the views of its shareholders, large and
small, in a number of forums, including at the Annual General
Meeting (AGM), Qantas Investor Days and, as is common practice
among its major listed peers, through periodic meetings with
current and potential institutional shareholders.
Shareholders also have the option to receive communications
from, and send communications to, Qantas and its share registry
electronically, including email notifications of significant market
announcements.
The external auditor attends the AGM and is available to answer
shareholder questions that are relevant to the audit.
30
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report
For the year ended 30 June 2021
The Directors of Qantas Airways Limited (Qantas) present their
Report, together with the Financial Statements of the consolidated
entity comprising Qantas and its controlled entities (Qantas
Group) and the Independent Audit Report, for the year ended
30 June 2021. In compliance with the provisions of the
Corporations Act 2001 (Cth), the Directors’ Report is set out below.
DIRECTORS
The Directors of Qantas during the year were:
Richard Goyder AO
Alan Joyce AC
Maxine Brenner
Jacqueline Hey
Belinda Hutchinson AC
Michael L’Estrange AO
Paul Rayner
Todd Sampson
Antony Tyler
Barbara Ward AM
Details of the Directors’ qualifications, experience and any special
responsibilities, including Qantas committee memberships, are
set out on pages 10 to 13.
PRINCIPAL ACTIVITIES
The principal activities of the Qantas Group during the year were
the operation of international and domestic air transportation
services, the provision of freight services and the operation of a
frequent flyer loyalty program.
DIVIDENDS AND OTHER SHAREHOLDER DISTRIBUTIONS
No final dividend will be paid in relation to the year ended
30 June 2021 (2020: nil final dividend). No interim dividend or
other shareholder distributions were paid during the year.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, there were no other significant
changes in the state of affairs of the Qantas Group that occurred
during the financial year under review that are not otherwise
disclosed in this Report.
REVIEW OF OPERATIONS
A review of, and information about, the Qantas Group’s operations,
including the results of those operations during the year, together
with information about the Qantas Group’s financial position,
appear on pages 14 to 28.
Details of the Qantas Group’s strategies, prospects for future
financial years and material business risks have been included in
the Review of Operations to the extent that their inclusion is not
likely to result in unreasonable prejudice to the Qantas Group. In
the opinion of the Directors, details that could be unreasonably
prejudicial to the interests of the Qantas Group, for example,
information that is commercially sensitive, confidential or could
give a third party a commercial advantage, has not been included.
EVENTS SUBSEQUENT TO BALANCE DATE
Refer to page 117 for events which occurred subsequent to
balance date. Other than the matters disclosed on page 117, since
the end of the year and to the date of this Report no other matter
or circumstance has arisen that has significantly affected or may
significantly affect the Qantas Group’s operations, results of those
operations or state of affairs in future years.
31
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
DIRECTORS’ MEETINGS
The number of Directors’ meetings held (including meetings of Committees of Directors) and attendance of Directors during 2020/21 is
as follows:
Qantas Board
Scheduled
Meetings
Unscheduled
Meetings
Sub-Committee
Meetings1
Audit
Committee2
Safety, Health,
Environment
and Security
Committee2
Remuneration
Committee2
Nominations
Committee2
Directors
Attended Held3 Attended Held3 Attended Held3 Attended Held3 Attended Held3 Attended Held3 Attended Held3
Richard Goyder4
Alan Joyce
Maxine Brenner
Jacqueline Hey
Belinda Hutchinson
Michael L’Estrange
Paul Rayner
Todd Sampson
Antony Tyler
Barbara Ward
12
12
12
12
12
12
12
11
12
12
12
12
12
12
12
12
12
12
12
12
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
-
-
-
-
-
-
-
2
2
2
-
-
-
-
-
-
-
2
-
-
6
6
6
-
-
-
-
6
-
-
6
6
6
-
-
-
-
6
-
6
-
-
6
6
-
-
6
6
-
6
-
-
6
6
-
-
6
6
-
-
4
-
4
4
4
-
-
-
-
4
-
4
4
4
-
-
2
-
-
-
-
-
2
-
2
2
2
-
-
-
-
-
2
-
2
2
1. Sub-Committee meetings convened for specific Board-related business.
2. All Directors are invited to, and regularly attend, committee meetings in an ex officio capacity. The above table reflects the attendance of a Director only where he or she is a
member of the relevant committee.
3. Number of meetings held and requiring attendance.
4. The Chairman attends all Committee meetings.
DIRECTORSHIPS OF LISTED COMPANIES HELD BY MEMBERS OF THE BOARD AS AT 30 JUNE 2021
– FOR THE PERIOD 1 JULY 2018 TO 30 JUNE 2021
Richard Goyder
Qantas Airways Limited
Woodside Petroleum Ltd
Current, appointed 17 November 2017
Current, appointed 1 August 2017
Alan Joyce
Qantas Airways Limited
Current, appointed 28 July 2008
Maxine Brenner
Qantas Airways Limited
Origin Energy Limited
Orica Limited
Woolworths Group Limited
Growthpoint Properties Australia Limited
Current, appointed 29 August 2013
Current, appointed 15 November 2013
Current, appointed 8 April 2013
Current, appointed 1 December 2020
Ceased, appointed 19 March 2012 and ceased
30 November 2020
Jacqueline Hey
Qantas Airways Limited
AGL Energy Limited
Bendigo and Adelaide Bank Limited
Australian Foundation Investment Company
Current, appointed 29 August 2013
Current, appointed 21 March 2016
Current, appointed 5 July 2011
Ceased, appointed 31 July 2013 and ceased 18 January 2019
Belinda Hutchinson Qantas Airways Limited
AGL Energy Limited
Future Generation Global Investment
Company Limited
Michael L’Estrange
Paul Rayner
Qantas Airways Limited
Rio Tinto Limited
Rio Tinto plc
Qantas Airways Limited
Treasury Wine Estates Limited
Boral Limited
Current, appointed 12 April 2018
Ceased, appointed 22 December 2010 and ceased 12 December 2018
Ceased, appointed 28 May 2015 and ceased 17 June 2021
Current, appointed 7 April 2016
Ceased, appointed 1 September 2014 and ceased 6 May 2021
Ceased, appointed 1 September 2014 and ceased 6 May 2021
Current, appointed 16 July 2008
Current, appointed 9 May 2011
Current, appointed 5 September 2008
Todd Sampson
Qantas Airways Limited
Fairfax Media Limited
Current, appointed 25 February 2015
Ceased, appointed 29 May 2014 and ceased 7 December 2018
32
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
DIRECTORSHIPS OF LISTED COMPANIES HELD BY MEMBERS OF THE BOARD AS AT 30 JUNE 2021
– FOR THE PERIOD 1 JULY 2018 TO 30 JUNE 2021 (CONTINUED)
Antony Tyler
Qantas Airways Limited
Current, appointed 26 October 2018
Barbara Ward
Qantas Airways Limited
Ampol Limited (formerly Caltex Australia Limited)
Brookfield Capital Management Limited1
Brookfield Funds Management Limited2
Current, appointed 19 June 2008
Ceased, appointed 1 April 2015 and ceased 13 May 2021
Ceased, appointed 1 January 2010 and ceased 30 June 2021
Ceased, appointed 22 October 2003 and ceased 12 June 2020
1. Responsible entity for the Brookfield Prime Property Fund and the Multiplex European Property Fund, both of which were listed Australian registered managed investment schemes.
Previously responsible entity for the Brookfield Australian Opportunities Fund, which was wound up on 30 October 2012.
2. Responsible entity for the Multiplex SITES Trust, which is a listed Australian registered managed investment scheme.
QUALIFICATIONS AND EXPERIENCE OF EACH PERSON WHO HELD OFFICE AS A COMPANY SECRETARY OF QANTAS BETWEEN
1 JULY 2020 UNTIL THE DATE OF THIS REPORT
Andrew Finch –
Company Secretary
Nicole Malone –
Company Secretary
Benjamin Jones –
Company Secretary
Benjamin Elliott –
Company Secretary
– BCom, LLB (UNSW), LLM (Hons I) (USyd), MBA (Exec) (AGSM)
– Appointed as Company Secretary on 31 March 2014
– Joined Qantas on 1 November 2012
– 2002 to 2012 – Mergers and Acquisitions Partner at Allens, Sydney (previously Allens Arthur Robinson and
Allen & Hemsley)
– 1999 to 2001 – Managing Associate at Linklaters, London
– 1993 to 1999 – Various roles at Allens, Sydney including Senior Associate (1997 to 1999) and Solicitor (1993
to 1997)
– Admitted as a solicitor of the Supreme Court of NSW in 1993
– BEc/LLB (Hons I) (UAdel), BCL (Oxon)
– Appointed as a Company Secretary on 18 February 2020
– Resigned as a Company Secretary on 20 July 2021
– Joined Qantas on 6 December 2010
– Admitted as a solicitor of the High Court of Australia and the Supreme Court of Victoria in 2006 and the
Supreme Court of NSW in 2011
– 2007 to 2010 – Solicitor at Baker & McKenzie
– LLM (USyd), LLB, BSocSci (Policy) (UNSW)
– Appointed as a Company Secretary on 20 July 2021
– Joined Qantas on 9 September 2013
– Admitted as a solicitor of the High Court of Australia and the NSW Supreme Court in 2008
– 2008 to 2013 – Solicitor at Herbert Smith Freehills
– 2013 to present – Football Australia, Disciplinary and Ethics Committee
– 2013 to present – Football NSW, General Purposes Tribunal (Deputy Chair 2018 to present)
– BBC, GIA (Affiliate)
– Appointed as a Company Secretary on 18 February 2020
– Joined Qantas on 14 August 2013
– 2021 to present – Head of Secretariat and Corporate Governance
– 2018 to 2021 – Manager, Group Secretariat
– 2014 to 2018 – Manager, Corporate Governance
– 2013 to 2014 – Manager, Public Company
33
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
DIRECTORS’ INTERESTS AND BENEFITS
Particulars of Directors’ interests in the issued capital of Qantas at the date of this Report are as follows:
Directors
Richard Goyder
Alan Joyce
Maxine Brenner
Jacqueline Hey
Belinda Hutchinson
Michael L’Estrange
Paul Rayner
Todd Sampson
Antony Tyler
Barbara Ward
1. Shares held as at date of 2020 Annual Report (17 September 2020).
2.
Includes restricted Ordinary Shares held by the Employee Share Plan Trust.
Rights held in trust under the Non-Executive Director Fee Sacrifice Share Acquisition Plan1:
Directors
Richard Goyder
Jacqueline Hey
Belinda Hutchinson
Paul Rayner
Todd Sampson
Number of Shares
2021
20201
157,7802
139,433
2,990,243
2,892,475
39,498
57,1152
40,7272
29,445
311,6982
30,7062
52,000
54,127
39,498
47,603
25,633
24,445
297,342
23,528
52,000
54,127
Number of Rights
2021
2020
17,823
4,616
6,472
-
3,077
-
-
8,432
8,020
4,010
1. Refer to page 60 for information regarding the operation of the Non-Executive Director Fee Sacrifice Share Acquisition Plan.
In addition to the direct interests shown, indirect interests in Qantas shares held in trust on behalf of Mr Joyce are as follows:
Deferred shares held in trust under:
2018/19 Short Term Incentive Plan
Rights granted under:
2018-2020 Long Term Incentive Plan
2019-2021 Long Term Incentive Plan
2020-2022 Long Term Incentive Plan
2021-2023 Long Term Incentive Plan
Total Rights
Number of Shares
2021
-
2020
97,768
Number of Rights
2021
2020
687,0001
687,0001
651,0001
651,000
743,0002
743,0002
1,349,0003
-
3,430,000
2,081,000
1. Mr Joyce offered, and the Board agreed, to defer the decision of whether his Rights will be forfeited or allowed to convert to shares until at least August 2022.
2. Shareholders approved the award of these Rights on 25 October 2019. Performance hurdles will be tested as at 30 June 2022 to determine whether any Rights vest to Mr Joyce.
3. Shareholders approved the award of these Rights on 23 October 2020. Performance hurdles will be tested as at 30 June 2023 to determine whether any Rights vest to Mr Joyce.
34
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
PERFORMANCE RIGHTS
Performance Rights are awarded to select Qantas Group Executives under the Qantas Long Term Incentive Plan (LTIP). Refer to pages 51 to 53
for further details.
The following table outlines the movements in Rights during the year:
Performance Rights Reconciliation
Rights outstanding as at 1 July
Rights granted
Rights forfeited
Rights exercised
Rights lapsed
Rights outstanding as at 30 June
1. The movement of Rights outstanding as at 30 June 2021 to the date of this Report is explained in the footnotes below.
Number of Rights
2021
2020
9,607,136
12,699,500
12,123,500
4,086,000
(2,879,567)
(1,175,189)
(1,134,203)
(6,003,175)
(1,148,297)
-
16,568,5691
9,607,1361
Rights will be converted to Qantas shares to the extent performance hurdles have been achieved. The Rights do not allow the holder to
participate in any share issue of Qantas. No dividends are payable on Rights. The fair value of Rights granted is calculated at the date of grant
using a Monte Carlo model and/or Black-Scholes model.
The following Rights were outstanding at 30 June 2021:
Testing
Period
Grant Date
Value at
Grant Date
2021
Net Vested
2021
Unvested
2021
Total
2020
Net Vested
2020
Unvested
2020
Total
Number of Rights
30 Jun 201
5 Sep 17
$2.98
30 Jun 201
27 Oct 17
$3.30
-
-
-
-
-
2,241,000
2,241,000
687,000
687,000
-
728,500
728,500
30 Jun 212
5 Sept 18
$3.35
-
1,694,000
1,694,000
-
2,274,000 2,274,000
30 Jun 212
26 Oct 18
$2.33
-
693,000
693,000
-
693,000
693,000
30 Jun 22
4 Oct 19
$4.06
-
2,401,892
2,401,892
-
2,927,636
2,927,636
30 Jun 22
26 Oct 19
$3.59
-
743,000
743,000
30 Jun 23
11 Sep 20
$2.24
-
9,000,677
9,000,677
30 Jun 23
23 Oct 20
$3.07
-
1,349,000
1,349,000
-
-
-
743,000
743,000
-
-
-
-
-
16,568,569
16,568,569
-
9,607,136
9,607,136
Name
2018–2020
Long Term
Incentive Plan
2018–2020
Long Term
Incentive Plan
2019–2021
Long Term
Incentive Plan
2019–2021
Long Term
Incentive Plan
2020–2022
Long Term
Incentive Plan
2020–2022
Long Term
Incentive Plan
2021–2023
Long Term
Incentive Plan
2021–2023
Long Term
Incentive Plan
Total
1. Following the testing of performance hurdles as at 30 June 2020 and the Board’s approval of the 2018-2020 vesting outcome on 19 August 2020, 50 per cent of Rights vested and
converted to shares after the release of the 2019/20 full-year financial results for Executives other than the CEO. For the CEO, the CEO offered, and the Board agreed, to defer the
decision until at least August 2022 as to whether his Rights will be forfeited or allowed to convert to shares.
2. Following the testing of performance hurdles as at 30 June 2021 and the Board’s approval of the 2019-2021 vesting outcome on 25 August 2021, 50 per cent of Rights vested and
converted to shares after the release of the 2020/21 full-year financial results for Executives other than the CEO. For the CEO, the CEO offered, and the Board agreed, to defer the
decision until at least August 2022 as to whether his Rights will be forfeited or allowed to convert to shares.
35
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED)
REMUNERATION REPORT
Cover Letter to the Remuneration Report
1
2
3
4
5
6
7
8
9
10
11
Remuneration Report Summary
Remuneration Governance
Remuneration Outcomes for 2020/21
Statutory Remuneration Disclosures for 2020/21
Executive Remuneration Structure
Annual Incentive Outcome 2020/21 STIP
Long Term Incentive Outcome 2019-2021
Summary of Key Contract Terms as at 30 June 2021
Qantas Financial Performance History
Equity Instruments
Non-Executive Director Fees
37
39
44
46
47
49
55
57
57
58
58
60
36
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
COVER LETTER TO THE REMUNERATION REPORT
Dear Shareholder,
This Remuneration Report sets out remuneration information for the Chief Executive Officer (CEO), direct reports to the CEO (Executive
Management) and Non-Executive Directors. It describes the Qantas Executive Remuneration Framework (Remuneration Framework) and
pay outcomes for 2020/21, and the intended Remuneration Framework for 2021/22, in a way that I believe is simple and transparent.
The COVID-19 pandemic continues to have a major impact on our aviation and tourism industry. Ongoing and unpredictable border
restrictions, both domestically and internationally, have tested our ability to chart a course towards a sustainable recovery. Indeed, it is
difficult to conceive of an industry harder hit by the COVID-19 crisis than aviation and tourism, in particular international passenger
services. Nevertheless, it is in this context that Qantas must best position itself to respond in an agile way as we continue to implement our
Three-Year Recovery Plan. Qantas is committed to its shareholders and its people to operate efficiently and flexibly to respond to the
challenges that COVID-19 presents in order to position the Group for future profitability and success as Australia and the rest of the world
recovers from the pandemic.
Remuneration Outcomes in 2020/21
Following several months of zero Base Pay (or fees) for the CEO, Executive Management and Directors in the previous financial year in
response to the pandemic, the Remuneration Outcomes for 2020/21 reflect similar discipline and leadership in difficult times.
Fixed Remuneration:
Reductions in Fixed Remuneration continued in 2020/21 as follows:
– The CEO took no Base Pay in July 2020 and a 35 per cent reduction in Base Pay from 1 August through to 31 October 2020
– The Chairman took no fees in July 2020 and a 35 per cent reduction in fees from 1 August through to 31 October 2020
– Executive Management took a 15 per cent reduction in Base Pay until 31 October 2020
– Non-Executive Directors took a 15 per cent reduction in fees until 31 October 2020.
The CEO, Executive Management and Non-Executive Directors returned to full pay from 1 November 2020.
There were no increases to Base Pay during 2020/21 for the CEO and Executive Management, other than to the newly appointed Chief
Financial Officer. Consistent with the Group-wide wage freeze, there are no planned Base Pay increases for the CEO and Executive
Management and Fees for Non-Executive Directors for 2021/22.
Variable Remuneration:
– Annual incentives were not paid for 2020/21 (as was also the case in 2019/20).
Notwithstanding that there was strong performance against each of the financial and non-financial components that comprise the
Short Term Incentive Plan (STIP) Scorecard that would have resulted in a substantial award under the 2020/21 STIP, the Board applied its
discretion and determined the STIP Scorecard outcome to be zero.
– Long Term Incentive partially vested.
In relation to the 2019-2021 Long Term Incentive Plan (LTIP), the performance condition against the ASX100 peer group was not
achieved. However, Qantas’ three-year relative Total Shareholder Return (TSR) performance against the airline peer group was ranked
4th of the 18 airlines, resulting in partial vesting.
Consequently, for Executive Management, 50 per cent of LTIP Rights vested and converted to shares, with the remaining Rights lapsing.
In relation to the 2019-2021 LTIP for the CEO, the CEO offered, as he did in 2019/20, and the Board agreed, to defer the decision until at
least August 2022 as to whether his Rights will be forfeited or allowed to convert to shares.
The CEO’s total pay outcome for 2020/21 is marginally higher than in prior years, reflecting the three months of zero Base Pay in 2019/20
compared with one month of zero Base Pay and three months of reduced pay in 2020/21.
Executive Remuneration Framework Review – 2021/22
In considering the priorities for 2021/22, the Board has been acutely conscious of the enormous challenges facing our business and the
pressures placed upon all of our people to manage those challenges. The COVID-19 pandemic has significantly increased the demands on
our executive cohorts at the same time as workloads and complexity have increased, their take home pay has fallen significantly, with no
annual incentives for the past two years and a continued wage freeze. In 2021/22, our executive cohorts are again facing both an extremely
high workload and the prospect of a third year of no annual incentives being awarded.
In that context, it is more critical than ever that the Group retains its talent, because the delivery of the Three-Year Recovery Plan and the
other key outcomes required to set our business for success beyond the pandemic depends upon the effort and acumen of our executive
leadership in particular. Given the challenges and demands faced by our people it is no surprise that the Group is experiencing significant
attrition. Our executive cohorts are talented and in increasing demand across a range of industries, many of which, unlike aviation and
tourism, are experiencing high rates of growth and activity, with financial rewards to match. The Board is particularly concerned that a
continued loss of capability and experience will materially inhibit the Group’s ability to deliver the key outcomes required for success
beyond the pandemic.
37
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Accordingly, the Board is considering how best to structure the Remuneration Framework for 2021/22 to retain the critical talent required to
set the Qantas Group on a course for prosperity beyond the COVID-19 crisis. As such, the Board is considering remuneration initiatives that
are designed to reward and incentivise all employees in setting up Qantas for post-pandemic success. In the case of the CEO and Executive
Management, any such plan would operate in lieu of the traditional annual incentive plan for the year. A separate plan would operate to
reward non-executive employees. Acknowledging the challenges that are expected to persist through the first half of 2021/22, any decision
to approve changes to the Remuneration Framework has been deferred until the second half of 2021/22.
The Qantas Board remains committed to a Remuneration Framework that supports business objectives, operates sustainably and is market
competitive. I invite you to review the 2021 Remuneration Report.
Paul Rayner
Chairman, Remuneration Committee
38
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
REMUNERATION REPORT SUMMARY
1
The objectives of, and approach to, Qantas’ Executive Remuneration Framework are summarised as follows:
Remuneration Objectives
Remuneration Effectiveness
– Supports Business Objectives: Encourages the pursuit of
growth and the success of Qantas. Aligned with Qantas’
purpose, values, strategy and risk appetite. Aligned with
shareholder requirements.
– Oversight: Remuneration governance roles clearly defined for
the Board; Remuneration Committee; Safety, Health,
Environment and Security Committee; Audit Committee; and the
Board’s independent remuneration consultant (EY).
– Operates Sustainably: Encourages sound management of
financial and non-financial risks. Encourages good conduct and
discourages misconduct. Considers cost and reputational
factors and complies with relevant laws and regulations.
Market Competitive: Attracts, motivates and appropriately
rewards a capable management team.
– Structure: Design elements that reward for performance, but
also protect against unintended or unjustified pay outcomes.
– Operation: Demonstrated history of aligning remuneration
outcomes with performance, appropriate application of Board
discretion and adjusting remuneration outcomes based on
individual performance and conduct.
– Quantum: Remuneration decisions made with reference to
comparable roles in other listed Australian companies.
A more detailed description is provided on pages 44 to 45.
The structure of the Executive Remuneration Framework is as follows:
Base Pay
Fixed salary inclusive of superannuation
Annual Incentive
Also referred to as the
Short Term Incentive
Plan (or STIP)
Long Term Incentive
Also referred to as the
Long Term Incentive
Plan (or LTIP)
– An annual incentive opportunity
– Balanced scorecard
–
(financial + non-financial measures)
Individual performance
(achievements and conduct)
– Delivered 2/3rds cash and 1/3rd shares
– Awards of Rights
– Qantas’ 3-year TSR performance relative to:
– A global airline peer group
– ASX100 companies
– Rights may convert to shares on vesting
Cash
Cash
Shares
Deferral Period
Additional Lock
Performance
Restriction
50% Rights may vest, subject to Qantas’ TSR
performance relative to ASX100 companies
50% Rights may vest, subject to Qantas’ TSR
performance relative to airline peers
Performance
Year 1
Year 2
Year 3
Additional Lock
Additional Lock
Restriction
Year 4
l
C
a
w
b
a
c
k
a
p
p
l
i
e
s
39
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
CHANGES TO THE REMUNERATION FRAMEWORK FOR 2020/21
Pay Mix Change for Executives for 2020/21
For 2020/21 only, the pay mix for the CEO and Executive Management changed, with a decrease in weighting towards annual incentive (STIP)
and an increase in weighting towards long term incentive (LTIP). These changes did not increase the total ‘at target’ pay for each Executive for
2020/21, as each Executive’s LTIP opportunity was offset by a reduction in their annual incentive opportunity.
The pay-mix change for 2020/21 further aligned the Executive Management team with the immediate priorities of the post-COVID-19
Recovery Plan. The change was particularly relevant for 2020/21 as the timeframe for delivery of the post-COVID-19 Recovery Plan is the
same three-year period as the performance period under the 2021-2023 LTIP. The pay mix for Executive Management is detailed on page 57.
2020/21 ANNUAL INCENTIVE PLAN
Annual Incentive – Structure
Annual Incentive Outcomes for 2020/21
Also referred to as the Short Term Incentive Plan (or STIP).
The STIP is an annual incentive opportunity where an Executive
may receive an award that is a combination of cash and an
award of restricted shares if the plan’s performance conditions
are achieved.
2020/21 STIP
Outcome
Purpose
Target and
Maximum
Opportunity
Reward for individual and Qantas Group
performance, aligned with annual performance
objectives.
2020/21
2019/20
% of Base Pay
Target
Maximum
Target
Maximum
CEO
50%
90%
100%
200%
Executive
KMP
40%
72%
80%
160%
Business
Performance
STIP Scorecard:
– A single Qantas Group Scorecard that applies to
the CEO and Executive Management
– A balanced set of financial and non-financial
measures.
2020/21 STIP
Scorecard
Individual Performance Factor (IPF):
– Delivery against individual objectives
– Behaviour and how it aligns to the Qantas
Group beliefs.
Base
Pay
x
Target
Opportunity
x
STIP
Scorecard
Outcome
x
IPF
Cash: 2/3rds
Shares: 1/3rd with 2-year deferral period and an
additional 1-year trading restriction, during
which shares cannot be traded and are subject
to clawback.
In addition to required statutory disclosures,
Qantas chooses to disclose the full value of each
year’s STIP award (in years where the STIP
award is made), disclosing both:
– The value of cash awards made
– The full value of restricted shares that were
awarded (notwithstanding that these shares
are still subject to a 2-year deferral period).
The Board retains discretion over any awards
made under the STIP.
Previously, the Board has applied its discretion in
circumstances where, although scorecard
measures had been achieved or exceeded, the
Board deemed it more appropriate to make a nil
or reduced award under the STIP or to deliver a
higher proportion of an award in Qantas shares.
Individual
Performance
STIP Formula
Delivery
Disclosure
Board
Discretion
40
The Board exercised its discretion and made no
awards under the annual incentive plan for the
second successive year.
While the Board sees the balanced scorecard
approach as an important design element of the
STIP, it recognises that the overall STIP outcome
needs to reflect the continuing severe impact of
COVID-19 on Qantas’ operations and financial
position.
Therefore, the Board determined that no awards
be made under the 2020/21 STIP.
Each year, the Board aligns the performance
measures that comprise the STIP Scorecard
with the Qantas Group’s strategic priorities.
For 2020/21, this involved aligning these
performance measures with the key financial,
operational and safety measures supporting
the Recovery Plan. For 2020/21, the Board
selected cash preservation and Recovery Plan
metrics as the key financial performance
measures for the Qantas Group, with a weighting
of 50 per cent of the STIP Scorecard.
Notwithstanding that there was strong
performance against both the financial and
non-financial components of the STIP Scorecard
that would have resulted in a substantial award
(estimated at 121 per cent) under the 2020/21
STIP, the Board applied its discretion and
determined the STIP Scorecard outcome to
be zero.
2020/21 STIP Scorecard:
Strategic Objective
Financial Measures
Recovery Plan and Growth
Customer
Leading Domestic Market Recovery
Workplace and Operational Safety
STIP Scorecard Outcome
Target achieved or exceeded
Partial achievement against targets
No achievement against targets
Weighting
(target)
Outcome
30%
20%
15%
20%
15%
100%
0%
Further detail on the STIP is provided on pages 49 to 51.
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
LONG TERM INCENTIVE PLAN
Long Term Incentive – Structure
Also referred to as the Long Term Incentive Plan (or LTIP).
The LTIP is a 4-year plan that involves an upfront award of a fixed
number of Rights. If performance and service conditions are
achieved over a 3-year period, Rights vest and convert to Qantas
shares. The vested shares are then subject to a 1-year trading
restriction during which the shares cannot be traded and are
subject to clawback.
Purpose
Reward for longer-term Qantas Group
performance.
Target
Opportunity
and Allocation
Methodology
The number of Rights awarded under the LTIP
has been calculated applying a face value
methodology. The number of Rights awarded is
the maximum number of Rights that may vest
and convert to Qantas shares.
The target opportunity for the CEO and
Executive KMP is as follows:
2020/21
Target
Opportunity
% of Base
Pay on a
face value
basis
2019/20 % of Base
Pay on a
face value
basis
CEO
235%
Executive
KMP
135%
185%
95%
The number of Rights awarded is determined by
applying the following formula:
Base
Pay
x
Target
Opportunity
÷
Face Value of
Right
Qantas’ 3-year Total Shareholder Return (TSR)
performance relative to:
– A global airline peer group
– ASX100 companies.
If performance and service conditions
are achieved, Rights vest and convert to Qantas
shares. A 1-year trading restriction on vested
shares applies, during which the shares cannot
be traded and are subject to clawback.
In addition to the required statutory disclosures,
Qantas chooses to disclose the full value of LTIP
awards that vest during the year, disclosing the
value of the LTIP awards based on the share
price at the end of the performance period.
Prior to 1 July 2019, the LTIP was a 3-year plan,
as follows:
– A 3-year performance period
– If performance and service conditions are
achieved, Rights vest and convert to Qantas
shares with no further restrictions.
The 2019-2021 LTIP was the final award that
operated on this basis.
Business
Performance
Delivery
Disclosure
Historic LTIP
Awards
(prior to
1 July 2019)
Further detail on the LTIP is provided on pages 51 to 53.
Long Term Incentive Outcomes for 2020/21
2019-2021
LTIP –
Achievement
of
Performance
Conditions
LTIP
Outcomes
Longer-Term
TSR
Performance
Qantas and the aviation industry continue to
be disproportionately impacted by COVID-19.
However, Qantas continued to outperform the
majority of its industry peers and competitors.
Qantas’ 3-year relative TSR performance was
ranked:
– 4th in the airline peer group – performance
condition fully achieved
– 70th in the ASX100 – performance condition
not achieved.
Based on this performance, 50 per cent vesting
was achieved.
Notwithstanding that the LTIP performance
conditions were partially achieved, the CEO offered
(as he did in 2019/20), and the Board agreed, to
defer the decision until at least August 2022 as to
whether his Rights will be forfeited or allowed to
convert to shares. Therefore, the CEO’s LTIP
outcome in 2020/21 is nil.
For Executive Management, 50 per cent of Rights
awarded under the 2019-2021 LTIP vested and
converted to shares.
The TSR performance of Qantas (and the aviation
industry as a whole) has continued to be adversely
impacted by COVID-19.
Prior to COVID-19, Qantas had achieved continued
longer-term share price growth, resulting in top
quartile relative TSR performance against the airline
peer group and ASX100 group over multiple rolling
3-year periods. Given the impact of COVID-19 on the
aviation industry, Qantas’ TSR performance over the
current 3-year performance period (to 30 June
2021) is below median compared to other ASX100
companies. However, Qantas continues to
outperform the majority of its airline peers,
achieving top quartile relative TSR performance for
the sixth consecutive rolling 3-year period.
QANTAS AND AIRLINE PEERS – 3-YEAR TSR PERFORMANCE1
QANTAS ROLLING 3-YEAR RELATIVE TSR PERFORMANCE1 HISTORY
LTIP Period
2019-2021
2018-2020
2017-2019
2016-2018
2015-2017
2014-2016
Airline Peer Group
ASX100 Peer Group
Top quartile
Top quartile
Top quartile
Top quartile
Top quartile
Top quartile
Below Median
Below Median
Top quartile
Top quartile
Top quartile
Top quartile
1. TSR performance, applying the LTIP performance test methodology (which uses the
average closing share price over the six months preceding the test date of
30 June 2021).
41
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
REMUNERATION OUTCOMES FOR THE CEO IN 2020/21
CEO Remuneration Outcomes – Key Points
The CEO remuneration outcomes demonstrate the commitment from the CEO and Board to align the remuneration outcomes with the
prevailing economic challenges that Qantas, its shareholders, employees and customers are experiencing.
The CEO’s total pay outcome for 2020/21 was 13 per cent higher than 2019/20. This increase was due to three months of zero Base Pay in
2019/20 compared with one month of zero Base Pay and three months of reduced pay. For context, the CEO’s pay in 2020/21 was 80 per
cent lower than pre-COVID (2018/19). The CEO’s pay outcome for 2020/21 is as follows:
– Zero Base Pay in July 2020 and 65 per cent Base Pay from August until 31 October 2020
– Zero Annual Incentive award
– Deferral of any award under the Long Term Incentive Plan, resulting in a zero vesting outcome under the Long Term Incentive Plan.
Base Pay
The CEO did not receive a Base Pay increase during 2020/21.
In addition, the CEO received no Base Pay in July 2020 and
received only 65 per cent of his Base Pay from August through
31 October 2020.
The CEO relinquished $370,708 of his Base Pay in 2020/21 and
relinquished $542,500 in 2019/20. The Base Pay he received in
2020/21 is slightly higher than that in 2019/20 due to the larger
amount of pay forgone in 2019/20.
Base Pay (cash) is $1,777,598 (Base Pay of $2,170,000 less Base Pay
forgone of $370,708 less superannuation contributions of $21,694).
Annual Incentive – 2020/21 STIP
While there was strong performance against the STIP Scorecard
measures, the Board applied its discretion and determined that the
2020/21 STIP Scorecard Outcome was zero.
As a result, the CEO received no award under the 2020/21 STIP.
The STIP Scorecard Outcome is detailed on page 55.
Long Term Incentive – 2019-2021 LTIP
Qantas’ TSR performance over the 3-year performance period was
better than the majority of other airlines that comprise the airline
peer group of the 2019-2021 LTIP.
This would have permitted 50 per cent of the CEO’s Rights to vest
and convert to Qantas shares. However, the CEO offered (as he did
in 2019/20), and the Board agreed, to defer the decision until at
least August 2022 as to whether his Rights will be forfeited or
allowed to convert to shares. As result, the CEO’s LTIP outcome
for 2020/21 was zero.
With respect to the 2018-2020 LTIP Rights, the CEO and the Board
agreed to further defer the decision until at least August 2022 as to
whether his Rights will be forfeited or allowed to convert to shares.
Actual Remuneration Outcomes for the CEO for 2020/21
The remuneration outcomes for the CEO in 2020/21 are detailed in
the following table. These outcomes are aligned with Qantas’
performance during 2020/21.
CEO Remuneration Outcomes1,2
Base Pay (cash)
STIP – cash bonus
STIP – share-based
LTIP
Other
Total Actual Outcome
2021
$’000
1,778
-
-
-
201
1,979
2020
$’000
1,606
-
-
-
138
1,744
2021 vs
2020 %
change
11%
-
-
-
n/a
13%
1. Details of the non-statutory remuneration methodology are explained on pages 49
and 54.
2. A reconciliation of remuneration outcomes to statutory remuneration disclosures
is provided on page 48.
42
CEO REMUNERATION OUTCOMES – BASE PAY (CASH)
CEO REMUNERATION OUTCOMES – ANNUAL INCENTIVE
CEO REMUNERATION OUTCOMES – LONG TERM INCENTIVE
Statutory Remuneration Disclosures
The statutory remuneration disclosures for the CEO are prepared
in accordance with Australian Accounting Standards.
The statutory disclosures differ from the remuneration outcomes
for the CEO due to the accounting treatment of share-based
payments for the STIP and LTIP.
CEO Statutory Remuneration
Base Pay (cash)
STIP – cash bonus
STIP – share-based
LTIP
Other
Total
2021
$’000
1,778
-
237
3,072
201
5,288
2020
$’000
1,606
-
603
2,411
138
4,758
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
CEO Remuneration Outcomes History (2011/12 to 2020/21)
Qantas’ incentive awards are designed to align Executive remuneration outcomes with business performance. This alignment is
demonstrated each year in the variability in the history of the incentive plan outcomes for the CEO, which reflect business performance.
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Underlying
PBT ($M)
ROIC %1
$95
$186
($646)
(1.5%)
$975
16.2%
$1,532
22.7%
$1,401
20.1%
$1,565
21.4%
$1,326
19.2%
$124
5.8%
($1,826)
(23.3%)
1. ROIC % information is only available from 2013/14.
43
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
REMUNERATION REPORT FOR 2020/21
The Remuneration Report sets out remuneration information for the CEO, Executive Management and Non-Executive Directors. Section 300A
of the Corporations Act 2001 (Cth) requires disclosure of remuneration information for Key Management Personnel (KMP), with KMP defined
in Australian Accounting Standard AASB 124 Related Party Disclosures as those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any Director (whether Executive or otherwise) of that entity.
CEO and Executive KMP (and their statutory remuneration disclosures) are listed on page 47. Non-Executive Director KMP (and their statutory
remuneration disclosures) are listed on page 61.
REMUNERATION GOVERNANCE
2
The objectives of Qantas’ Executive Remuneration Framework are to:
– Support Business Objectives by:
– Encouraging the pursuit of growth and the success of Qantas
– Aligning with Qantas’ purpose, values, strategy and risk appetite
– Aligning with shareholder requirements.
– Operate Sustainably by:
– Encouraging the sound management of financial and non-financial risks
– Encouraging good conduct and discouraging misconduct
– Considering cost and reputational factors and complying with relevant laws and regulations.
– Be Market Competitive to attract, motivate and appropriately reward a capable management team.
These objectives are achieved by the Board applying the following robust approach to remuneration governance and effectiveness, described
below across the areas of oversight, structure, operation and quantum:
Oversight
The remuneration governance role of the Board; the Remuneration Committee; the Safety, Health, Environment
and Security Committee; the Audit Committee; and the Board’s independent remuneration consultant (EY) are
clearly defined.
The Remuneration Committee (a committee of the Board, whose members are detailed on pages 10 to 13) has the
role of reviewing and making recommendations to the Board on specific remuneration matters at Qantas. The
Committee makes recommendations it believes are appropriate from the perspective of business performance,
individual performance and conduct, risk, governance, quantum and market conditions.
The Safety, Health, Environment and Security Committee and the Audit Committee have appropriate input into
remuneration decision making. The Chairs of both committees regularly attend Remuneration Committee meetings
and provide input into remuneration decision making. A member of the Remuneration Committee is also a member of
the Safety, Health, Environment and Security Committee and the Audit Committee.
During 2020/21, the Remuneration Committee reappointed EY as its remuneration consultant. The Remuneration
Committee has established protocols in relation to the appointment and use of remuneration consultants to support
compliance with the Corporations Act 2001 (Cth), which are incorporated into the terms of engagement with EY.
The Remuneration Committee did not seek a formal remuneration recommendation (as defined in the Corporations
Act 2001 (Cth)) during 2020/21.
44
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Structure
The framework has design elements that protect against the risk of unintended and unjustified pay outcomes. These
design elements include:
– Diversity in incentive plan performance measures, which as a suite of measures cannot be directly and imprudently
influenced by any individual employee
– Individual performance defined and assessed in terms of both achievements and conduct
– The Board retaining discretion over remuneration outcomes
– Clear maximum values specified for Scorecard outcomes under the STIP and a challenging vesting scale under
the LTIP
– Diversity of the timeframes within which performance is measured, with performance under the STIP measured over
one year and performance under the LTIP measured over three years
– Deferral of a portion of awards under the STIP for two years, with an additional one-year trading restriction providing
alignment with shareholder interests
– Deferral of Rights that vest and convert to shares under the LTIP, with shares subject to a one-year trading
restriction to provide further alignment with shareholder interests
– Clawback being available in the event of serious misconduct, breach of obligations to the Group or a material
misstatement in Qantas’ Financial Statements. The Board may:
– Determine that an Executive forgoes some or all awards otherwise due under the STIP
– Deem some or all STIP shares, which are subject to a deferral period and/or additional one-year trading
restriction, be forfeited
– Cause some or all LTIP Rights which have not yet vested to lapse, or LTIP Rights which have vested and converted
to shares that are subject to a trading restriction to be forfeited
– In the case of serious misconduct, cancel any post-employment benefits for the relevant employee(s) where
possible.
Operation
The Qantas Board has a demonstrated history of aligning remuneration outcomes with performance. The Board has
applied its discretion in the past to ensure remuneration outcomes are appropriate and has adjusted individual
remuneration outcomes based on performance and conduct.
Examples of where the Board has applied its discretion, including both in 2019/20 and 2020/21, are provided on
page 50.
Quantum
Base Pay and incentive plan opportunities are set with reference to external market data, including comparable roles in
other listed Australian companies. Remuneration is benchmarked against ASX50 companies and a revenue-based peer
group of other listed Australian companies.
The Board believes these are the appropriate benchmarks, as these are the comparator groups whose roles best mirror
the size, complexity and challenges in managing Qantas’ businesses, and they are also the peer groups with which
Qantas competes for executive talent.
EMPLOYEE SHARE TRADING POLICY
The Qantas Code of Conduct and Ethics contains Qantas’ Employee Share Trading Policy (Policy). The Policy prohibits employees from dealing
in Qantas securities (or securities of other listed or unlisted entities) while in possession of material non-public information relevant to the entity.
In addition, nominated employees (including the CEO and Executive Management) and Non-Executive Directors are:
– Prohibited from dealing in Qantas securities (or the securities of any Qantas Group listed entity) during defined closed periods
– Required to comply with ‘request to deal’ procedures prior to dealing in Qantas securities (or the securities of any Qantas Group listed
entity) outside of defined closed periods
– Prohibited from hedging or entering into any margin lending arrangement, or entering into any other encumbrances over the securities of
Qantas (or the securities of any Qantas Group listed entity) at any time.
45
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
REMUNERATION OUTCOMES FOR 2020/21
3
The following table summarises the remuneration decisions and outcomes for the CEO and Executive KMP for the year ended 30 June 2021.
The remuneration outcomes detailed in this table are better aligned to the current year performance and are therefore particularly useful in
understanding current year pay and its alignment with performance, in comparison to the statutory remuneration disclosures.
In regards to the 2019-2021 LTIP, the performance measures, being Qantas’ TSR relative to companies with ordinary shares included in the
ASX100 and an airline peer group (Global Listed Airlines), were tested as at 30 June 2021. Qantas’ three-year relative TSR performance was
ranked 4th in the airline peer group and 70th in the ASX100. Based on this performance, 50 per cent vesting was achieved. Notwithstanding
that the LTIP conditions were partially achieved, the CEO offered, as he did in 2019/20 (in relation to the 2018-2020 LTIP), and the Board agreed,
to defer the decision until at least August 2022 as to whether his Rights will be forfeited or allowed to convert to shares. Therefore, the CEO’s
LTIP outcome in 2020/21 is nil. For Executive Management, 50 per cent of Rights awarded under the 2019-2021 LTIP vested and converted to
shares, with the remaining Rights lapsing.
Actual Remuneration Outcomes Table – CEO and Executive KMP1
Base Pay
(Cash)2
STIP Cash
Bonus3
STIP Deferred
Award3
LTIP4,5
Other
Benefits6
Termination
Benefit
$’000s
Current Executives
Alan Joyce
Chief Executive Officer
Andrew David
CEO Qantas Domestic and International
from 1 September 2020
CEO Qantas Domestic
to 31 August 2020
Gareth Evans
CEO Jetstar Group
Vanessa Hudson7,8
Chief Financial Officer from
1 October 2019
Olivia Wirth
CEO Qantas Loyalty
Total
Former Executive
Tino La Spina9
CEO International to 31 August 2020
2021
2020
2021
1,778
1,606
936
2020
749
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
1,005
795
875
576
802
635
5,396
4,361
390
749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
367
314
388
333
145
66
311
141
1,211
854
296
314
201
138
108
50
64
86
182
169
141
145
696
588
95
97
Total
1,979
1,744
1,411
1,113
1,457
1,214
1,202
811
1,254
921
7,303
5,803
-
-
-
-
-
-
-
-
-
-
-
-
763
-
1,544
1,160
1. Details of the non-statutory remuneration methodology are explained on pages 49 and 54.
2. Base Pay (Cash) is Base Pay less superannuation contributions. Superannuation is reported in Other Benefits.
3. The full value of STIP awards made to each Executive is calculated by adding the STIP Cash Bonus and the STIP Deferred Award. For 2019/20 and 2020/21 the value is nil as no
award was made.
4. LTIP awards vested in 2020/21 at 50% for Executive Management other than the CEO. The CEO offered, and the Board, agreed to defer the decision until at least August 2022 as to
whether his Rights will be forfeited or allowed to convert to shares. The decision for the CEO’s LTIP award for 2019/20 was further deferred until August 2022.
5. The number of Rights vested multiplied by the Qantas share price of $4.66 at 30 June 2021, as at the end of the performance period (2020: 30 June 2020).
6. Other Benefits are detailed on page 54.
7. 2019/20 remuneration reflects the full-year remuneration for Ms Hudson. This differs to the Statutory Remuneration disclosure, which includes only the remuneration for the period
of time in a KMP role for Ms Hudson (1 October 2019 to 30 June 2020).
8. Superannuation benefits are provided through a defined benefit superannuation plan. The amount disclosed has been measured in accordance with AASB 119 Employee Benefits.
9. Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas on 30 November 2020. 2020/21 remuneration is included up until the employment
termination date of Mr La Spina on 30 November 2020.
Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas 30 November 2020. Under the terms of separation and
per Mr La Spina’s contract, Mr La Spina received a termination benefit of nine months of Base Pay. Pay for the period from 1 September 2020
to 30 November 2020 has also been presented as Base Pay in the remuneration disclosures. Treatment on cessation of employment, as a
good leaver, under the STIP and LTIP (consistent with the terms and conditions of those plans) was as follows:
– Deferred Shares under the 2018/2019 STIP were released
– Rights under the 2019-2021 LTIP lapsed on termination. As a good leaver, Mr La Spina was eligible to receive the Rights granted under
2019-2021 LTIP which lapsed on the termination date and were replaced by the deferred cash payment prorated for the portion of the
performance period employed
– Rights under the 2020-2022 LTIP continue to remain on foot on a pro-rata basis for the portion of the performance period in which Mr La
Spina was employed, and may vest and convert to shares at the end of the performance period subject to achievement of the original LTIP
performance conditions. Any shares allocated following vesting of the LTIP will be subject to a one-year trading restriction.
46
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
STATUTORY REMUNERATION DISCLOSURES FOR 2020/21
4
The statutory remuneration disclosures for the year ended 30 June 2021 are detailed below. These are prepared in accordance with Australian
Accounting Standards and differ from the 2020/21 remuneration outcomes on page 46. The differences arise due to the accounting
treatment of share-based payments for the STIP and LTIP. The statutory disclosures include an accounting remuneration value for:
– Prior years’ STIP awards
Accounting standards require STIP remuneration to be expensed (and therefore included as statutory remuneration) in financial years
which differ from the year of Scorecard performance.
Despite no awards being made under either the 2019/20 or the 2020/21 STIP, a value for STIP awards is still required to be included in the
statutory remuneration table. This is due to the fact that deferred shares granted under the 2018/19 STIP have a future service period,
during which the recipient must remain employed by the Group for the awards to vest. Therefore, the 2019/20 and 2020/21 statutory
remuneration disclosures include a value for part of those prior year STIP awards.
– LTIP awards that have not vested
Accounting standards require LTIP remuneration to be expensed (and therefore included as statutory remuneration) notwithstanding that
some of the Rights have not met the performance hurdles and have lapsed.
The performance measures for the 2019-2021 LTIP, being Qantas’ TSR relative to companies with ordinary shares included in the ASX100
and an airline peer group (Global Listed Airlines), were tested as at 30 June 2021. Qantas’ three-year relative TSR performance was ranked
4th in the airline peer group and 70th in the ASX100. Based on this performance, 50 per cent vesting was achieved. Notwithstanding that
the LTIP conditions were partially achieved, the CEO offered, and the Board agreed, to defer the decision until at least August 2022 as to
whether his Rights will be forfeited or allowed to convert to shares. For Executive Management, 50 per cent of Rights awarded under the
2019-2021 LTIP vested and converted to shares, with the remaining Rights lapsing. Notwithstanding that 50 per cent of Rights lapsed, the
Statutory Remuneration recognises an expense for 100 per cent of Rights under the 2019-2021 LTIP.
Additionally, LTIP awards that will be assessed for vesting in future years are expensed over the three-year testing period. Therefore, the
statutory disclosures include an accounting value for part of the 2020-2022 and the 2021-2023 LTIP awards.
Statutory Remuneration Table – CEO and Executive KMP
Incentive Plan – Accounting
Accrual
Equity-Settled
Share-Based
Payments
Other Benefits
Base Pay
(Cash)1,2
STIP
Cash
Bonus1
STIP
Deferred
Shares
LTIP
Rights
Sub-
Total
Non-Cash
Benefits1,3
Post-
Employment
Benefits4
Other
Long-Term
Benefits5
Termin-
ation
Benefit
Sub-
Total
$’000s
Current Executives
Alan Joyce
Chief Executive Officer
Andrew David
CEO Qantas Domestic and
International
Gareth Evans
CEO Jetstar Group
Vanessa Hudson6,7
Chief Financial Officer
from 1 October 2019
Olivia Wirth
CEO Qantas Loyalty
Total
Former Executive
Tino La Spina8,9
CEO International
from 1 October 2019
Chief Financial Officer
to 30 September 2019
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
1,778
1,606
936
749
1,005
795
875
384
802
635
5,396
4,169
2021
2020
390
749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
237
603
80
192
94
227
59
78
74
171
544
1,271
3,072
5,087
2,411 4,620
1,696
680
583
720
621
520
1,524
1,819
1,643
1,454
218
567
420
680
1,443
1,226
5,559 11,499
4,253 9,693
95
201
104
583
589
1,533
2
28
4
54
10
21
4
36
15
94
35
233
1
35
53
53
56
50
56
50
138
105
57
51
360
309
44
52
146
57
48
(54)
(2)
15
40
(1)
69
-
301
17
201
138
108
50
64
86
182
140
141
145
696
559
-
-
-
-
-
-
-
-
-
-
-
-
Total
5,288
4,758
1,804
1,574
1,883
1,729
1,636
820
1,584
1,371
12,195
10,252
50
10
95
97
763
-
1,447
1,630
1. Short-term employee benefits include Base Pay (cash), STIP cash bonus and non-cash benefits.
2. Base Pay (Cash) is Base Pay less superannuation contributions. Superannuation is reported in Post-Employment Benefits.
3. Non-cash benefits includes the value of travel benefits while employed and other minor benefits.
4. Post-Employment Benefits includes superannuation and an accrual for post-employment travel of $30,000 for Mr Joyce and $34,000 for each other Executive (2020: $31,000 for
Mr Joyce and $35,000 for each other Executive).
5. Other Long-Term Benefits include movement in annual leave and long service leave balances. The accounting value of other long-term benefits may be negative, for example, where
an Executive’s annual leave balance decreases as a result of taking more annual leave than they accrue during the current year.
6. 2019/20 remuneration reflects the period of time in a KMP role for Ms Hudson (1 October 2019 to 30 June 2020).
7. Superannuation benefits are provided through a defined benefit superannuation plan. The amount disclosed has been measured in accordance with AASB 119 Employee Benefits.
8. Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas on 30 November 2020. 2020/21 remuneration is included up until the employment
termination date of Mr La Spina on 30 November 2020.
9. Under the terms of separation and per Mr La Spina’s contract, Mr La Spina received a termination benefit of nine months’ Base Pay. As a good leaver, the Rights awarded to Mr La
Spina under 2019-2021 LTIP lapsed on the termination date and were replaced by the deferred cash payment prorated for the portion of the performance period employed, as
disclosed in the table on page 46. The Rights granted under the 2020-2022 LTIP continue to remain on foot on a pro-rata basis for the portion of the performance period employed
and may vest and convert to shares at the end of the performance period subject to achievement of the original LTIP performance conditions. Any shares allocated following vesting
of the LTIP will be subject to a one-year trading restriction.
47
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
A reconciliation of the CEO’s remuneration outcome to the statutory disclosures is detailed below as an example.
CEO’s Statutory Remuneration Disclosure to Remuneration Outcome for 2020/21
Reconciliation
($’000s) Description
Statutory Remuneration Disclosure
Accounting value of share-based payments
– Less: Accounting value for STIP share awards
– Less: Accounting value for LTIP share awards
5,288
(237)
(3,072)
The Statutory Remuneration Disclosure includes the accounting value of
share-based payments. Accounting standards require share-based
payments to be amortised over the relevant performance and service
periods. For 2020/21, the Statutory Remuneration Disclosure includes:
– A value resulting from the expense of deferred shares from the
2018/19 STIP awards. No value was included for the 2019/20 or
2020/21 STIP as the CEO did not receive an award under either of
these plans.
– A value resulting from the expense of LTIP Rights from the 2019-
2021, 2020-2022 and 2021-2023 LTIP awards. Statutory
remuneration includes the full expense of LTIP Rights irrespective of
whether performance conditions are achieved or expected to be
achieved. For the 2019-2021 LTIP, the CEO offered, and the Board
agreed, to defer the decision until at least August 2022 as to whether
his Rights will be forfeited or allowed to convert to Shares.
The CEO’s LTIP outcome in 2020/21 is nil but a value is still included as
statutory remuneration. If Rights convert to shares, the value of the
award of the 2019-2021 LTIP will be disclosed in the Remuneration
Outcome for that year. Testing for the 2020-2022 and 2021-2023
LTIP awards will be undertaken as at 30 June 2022 and 30 June
2023, respectively, to determine whether the CEO receives any
shares under these awards.
Current year STIP share awards and vesting of LTIP
awards
– Add: 2020/21 STIP share awards
– Add: 2019-2021 LTIP vesting
In a year where STIP share awards are made or LTIP awards vest, the
Remuneration Outcomes disclosure includes:
– The full value of STIP shares awarded even though these awards are
still subject to a two-year deferral period and an additional one-year
trading restriction
–
–
– The full value of the shares that vested under the LTIP even where
these shares are subject to an additional one-year trading restriction.
No awards were made to the CEO in 2020/21 and therefore these values
are nil.
Remuneration Outcome – Total
1,979
48
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
EXECUTIVE REMUNERATION STRUCTURE
5
The Qantas Executive Remuneration Framework, as it applies to the CEO and Executive Management, is summarised on pages 39 to 43.
Additional detail on the structure and operation of each element of the framework is provided below.
Base Pay
(also referred to
as Fixed Annual
Remuneration)
Base Pay is a guaranteed salary level, inclusive of superannuation. Each year, the Remuneration Committee reviews the
Base Pay for the CEO and Executive Management. An individual’s Base Pay, being a guaranteed salary level, is not related
to Qantas’ performance in a specific year.
Base Pay (Cash), as disclosed in the remuneration tables, excludes superannuation (which is disclosed as Post-
Employment Benefits) and includes salary sacrifice components such as motor vehicles.
In performing a Base Pay review, the Board makes reference to external market data including comparable roles
in other listed Australian companies. Remuneration is benchmarked against ASX50 companies and a revenue-based peer
group of other listed Australian companies. The Board believes these are the appropriate benchmarks, as these are the
comparator groups whose roles best mirror the size, complexity and challenges in managing Qantas’ businesses, and
they are also the peer groups with whom Qantas competes for executive talent.
There was no increase to the Base Pay of the CEO and other Executive Management, other than to the newly appointed
Chief Financial Officer, during 2020/21. In addition, the CEO elected to forgo 100 per cent of his Base Pay from
1 April 2020 until 31 July 2020 and took a 35 per cent reduction in Base Pay from 1 August 2020 through to 31 October
2020. Executive Management took no Base Pay from 1 April 2020 to 30 June 2020 and took a 15 per cent reduction in
Base Pay from 1 July 2020 to 31 October 2020.
Ms Hudson commenced in her KMP role on 1 October 2019 and her Base Pay was set at a level below her predecessor as
she was new to the role. Consistent with the approach taken with members of Executive Management, Ms Hudson’s Base
Pay was realigned and increased to $1,020,000 with effect from 1 July 2020.
Consistent with the Group-wide wage freeze there is no planned Base Pay increases for the CEO and Executive
Management for 2021/22.
The Base Pay for each Executive KMP is outlined on page 57.
Annual Incentive
STIP Overview
Calculation of
STIP Awards
‘Target’
Opportunity
The STIP is the annual incentive plan for members of Qantas Executive Management. Each year, the Executives may
receive an award that is a combination of cash and restricted shares to the extent that the plan’s performance conditions
are achieved.
STIP awards are calculated as follows:
STIP
Award
=
Base Pay
X
‘Target’
Opportunity
X
STIP Scorecard
Outcome
X
Individual Performance
Factor
Each STIP participant has a ‘Target’ STIP Opportunity expressed as a percentage of Base Pay. For 2020/21 only, the pay
mix for the CEO and Executive Management changed, with a decrease in weighting towards annual incentive (STIP) and
an increase in weighting towards long term incentive (LTIP). The ‘Target’ STIP Opportunity expressed as a percentage of
Base Pay for 2020/21 was as follows:
– For the CEO, 50 per cent of Base Pay
– For Executive Management, 40 per cent of Base Pay.
Performance
Conditions –
STIP Scorecard
The Board sets a scorecard of performance conditions for the 2020/21 STIP (the STIP Scorecard).
The STIP Scorecard contains a mix of Group financial and non-financial measures.
For 2020/21, the Board selected cash preservation and Recovery Plan metrics as the key financial performance
measures for the Qantas Group, with a weighting of 50 per cent.
Other financial and non-financial measures comprise the remaining 50 per cent of the STIP Scorecard. The Board sets
targets for each STIP Scorecard measure. At the end of the financial year, the Board assesses performance against each
measure and determines the overall STIP Scorecard outcome.
A detailed description of the STIP Scorecard measures and the 2020/21 STIP Scorecard outcome is provided on pages 55
to 56.
49
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Performance
Conditions –
Individual
Performance
Factor (IPF)
Board
Discretion
An individual’s performance is recognised via an IPF. The IPF is a measure of individual performance that assesses:
– What an individual has achieved
– How they went about it (their conduct and behaviours).
An individual’s behaviour is assessed against the Qantas Group Beliefs. The Qantas Group Beliefs are:
– Everyone has the right to return home safely
– Customers determine our success
– Being a fit, agile and diverse organisation drives innovation and simplicity
– Working together in an inclusive manner always delivers the optimal Group outcome
– Each employee deserves respect, trust and good leadership.
IPFs are generally in the range of 0.8 to 1.2. However, in the case of underperformance the IPF may be zero. In
exceptional circumstances the IPF may be as high as 1.5.
Board discretion is a key element of the design of the STIP.
While the Board sees the STIP Scorecard approach as an important design element of the STIP, it also recognises that
remuneration outcomes must be considered in the context of Qantas’ overall business performance, the operating
environment and non-financial considerations. Circumstances may occur where scorecard measures have been
achieved or exceeded, but in the view of the Board it is more appropriate to make no award under the STIP or to deliver a
higher proportion of an award in Qantas shares. Likewise, there may be circumstances where performance is below an
agreed target where the Board may determine that it is appropriate to pay a partial STIP award. This circumstance has
not occurred.
Therefore, each year the Board considers whether to apply its discretion. The Board may determine that:
– No award be made (as it did in 2011/12, 2013/14, 2019/20 and 2020/21)
– Only a partial award be made (as it did in 2010/11 and 2012/13)
– Any award will be entirely deferred and/or delivered in Qantas shares (as it did in 2010/11)
– A higher proportion of the award be made in Qantas shares (as it did in 2016/17)
– Any award be reduced (as it did in 2018/19).
The Board exercised discretion not to make any awards under the 2020/21 STIP.
Delivery of
STIP Awards
No awards were made under the 2020/21 STIP. In a year where STIP awards are made, 2/3rds of the STIP award would
be paid as a cash bonus, with the remaining 1/3rd deferred into Qantas shares.
STIP Award
Deferral and
Trading Restriction
No awards were made under the 2020/21 STIP. In a year where STIP awards are made, any shares awarded would be
subject to:
– A two-year deferral period, and
– A one-year trading restriction. The trading restriction would apply to these shares both during employment and post-
cessation of employment (shares subject to the trading restriction are not forfeited on cessation of employment, but
are subject to clawback).
Maximum and
Minimum STIP
Outcome
The additional trading restriction strengthens the ability to clawback vested equity, if required.
No awards were made under the 2020/21 STIP.
The maximum outcome under the STIP is capped at 200 per cent of Base Pay for the CEO and 160 per cent of Base Pay
for other Executive Management.
The minimum outcome is nil, which would occur if the threshold level of performance is missed on each STIP measure, if
an individual’s performance does not warrant an award, or if the Board determines that no award be made.
For 2020/21 only, the maximum STIP Scorecard outcome was reduced from 175 per cent to 150 per cent. Hypothetically,
applying an IPF of 1.2 for the CEO and each member of Executive Management, then the maximum outcome under the
STIP for 2020/21 would be approximately 90 per cent of Base Pay for the CEO and 72 per cent of Base Pay for other
Executive Management.
Cessation of
Employment
(plans prior to
1 July 2019)
In general, Executives ceasing employment during the year forfeit any right to participate in that year’s STIP and forfeit
any shares awarded under prior year STIPs that are subject to a deferral period.
In limited circumstances (for example, retirement, employer-initiated terminations (with no record of poor performance),
death or total and permanent disablement), the Board may:
– For the current year STIP, make a pro-rated award that has regard to actual performance against the performance
measures (as determined by the Board following the end of the performance period), and the portion of the
performance period that the Executive served
– For shares awarded under prior year STIPs that are subject to a deferral period, remove that restriction.
50
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Cessation of
Employment
(current plan)
In general, where an Executive resigns, is terminated for cause or is terminated in other circumstances involving
unacceptable performance or conduct, they forfeit any right to participate in that year’s STIP and forfeit any shares
awarded under prior year STIPs that are subject to a deferral period.
For shares subject to the additional trading restriction, forfeiture does not apply. That is, for any shares awarded under
prior year STIPs where the deferral period has been served, but the shares are subject to the additional trading
restriction, the Executive retains those shares subject to the additional trading restriction.
The additional trading restriction strengthens the ability to clawback vested equity, if required.
In limited circumstances (for example, retirement, employer-initiated terminations (with no record of poor
performance), death or total and permanent disablement):
– For the current year STIP, the Executive will receive a pro-rated award based on the actual performance against the
performance measures (as determined by the Board following the end of the performance period), and the portion of
the performance period that the Executive served.
– For shares awarded under prior year STIPs that are subject to a deferral period, the original deferral period and
additional trading restriction continue to apply and these shares are subject to clawback.
On cessation of employment, a tax liability arises on shares that are subject to a deferral period or trading restriction,
notwithstanding that those trading restrictions continue to apply. Accordingly, a portion of the shares may be released
to assist with funding the tax liability that arises for the Executive.
Disclosure
In addition to required statutory disclosures, Qantas chooses to disclose the full value of each year’s STIP award in the
Remuneration Outcomes Table on page 46. This involves disclosing both:
– The value of cash awards made
– The full value of restricted shares that were awarded (notwithstanding that these shares are still subject to a two-
year deferral period and a one-year trading restriction).
No awards were made under the 2020/21 STIP and therefore the value for the 2020/21 STIP is nil.
Disclosure of STIP awards in the Statutory Remuneration Table on page 47 is based on the requirements of the
Corporations Act 2001 (Cth) and applicable Australian Accounting Standards. The STIP awards are disclosed as either:
– A cash incentive for any cash bonus paid, or
– A share-based payment for any component awarded in deferred shares.
Where share-based STIP awards involve deferral over multiple reporting periods, they are reported against each period in
accordance with accounting standards.
Long Term Incentive Plan (LTIP)
LTIP Overview
The LTIP is a four-year plan that involves an upfront award of a fixed number of Rights over Qantas shares. If
performance and service conditions are achieved over a three-year period, Rights vest and convert to Qantas shares.
The vested shares are then subject to a one-year trading restriction during which the shares cannot be traded and are
subject to clawback.
If the three-year performance conditions or service conditions are not met, the Rights lapse.
51
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Performance
Conditions
The performance measures for each of the 2019-2021 LTIP (tested at 30 June 2021), 2020-2022 LTIP (to be tested at
30 June 2022) and 2021-2023 LTIP (to be tested at 30 June 2023) are Qantas’ TSR compared to:
– A global airline peer group
– ASX100 companies.
Up to 50 per cent of the total number of Rights granted may vest based on Qantas’ TSR performance in comparison to
the global airline peer group, and up to 50 per cent of the total number of Rights granted may vest based on Qantas’ TSR
performance in comparison to the ASX100 companies.
These Rights will only vest in full if Qantas’ TSR performance ranks at or above the 75th percentile compared to both the
global airline peer group and the ASX100 companies. At the end of the performance period, the TSR performance of
Qantas and each comparator company is determined based on their average closing share price over the final six
months of the performance period.
Qantas’ Financial Framework also targets top quartile TSR performance relative to global airline peers and ASX100
companies. Therefore, relative TSR performance against these peer groups has been chosen as the performance
measure for the LTIP for alignment.
The peer groups selected provide a comparison of relative shareholder returns relevant to most Qantas investors:
– The global airline peer group was chosen for relevance to investors, including investors based outside Australia, with
a primary interest in the aviation industry sector
– The ASX100 peer group was chosen for relevance to investors with a primary interest in the equity market for major
Australian listed companies (of which Qantas is one).
The vesting scale for both the ASX100 and the global listed airline peer groups is as follows:
Qantas’ TSR Performance Relative to Each Peer Group
Vesting Scale
Below 50th percentile
50th to 75th percentile
Above 75th percentile
Nil vesting
Linear scale: 50 per cent to 100 per cent vesting
100 per cent vesting
The ASX100 peer group comprises those companies that make up the S&P/ASX100 Index at the commencement of the
performance period.
The global listed airline peer group has been selected with regard to its representation of Qantas’ key markets, full-
service and value-based airlines and the level of government involvement. For both the 2019-2021 LTIP and 2020-2022
LTIP, the global listed airline peer group comprised: Air Asia, Air France/KLM, Air New Zealand, All Nippon Airways,
American Airlines, Cathay Pacific, Delta Airlines, Deutsche Lufthansa, easyJet, International Consolidated Airlines Group,
Japan Airlines, LATAM Airlines Group, Ryanair, Singapore Airlines, Southwest Airlines, United Continental and Virgin
Australia. The peer group for the 2021-2023 LTIP was consistent, other than Virgin Australia, which was excluded due to
entering voluntary administration.
The Remuneration Committee regularly reviews the appropriateness of the performance measures. This includes
considering other measures such as Return on Invested Capital. In 2020/21, the Remuneration Committee determined
that the current measures continue to remain the most appropriate. These measures are aligned with returns achieved
for shareholders and are consistent with the Group Financial Framework.
If performance and service conditions are achieved over a three-year period, Rights vest and convert to Qantas shares.
Any shares awarded under the LTIP will be subject to a one-year trading restriction.
Shares subject to the trading restriction are not forfeited on cessation of employment but are subject to clawback. The
additional trading restriction strengthens the ability to clawback vested equity, if required.
In general, any Rights which have not vested are forfeited if the Executive ceases employment with the Qantas Group.
In limited circumstances approved by the Board (for example, retirement, employer-initiated terminations (with no
record of poor performance), death or total and permanent disablement), a deferred cash payment may be made. This
payment is determined with regard to the value of the LTIP Rights which would have vested and converted to shares had
they not lapsed, and the portion of the performance period that the Executive served prior to cessation of employment.
The Board retains discretion to determine otherwise in appropriate circumstances, which may include retaining some or
all of the LTIP Rights.
Review of
Performance
Conditions
Vesting of
LTIP Award
Trading Restriction
(commencing with
2020-2022 LTIP)
Cessation of
Employment
(plans prior to
1 July 2019)
52
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Cessation of
Employment
(commencing
with 2020-2022
LTIP)
In general, when an Executive resigns, is terminated for cause or is terminated in other circumstances involving
unacceptable performance or conduct, any Rights which have not vested will be forfeited. For any shares awarded under
the LTIP that are now subject to an additional trading restriction, the Executive will continue to hold those shares and the
additional trading restriction continues to apply. That is, forfeiture does not apply to those shares during the trading
restriction period. These shares are subject to clawback.
On cessation of employment, a tax liability arises on shares that are subject to the one-year trading restriction,
notwithstanding that the trading restriction continues to apply. Accordingly, a portion of the shares may be released to
assist with funding the tax liability that arises for the Executive.
In limited circumstances (for example, retirement, employer-initiated terminations (with no record of poor
performance), death or total and permanent disablement), Rights will remain on foot on a pro-rata basis and may vest
at the end of the performance period, subject to the satisfaction of the relevant performance and service conditions of
the LTIP. Any shares allocated following vesting of the LTIP will be subject to a trading restriction.
Allocation
Methodology
The number of Rights granted to the CEO and Executive Management under the LTIP is calculated on a face value basis.
This number of Rights is the maximum that may vest at the end of the performance period.
The ‘Target’ LTIP opportunity for the CEO and other Executive KMP is provided on a face value basis in the Summary of
Key Contract Terms on page 57.
Allocation
Methodology
Used in 2020/21
Award to the CEO
At each year’s Annual General Meeting (AGM), Qantas seeks shareholder approval for any award of Rights to the CEO. At
the 2020 AGM, shareholders approved an award of 1,349,000 Rights to the CEO (under the 2021-2023 LTIP), being the
maximum number of Rights that may vest and convert to shares.
The Notice of Meeting for the 2020 AGM set out the proposed number of LTIP Rights to be granted to the CEO on a face
value basis as follows:
Change of
Control
Disclosure
Number of Rights awarded
1,349,000 Rights awarded
=
=
Base Pay x ‘Target’ LTIP Opportunity
Face Value (Share Price) as at 30 June 2020
$2,170,000 x 235%
$3.78
In the event of a change of control, the Board determines whether the LTIP Rights vest or otherwise.
In addition to the required statutory disclosures, Qantas chooses to disclose the full value of LTIP awards that vest
during the year in the Remuneration Outcomes Table on page 46. The full value is equal to the number of Rights vested,
multiplied by the Qantas share price at the end of the performance period, even where these shares are subject to an
additional one-year trading restriction.
The statutory remuneration disclosure amortises the accounting value of LTIP awards over the relevant performance and
service period as per the accounting standards. The accounting value for the LTIP awards does not have regard to
whether performance conditions were achieved.
53
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Other Benefits
Non-Cash
Benefits
Non-Cash Benefits, as disclosed in the remuneration tables, include travel entitlements while employed and other minor
benefits.
Travel
Travel concessions are provided to permanent Qantas employees, consistent with practice in the airline industry.
Travel at concessionary prices is on a sub-load basis, that is, it is subject to considerable restrictions and limits on
availability. The policy includes specified direct family members or a nominated travel companion.
In addition to this, and consistent with practice in the airline industry, the CEO and Executive Management and their
eligible beneficiaries are entitled to a number of trips for personal purposes at no cost to the individual.
Post-employment travel concessions are also available to all permanent Qantas employees who qualify by achieving a
service condition. The CEO and Executive Management and their eligible beneficiaries are also entitled to a number of
trips for personal purposes at no cost to the individual after ceasing employment. An estimated present value of these
entitlements accrues over the service period of the individual and is disclosed as a post-employment benefit.
Superannuation
Superannuation includes statutory and salary sacrifice superannuation contributions (or superannuation benefits
provided through a defined benefit superannuation plan) and is disclosed as a post-employment benefit.
Other
Long-Term
Benefits
The movement in accrual of annual leave and long service leave is included in Other Long-Term Benefits. The
accounting value of other long-term benefits may be negative, for example, where an Executive’s annual leave balance
decreases as a result of taking more annual leave than they accrued during the year.
Minimum Shareholding Guidelines
Minimum
Shareholding
Guidelines
The following shareholding guidelines were introduced with effect from 1 July 2019:
Individual
Guideline
Non-Executive Directors
1 times base fee
CEO
1.5 times Base Pay
Executive Management
0.75 times Base Pay
Non-Executive Directors, the CEO and Executive Management have a maximum five-year period from the date of their
appointment to the respective role or commencement of this guideline to accumulate the value of their shareholding.
54
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
ANNUAL INCENTIVE OUTCOME 2020/21 STIP
6
The Board determined that, despite strong performance against both the financial and non-financial components of the STIP Scorecard that
would have permitted a substantial award under the 2020/21 STIP (as outlined in the table below), the continuing impact of COVID-19 border
closures and travel restrictions on Qantas’ operations and financial position did not warrant any awards. Therefore, the Board applied its
discretion and determined the STIP Scorecard outcome to be zero.
Nonetheless, in the interests of transparency, the table below summarises performance versus target against each scorecard category under
the 2020/21 STIP.
Scorecard
Category/
Strategic Objective Measures
Cash
Preservation
Operating cash flow
Recovery Plan
and Growth
Restructuring
benefits
Scorecard
Weighting
‘Target’
(Range of
Outcomes)
30%
(0-45%)
20%
(0-30%)
Customer
Leading
Domestic Market
Position
Qantas Loyalty
Underlying EBIT
Net Promoter Score
(NPS) – for
domestic airlines
and Qantas
Frequent Flyer
External
Reputation/Trust
Punctuality
Corporate Share –
Qantas Group
Small and Medium-
sized Enterprise
(SME) Share –
Qantas Airlines
Jetstar Capacity
Share
20%
(0-30%)
Workplace and
Operational
Safety
Workplace Safety
measures
15%
(0-22.5%)
Board’s
assessment of
Operational Safety
and ‘Work Well’/’Fly
Well’ Programs
Actual
Outcome
Comment
The net cash outflow from operating activities of ($386) million for
2020/21 was ahead of the target set by the Board. Therefore, there was
an above target contribution under this measure to the STIP Scorecard.
Recovery Plan initiatives have delivered $650 million of structural cost
benefits.
Qantas Loyalty partially achieved its Earnings Before Interest and Tax
(EBIT) target for 2020/21.This scorecard category achieved an at target
outcome and therefore a full contribution to the STIP Scorecard.
15%
(0-22.5%)
NPS targets for all key domestic airlines and Qantas Frequent Flyer
were exceeded despite significant disruption caused by border closures.
Reputation/Trust target was partially achieved.
Qantas Domestic and QantasLink combined achieved the on-time
performance target, with 86.2 per cent of flights on time.
Overall, there was an above target outcome to the STIP Scorecard under
the Customer measure.
Qantas Group’s revenue share of the domestic corporate travel market
and Qantas Airlines’ revenue share of the SME domestic travel market
targets were exceeded.
Jetstar exceeded its Australian domestic market capacity share target.
Overall, there was an above target outcome to the STIP Scorecard under
the Leading Domestic Market Position.
Workplace Safety targets overall were exceeded.
Operational Safety performance continued to remain strong.
‘Work Well’/’Fly Well’ program performance for the year was good.
Overall, there was an above target outcome to the STIP Scorecard under
the Workplace and Operational Safety measure.
2020/21 STIP Scorecard Outcome
100%
(0-150%)
0%
Zero outcome reflects exercise of Board’s discretion.
KEY:
Target achieved
or exceeded
Partial achievement
against targets
No achievement
against targets
55
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional Descriptions of 2020/21 STIP Scorecard Measures
Cash Preservation Cash preservation was critical to our business in 2020/21. Operating cash flow was selected as the primary financial
performance measure under the STIP for the Qantas Group for 2020/21.
Recovery Plan and
Growth
The post-COVID-19 Three-Year Recovery Plan, including delivering on the rightsizing and restructuring initiatives, was a
strategic priority for 2020/21. Therefore, a restructuring benefit target was included as a performance measure.
To support the strategic initiative of growing diversified earnings, a STIP target was set to grow Qantas Loyalty EBIT.
Customer
Customer service is measured against NPS targets.
This is a survey-based measure of how strongly our customers promote the services of our businesses. Individual NPS
targets are set for Qantas Domestic, QantasLink, Qantas Frequent Flyer and Jetstar Australia Domestic.
Maintaining our reputation during a period of significant transformation and uncertain flying resulting from multiple
border closures was a key area of focus. Reputation/Trust is a survey-based measure of how trusted Qantas is as a
brand in the community.
On-time departures for Qantas Domestic and QantasLink continue to be a particular area of focus and is therefore
included as a STIP measure. As agreed with and reported to the Bureau of Infrastructure, Transport and Regional
Economics (BITRE), punctuality is measured as the number of flights operating on-time (on an on-time departure
basis) as a percentage of the total number of flights operated.
Leading Domestic
Market Recovery
To support the strategic initiatives of maximising our domestic position through the dual brand strategy, STIP targets
were set in relation to our Australian domestic share of the corporate and Small and Medium-sized Enterprise (SME)
travel markets and Jetstar domestic capacity share.
Workplace and
Operational
Safety
As safety is always our first priority, the STIP Scorecard includes an assessment of both Workplace and Operational
safety. In addition, the Board retains an overriding discretion to scale down the STIP outcome (or reduce it to zero) in
the event of a material aviation safety incident. This is in addition to the Board’s overall discretion over STIP awards.
Any such decision would be made considering the specific circumstances and following the recommendation of the
Safety, Health, Environment and Security Committee.
The Safety, Health, Environment and Security Committee performs an assessment of both Workplace Safety
performance and Operational Safety performance.
The objective of the Workplace Safety targets is to reduce employee injuries. Targets were therefore set across:
– Total Recordable Injury Frequency Rate
– Lost Work Case Frequency Rate
– Short Term Impairment Injury Frequency Rate
– Long Term Impairment Injury Frequency Rate.
Operational Safety performance is assessed against outcome-based measures (including operational occurrences
that pose a significant threat to the safety of employees and customers) and risk-based lead indicators commonly
associated with aviation industry accidents, such as flight data trends, Technical Dispatch Reliability and reporting
rates.
‘Work Well’/’Fly Well’ programs are assessed against outcomes associated with minimising our customers’ and
employees’ exposure to COVID-19. This includes implementation and effectiveness of controls to prevent clusters both
on-board and in the workplace, and customer satisfaction with the Group’s response to the pandemic.
56
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
7
LONG TERM INCENTIVE OUTCOME 2019-2021
Qantas TSR Performance1
Qantas TSR Rank vs. Airlines
Qantas TSR Rank vs. ASX100
Vesting of 2019-2021 LTIP
(16%)
4th
70th
50%
Prior to COVID-19, Qantas’ TSR Performance was positive. As at 30 June 2021, Qantas’ three-year TSR Performance was (16%).
The three-year performance measures under the 2019-2021 LTIP are Qantas’ TSR compared to:
– A global airline peer group
– ASX100 companies.
The airline industry continues to be severely impacted by COVID-19 as travel restrictions and border closures continued in 2020/21 and
therefore Qantas’ TSR performance versus other ASX100 companies was below median.
Qantas continues to outperform the majority of companies in the global airline peer group, with top quartile relative TSR performance versus
airline peer group companies achieved for the sixth straight rolling three-year period.
Based on this performance, 50 per cent vesting was achieved.
Qantas’ Three-Year TSR Performance1 vs Peer Groups (%)
1.
TSR performance, applying the LTIP performance test methodology (which uses the average closing share price over the six months preceding the test date of 30 June 2021).
SUMMARY OF KEY CONTRACT TERMS AS AT 30 JUNE 2021
8
Contract Details
Base Pay per contract
Actual Base Pay1
Pay Mix:
– 2020/21 STIP ‘Target’2
– 2020/21 LTIP ‘Target’2,3
– 2019/20 STIP ‘Target’2
– 2019/20 LTIP ‘Target’2,3
Notice
Alan Joyce4
Andrew David5
Gareth Evans5
Vanessa Hudson5
Olivia Wirth5
$2,170,000
$1,020,000
$1,800,000
$969,000
$1,081,000
$1,026,950
$1,020,000
$969,000
$867,000
$823,650
50%
235%
100%
185%
40%
135%
80%
95%
40%
135%
80%
95%
40%
135%
80%
95%
40%
135%
80%
95%
An annual benefit of trips for these Executives and eligible beneficiaries during employment,6 at no cost
to the individual, is as follows:
4 long-haul
12 short-haul
2 long-haul
6 short-haul
2 long-haul
6 short-haul
2 long-haul
6 short-haul
2 long-haul
6 short-haul
The same benefit is provided for use post-employment, based on the period of service in an Executive
Management role within the Qantas Group.
Employment may be terminated by either the Executive or Qantas by providing six months’ written
notice.7 Each Executive’s contract includes a provision that limits any termination payment to the
statutory limit prescribed under the Corporations Act 2001 (Cth).
Severance
A severance payment of six months’ Base Pay applies where termination is initiated by Qantas.7
1. Actual Base Pay is the Base Pay per contract less the zero pay in July 2020 and a 35% reduction in pay from August to October 2020 for the CEO, and a 15% reduction from
1 July 2020 to 31 October 2020 for Executive KMP.
2. Opportunity expressed as a percentage of Base Pay.
3. Rights awarded on a face value basis.
4. Target Remuneration Mix for the CEO for 2020/21 was Base Pay 26%, Annual Incentive 13% and Long Term Incentive (on a face value basis) 61%. With Long Term Incentive valued on
a fair value basis, the pay mix was Base Pay 33%, Annual Incentive 17%, Long Term Incentive 50%.
5. Target Remuneration Mix for Executive KMP for 2020/21 was Base Pay 36%, Annual Incentive 15% and Long Term Incentive (on a face value basis) 49%. With Long Term Incentive
valued on a fair value basis, the pay mix was Base Pay 44%, Annual Incentive 17% and Long Term Incentive 39%.
6. These benefits are not cumulative and lapse if they are not used during the calendar year in which the entitlements arise.
7. Other than for misconduct or unsatisfactory performance.
57
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
QANTAS FINANCIAL PERFORMANCE HISTORY
9
To provide further context on Qantas’ performance, the following graphs outline a five-year history of key financial metrics:
Return on Invested Capital (ROIC%)
Underlying Profit before Tax1 ($M)
Operating Cash Flow ($M)
1. Underlying Profit Before Tax (Underlying PBT) is the primary reporting measure used by the Qantas Group’s Chief Operating Decision-Making bodies, being the Chief Executive
Officer, Group Management Committee and the Board of Directors, for the purpose of assessing the performance of the Group. Statutory (Loss)/Profit After Tax for 2020/21 was
($1,728) million (2020: ($1,964) million; 2019: $840 million; 2018: $953 million; and 2017: $853 million).
Qantas’ Five-Year TSR Performance
10 EQUITY INSTRUMENTS
The following tables set out the holdings of equity instruments granted as remuneration.
Shares Awarded Under the Short Term Incentive Plan
The following table details shares awarded under the Short Term Incentive Plan that are subject to a deferral period:
Number of Shares
Short Term Incentive Plan
1 July 2020
Commenced
as KMP
Alan Joyce
Andrew David
Gareth Evans
Vanessa Hudson2
Olivia Wirth
Tino La Spina3
ceased as KMP 31 August 2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
251,886
501,130
83,168
142,616
97,669
170,838
52,894
n/a
74,307
124,706
87,510
145,120
-
-
-
-
-
-
-
52,894
-
-
-
-
Granted1
-
97,768
-
33,088
-
38,963
-
-
-
31,250
-
34,926
Vested and
Transferred
(154,118)
(347,012)
(50,080)
(92,536)
(58,706)
(112,132)
(26,309)
n/a
(43,057)
(81,649)
(87,510)
(92,536)
Forfeited
Employment 30 June 2021
Ceased
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97,768
251,886
33,088
83,168
38,963
97,669
26,585
52,894
31,250
74,307
n/a
87,510
1. Shares awarded under the 2018/19 STIP awards (granted 30 August 2019) were delivered to participants in deferred shares that are subject to a two-year deferral period. The
deferral period on these shares applied throughout 2020/21.
2. Ms Hudson commenced as a KMP on 1 October 2019.
3. Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas on 30 November 2020. All restricted shares were released on cessation of employment.
58
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Rights Awarded Under the Long Term Incentive Plan
The following table details Rights awarded under the Long Term Incentive Plan that are subject to performance hurdles that are yet to be
tested, and vested Rights that have not yet converted into shares.
Long Term Incentive Plan
Alan Joyce4
Andrew David
Gareth Evans
Vanessa Hudson6
Olivia Wirth
Tino La Spina7
1 July 2020
2,081,000
2,510,000
503,000
616,500
532,500
697,500
246,500
n/a
360,500
337,500
503,000
616,500
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Number of Rights
Commenced
as KMP
Granted1,2
Vested and
Transferred3
Lapsed/
Forfeited
Ceased
Employment
-
-
-
-
-
-
-
97,000
-
-
-
-
1,349,000
743,000
-
(1,172,000)
-
-
(83,000)
-
(88,000)
-
(17,500)
-
(37,250)
-
-
-
-
-
-
-
-
-
-
-
(83,000)
(293,000)
(88,000)
(355,000)
(17,500)
n/a
(37,250)
(129,500)
(83,000)
(293,000)
(207,965)
-
(212,035)
-
364,500
179,500
386,000
190,000
364,500
149,500
309,500
152,500
-
179,500
30 June 20215
3,430,000
2,081,000
701,500
503,000
742,500
532,500
576,000
246,500
595,500
360,500
n/a
503,000
1. Rights under the 2021-2023 LTIP were granted on 23 October 2020 to Mr Joyce (following approval by shareholders at the 2020 AGM) and 11 September 2020 for other Executives
and will be tested against the performance hurdles as at 30 June 2023. The number of Rights granted was determined using the face value of a Right on 30 June 2020 of $3.78,
being the start of the performance period. The fair value of a Right on the grant date was $3.07 for Mr Joyce and $2.235 per Right for other Executives.
2. Rights under the 2020-2022 LTIP were granted on 25 October 2019 to Mr Joyce (following approval by shareholders at the 2019 AGM) and 4 October 2019 for other Executives and
will be tested against the performance hurdles as at 30 June 2022. The number of Rights granted was determined using the face value of a Right on 30 June 2019 of $5.40, being
the start of the performance period. The fair value of a Right on the grant date was $3.59 for Mr Joyce and $4.06 per Right for other Executives.
3. 50% of Rights under the 2018-2020 LTIP (granted on 5 September 2017 for other Executives) vested following the testing of performance hurdles as at 30 June 2020 and the
Board’s approval of the 2018-2020 LTIP vesting outcome on 21 August 2020.
4. Rights under the 2018-2020 LTIP (granted on 27 October 2017 to Mr Joyce) are included in the 30 June 2021 balance. The number of Rights granted was determined using the face
value of a Right on 30 June 2017 of $5.72, being the start of the performance period. The fair value of a Right on the grant date was $3.30 for Mr Joyce. 50% vesting was achieved
following the testing of performance hurdles as at 30 June 2020. Notwithstanding that the LTIP conditions were partially achieved, the CEO offered, and the Board agreed, to defer
the decision until at least August 2021 as to whether his Rights will be forfeited or allowed to convert to shares. The CEO and the Board have agreed to further defer the decision until
August 2022.
5. Rights under the 2019-2021 LTIP (granted on 26 October 2018 to Mr Joyce and 5 September 2018 for other Executives) are included in the 30 June 2021 balance. The number of
Rights granted was determined using the face value of a Right on 30 June 2018 of $6.16, being the start of the performance period. The fair value of a Right on the grant date was
$2.33 for Mr Joyce and $3.35 per Right for other Executives. For Executive Management, 50% of these Rights vested following the testing of performance hurdles as at 30 June 2021
and the Board’s approval of the 2019-2021 LTIP vesting outcome on 25 August 2021. The CEO offered, and the Board agreed, to defer the decision until at least August 2022 as to
whether his Rights will be forfeited or allowed to convert to shares.
6. Ms Hudson commenced as a KMP on 1 October 2019.
7. Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas on 30 November 2020. Rights under the 2019-2021 LTIP lapsed on termination and were
replaced by a deferred cash payment prorated for the portion of the performance period employed. Rights under the 2020-2022 LTIP continue to remain on foot on a pro-rata basis
for the portion of the performance period employed and may vest and convert to shares at the end of the performance period subject to achievement of the original LTIP
performance conditions. Any shares allocated following vesting of the LTIP will be subject to a one-year trading restriction.
Equity Holdings and Transactions
Executive KMPs or their related parties directly, indirectly or beneficially held shares in the Qantas Group as detailed in the table below:
Key Management
Personnel – Executives
Interest in Shares
1 July 2020
Commenced as
KMP
Awarded as
Remuneration
Rights Converted
to Shares
Other
Changes1
Interest in Shares
30 June 20212
Alan Joyce
Andrew David
Gareth Evans
Vanessa Hudson
Olivia Wirth
Tino La Spina3
ceased as KMP 31 August 2020
2,980,810
83,168
546,604
58,568
74,307
345,399
-
-
-
-
-
-
-
-
-
-
-
-
-
83,000
88,000
17,500
37,250
83,000
9,433
2,990,243
-
-
9,433
(80,307)
(428,399)
166,168
634,604
85,501
31,250
n/a
1. Other Changes include shares purchased, sold, forfeited, and on cessation as a KMP.
2. Shares awarded under the 2018/19 STIP are subject to a deferral period until after the release of the 2020/21 full-year financial results.
3. Mr La Spina ceased as a KMP on 31 August 2020 and ceased employment with Qantas 30 November 2020.
Other than share-based payment compensation, all equity instrument transactions between the Executive KMP, including their related
parties, and Qantas during the year have been on an arm’s length basis.
59
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Performance Remuneration Affecting Future Periods
The fair value of share-based payments granted is amortised over the service period, therefore, remuneration in respect of these awards may
be reported in future years. The following table summarises the maximum value of the awards that will be reported in the statutory
remuneration tables in future years, assuming all performance conditions are met. The minimum value of these awards is nil should
performance conditions not be satisfied.
Future Expense by Plan
Future Expense by Financial Year
STIP Awards
LTIP Awards
Executives
Alan Joyce
Andrew David
Gareth Evans
Vanessa Hudson
Olivia Wirth
2018/1
9
$’000
2019/20
$’000
2020/2
1
$’000
31
11
12
8
10
-
-
-
-
-
-
-
-
-
-
2019-2021
$’000
2020-2022
$’000
2021-2023
$’000
Total
$’000
2022
$’000
2023
$’000
2024
$’000
Total
$’000
89
28
29
11
24
1,098
3,167 4,385
2,523
1,619
243
4,385
268
284
224
228
557
591
557
473
864
916
800
735
525
558
468
447
296
313
289
251
43
45
43
37
864
916
800
735
11 NON-EXECUTIVE DIRECTOR FEES
Non-Executive Director fees are determined within an aggregate Non-Executive Directors’ fee pool limit. An annual total fee pool of $3 million
(excluding industry standard travel entitlements received) was approved by shareholders at the 2016 AGM. Total Non-Executive Directors’
remuneration (excluding industry standard travel entitlements received and other non-cash benefits) for the year ended 30 June 2021
was $2.25 million (2020: $1.92 million), which is within the approved annual fee pool. Non-Executive Directors’ remuneration reflects the
responsibilities of Non-Executive Directors. Fees are benchmarked against Non-Executive Director fees of ASX50 companies and revenue-
based peer groups.
Non-Executive Director fees remained unchanged in 2020/21. In addition, the Chairman elected to forgo 100 per cent of his fees from 1 April
2020 until 31 July 2020 and took a 35 per cent reduction in fees from August through to 31 October 2020. Non-Executive Directors elected to
forgo 100 per cent of their fees from 1 April 2020 to 30 June 2020 and took a 15 per cent reduction in fees from 1 July 2020 to 31 October
2020. Furthermore, Non-Executive Director fees in 2019/20 were lower than fees in 2020/21 due to the fees that directors elected to forgo in
2019/20. Consistent with the Group-wide wage freeze there are no planned fee increases for Non-Executive Directors for 2021/22.
Board Fees – per Contract
Actual Board Fees3
Board
Committees1
Chair2
$610,000
$505,792
Member
$158,000
$150,100
Chair
$63,500
$60,325
Member
$31,750
$30,163
1. The committees are the Audit Committee, Remuneration Committee, Nominations Committee and Safety, Health, Environment and Security Committee.
2. The Chairman does not receive any additional fees for serving on or chairing any Board Committee.
3. Actual Board Fees are the Board Fees per agreement less the zero pay in July 2020 and a 35% reduction in fees from August to October 2020 for the Chairman, and a 15% reduction
from 1 July 2020 to 31 October 2020 for Non-Executive Directors.
Non-Executive Directors do not receive any performance-related remuneration. Overseas-based Non-Executive Directors are paid a travel
allowance when travelling on international journeys of greater than six hours to attend Board and committee meetings or Board-related
activities requiring the participation of all Directors.
In December 2019, a Non-Executive Director Fee Sacrifice Share Acquisition Plan was introduced whereby Non-Executive Directors can elect
to sacrifice a percentage of their Board or Board and Committee fees in return for a grant of Rights to the equivalent value of the same
number of Qantas ordinary shares. Each Right granted will convert automatically to one fully-paid Qantas ordinary share at the Conversion
Date, which is six months from the Grant Date, subject to remaining as a Non-Executive Director on the Conversion Date. The plan is designed
to provide Non-Executive Directors the opportunity to build their shareholding in a tax effective manner and to further align their interests
with the interests of shareholders. The plan commenced in March 2020, but following approval from the Board, each participating Non-
Executive Director elected to withdraw as a result of the Board’s decision to receive nil fees from 1 April 2020 to 30 June 2020. The plan
recommenced from August 2020. Fees elected to be sacrificed in return for a grant of Rights continue to be reported as ‘Base Pay’ in the
remuneration disclosures.
All Non-Executive Directors and eligible beneficiaries receive travel entitlements. The Chair and eligible beneficiaries are each entitled to four
long-haul trips and 12 short-haul trips each calendar year and all other Non-Executive Directors and eligible beneficiaries are each entitled to
three long-haul trips and nine short-haul trips each calendar year. These flights are not cumulative and lapse if they are not used during the
calendar year in which the entitlement arises.
Post-employment, the Chair and eligible beneficiaries are each entitled to two long-haul trips and six short-haul trips for each year of service,
and all other Non-Executive Directors and eligible beneficiaries are each entitled to one long-haul trip and three short-haul trips for each year
of service. The accounting value of the travel benefit is captured in the remuneration table (as a non-cash benefit for travel during the year and as
a post-employment benefit).
60
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Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration for 2020/21 – Non-Executive Directors
$’000
Richard Goyder
Chair
Maxine Brenner
Non-Executive Director
Jacqueline Hey
Non-Executive Director
Belinda Hutchinson
Non-Executive Director
Michael L'Estrange
Non-Executive Director
Paul Rayner
Non-Executive Director
Todd Sampson
Non-Executive Director
Antony Tyler2
Non-Executive Director
Barbara Ward
Non-Executive Director
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Short-Term Employee Benefits
Post-Employment Benefits
Base Pay1
(Cash)
Non-Cash
Benefits
Sub-Total
Superannuation
Travel
Sub-Total
Total
486
442
192
152
167
130
197
152
192
152
223
175
167
130
241
186
249
198
2,114
1,717
25
37
8
57
-
11
3
51
-
11
5
24
4
106
-
-
-
39
45
336
511
479
200
209
167
141
200
203
192
163
228
199
171
236
241
186
249
237
2,159
2,053
20
16
18
14
13
12
14
14
18
14
18
15
13
12
-
-
22
16
136
113
29
29
11
12
11
12
11
12
11
12
11
12
11
12
11
12
11
12
49
45
29
26
24
24
25
26
29
26
29
27
24
24
11
12
33
28
560
524
229
235
191
165
225
229
221
189
257
226
195
260
252
198
282
265
117
125
253
238
2,412
2,291
1. Base Pay includes any amounts that the Non-Executive Director elects to salary sacrifice in return for a grant of Rights under the Non-Executive Director Fee Sacrifice Share
Acquisition Plan.
2. Mr Tyler received no travel allowance during 2020/21 (2020: $25,000 was included in Base Pay (Cash)).
61
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Directors’ Report continued
For the year ended 30 June 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
Equity Holdings and Transactions
Non-Executive Director KMP or their related parties directly, indirectly or beneficially held shares in the Qantas Group as detailed in the table
below:
Key Management Personnel – Non-Executive Directors
Interest in
Shares as at
30 June 2020
Conversion of Rights
to Ordinary Shares1
Other
Changes2
Interest in
Shares as at
30 June 2021
Richard Goyder
Maxine Brenner
Jacqueline Hey
Belinda Hutchinson
Michael L’Estrange
Paul Rayner
Todd Sampson
Antony Tyler
Barbara Ward
130,000
30,065
38,170
16,200
15,012
287,909
14,095
52,000
44,694
-
-
-
8,432
-
8,020
4,010
-
-
9,433
9,433
9,433
9,433
14,433
9,433
9,433
-
9,433
139,433
39,498
47,603
34,065
29,445
305,362
27,538
52,000
54,127
1. Ordinary Shares issued upon conversion of Rights acquired under the Non-Executive Director Fee Sacrifice Share Acquisition Plan.
2. Other Changes includes shares purchased and sold.
Rights acquired under the Non-Executive Director Fee Sacrifice Share Acquisition Plan
The following table details Rights acquired under the Non-Executive Director Fee Sacrifice Share Acquisition Plan by Non-Executive Director
KMP or their related parties:
Key Management Personnel – Non-Executive Directors
Interest in
Rights as at
30 June 2020
Acquired by Fee
Sacrifice1
Converted to
Ordinary Shares
Interest in
Rights as at
30 June 2021
Richard Goyder
Maxine Brenner
Jacqueline Hey
Belinda Hutchinson
Michael L’Estrange
Paul Rayner
Todd Sampson
Antony Tyler
Barbara Ward
-
-
-
-
-
-
-
-
-
18,347
-
9,512
15,094
-
14,356
7,178
-
-
-
-
-
(8,432)
-
(8,020)
(4,010)
-
-
18,347
-
9,512
6,662
-
6,336
3,168
-
-
1. Number of Rights acquired under the Non-Executive Director Fee Sacrifice Share Acquisition Plan. Rights acquired on 1 September 2020 (Fair value of $3.7430 per Right) converted
to restricted Ordinary Shares on 26 February 2021. Rights acquired on 5 March 2021 (Fair Value of $4.9871) remained outstanding at 30 June 2021 and converted to restricted
Ordinary shares on 27 August 2021.
All equity instrument transactions between the Non-Executive Director KMP, including their related parties, and Qantas during the year have
been on an arm’s length basis.
Loans and Other Transactions with Key Management Personnel
No KMP or their related parties held any loans from the Qantas Group during or at the end of the year ended 30 June 2021 or prior year.
A number of KMPs and their related parties have transactions with the Qantas Group. All transactions are conducted on normal commercial
arm’s length terms.
62
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Directors’ Report continued
For the year ended 30 June 2021
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 environmental sustainability with high standards for environmental performance. The Board places particular
focus on the environmental aspects of its operations through the Safety, Health, Environment and Security Committee, which is responsible
for monitoring compliance with these regulations and reporting to the Board.
The Directors are satisfied that adequate systems are in place for the management of the Qantas Group’s environmental exposures and
environmental performance. The Directors are also satisfied that relevant licences and permits are held and that appropriate monitoring
procedures are in place to ensure compliance with those licences and permits. Any significant environmental incidents are reported to
the Board.
INDEMNITIES AND INSURANCE
Under the Qantas Constitution, Qantas indemnifies, to the extent permitted by law, each Director and Company Secretary of Qantas against
any liability incurred by that person as an officer of Qantas.
The Directors and the Company Secretaries listed on pages 32 to 33 and individuals who formerly held any of these positions have the benefit
of the indemnity in the Qantas Constitution. Members of Qantas’ Executive Management team and certain former members of the Executive
Management team have the benefit of an indemnity to the fullest extent permitted by law and as approved by the Board. In respect of non-audit
services, KPMG, Qantas’ auditor, has the benefit of an indemnity to the extent KPMG reasonably relies on any information provided by Qantas
which is false, misleading or incomplete. No amount has been paid under any of these indemnities during 2020/21 or to the date of this Report.
Qantas has insured against amounts which it may be liable to pay on behalf of Directors and officers or which it otherwise agrees to pay by
way of indemnity.
During the year, Qantas paid a premium for Directors’ and Officers’ liability insurance policies, which cover all Directors and officers of the
Qantas Group. Details of the nature of the liabilities covered, and the amount of the premiums paid in respect of the Directors’ and Officers’
insurance policies, are not disclosed, as disclosure is prohibited under the terms of the contracts.
NON-AUDIT SERVICES
During the year, Qantas’ auditor, KPMG, performed certain other services in addition to its statutory duties. The Directors are satisfied that:
a. The non-audit services provided during 2020/21 by KPMG as the external auditor were compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001 (Cth)
b. Any non-audit services provided during 2020/21 by KPMG as the external auditor did not compromise the auditor independence
requirements of the Corporations Act 2001 (Cth) for the following reasons:
– KPMG services have not involved partners or staff acting in a managerial or decision-making capacity within the Qantas Group or being
involved in the processing or originating of transactions
– KPMG non-audit services have only been provided where Qantas is satisfied that the related function or process will not have a material
bearing on the audit procedures
– KPMG partners and staff involved in the provision of non-audit services have not participated in associated approval or authorisation
processes
– A description of all non-audit services undertaken by KPMG and the related fees has been reported to the Board to ensure complete
transparency in relation to the services provided
– The declaration required by section 307C of the Corporations Act 2001 (Cth) confirming independence has been received from KPMG.
A copy of the lead auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is included on
page 64.
Details of the amounts paid to KPMG for audit and non-audit services provided during the year are set out in Note 28 to the Financial
Statements.
63
Q AN T A S A N NU A L R E POR T 2 0 21
Directors’ Report continued
For the year ended 30 June 2021
LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
To: The Directors of Qantas Airways Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2021, there
have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit,
and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Sydney
17 September 2021
Andrew Yates
Partner
KPMG, an Australian partnership and a member firm of the
KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English
company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license
by the independent member firms of the KPMG global
organization.
Limited liability by a scheme approved
under Professional Standards Legislation
Rounding
Qantas is a company of a kind referred to in Australian Securities and Investments Commission (ASIC) Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in this Directors’ Report and the
Financial Report have been rounded to the nearest million dollars unless otherwise stated.
Signed pursuant to a Resolution of the Directors:
Richard Goyder
Chairman
17 September 2021
Alan Joyce
Chief Executive Officer
17 September 2021
64
Q AN T A S A N NU A L R E POR T 2 0 21
Financial Report
For the year ended 30 June 2021
FINANCIAL STATEMENTS
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
NOTES TO THE FINANCIAL STATEMENTS
Statement of Compliance And Basis of Preparation
Investments Accounted For Under The Equity Method
1
2 Operating Segments, Underlying Profit Before Tax and Return on Invested Capital
3 Earnings Per Share
4 Revenue and Other Income
5 Depreciation and Amortisation
6 Net Gain on Disposal of Assets
7 Other Expenditure
8 Net Finance Costs
Income Tax benefit
9
10 Dividends and Other Shareholder Distributions
11 Receivables
12
Inventories
13 Assets Classified as Held for Sale
14
15 Property, Plant and Equipment
16 Leases
Intangible Assets
17
18 Deferred Tax Assets
19 Other Assets
20 Revenue Received in Advance
21 Net on Balance Sheet Debt
22 Provisions
23 Capital
24 Government Grants and Assistance
25 Impairment Of Assets and Related Costs
26 Share-based Payments
27 Financial Risk Management
28 Auditor’s Remuneration
29 Notes to the Consolidated Cash Flow Statement
30 Superannuation
31 Deed of Cross Guarantee
32 Related Parties
33 Parent Entity Disclosures – Qantas Airways Limited
34 Contingent Liabilities
35 Post-Balance Sheet Date Events
36 Material Business Risks
37 Summary of Significant Accounting Policies
38 New Standards and Interpretations not yet Adopted by the Group
Directors’ Declaration
Independent Auditor’s Report
66
67
68
69
71
72
75
81
81
82
82
82
83
83
84
85
85
85
86
87
88
89
90
91
92
92
93
94
95
96
101
103
109
109
110
112
114
115
117
117
118
120
132
133
134
65
Q AN T A S A N NU A L R E POR T 2 0 21
Consolidated Income Statement
For the year ended 30 June 2021
REVENUE AND OTHER INCOME
Net passenger revenue
Net freight revenue
Other revenue and income
Revenue and other income
EXPENDITURE
Manpower and staff-related
Aircraft operating variable
Fuel
Depreciation and amortisation
Share of net loss of investments accounted for under the equity method
Impairment of assets and related costs
De-designation of fuel and foreign exchange hedges
Redundancies and related costs
Net gain on disposal of assets
Other
Expenditure
Statutory loss before income tax expense and net finance costs
Finance income
Finance costs
Net finance costs
Statutory loss before income tax expense
Income tax benefit
Statutory loss for the year
Attributable to:
Members of Qantas
Non-controlling interests
Statutory loss for the year
Notes
2021
$M
2020
$M
4(B)
5
14
25
27(C)
6
7
8
8
8
9
3,766
1,316
852
5,934
1,970
1,555
835
1,929
129
270
(33)
297
(26)
12,183
1,045
1,029
14,257
3,646
3,520
2,895
2,045
53
1,456
571
565
(7)
1,058
7,984
1,950
16,694
(2,050)
(2,437)
20
(321)
(301)
33
(304)
(271)
(2,351)
(2,708)
623
744
(1,728)
(1,964)
(1,728)
(1,964)
-
-
(1,728)
(1,964)
EARNINGS PER SHARE ATTRIBUTABLE TO MEMBERS OF QANTAS
Basic loss per share (cents)
Diluted loss per share (cents)
3
3
(91.8)
(91.8)
(129.6)
(129.6)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
66
Q AN T A S A N NU A L R E POR T 2 0 21
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Statutory loss for the year
Items that are or may be subsequently reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges, net of tax
Transfer of effective hedging losses/(gains) from hedge reserve to the Consolidated Income Statement,
net of tax1
De-designation of fuel and foreign exchange hedges to the Consolidated Income Statement, net of tax
Recognition of effective cash flow hedges on capitalised assets, net of tax
Net changes in hedge reserve for time value of options, net of tax
Foreign currency translation of controlled entities
Foreign currency translation of investments accounted for under the equity method
Share of other comprehensive loss of investments accounted for under the equity method
Items that will not subsequently be reclassified to profit or loss
Defined benefit actuarial gains/(losses), net of tax
Fair value gains/(losses) on investments, net of tax
Other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Attributable to:
Members of Qantas
Non-controlling interests
Total comprehensive loss for the year
2021
$M
2020
$M
(1,728)
(1,964)
201
49
15
4
42
10
12
12
251
29
625
(205)
(123)
425
(42)
(232)
(9)
11
(6)
(40)
(16)
(237)
(1,103)
(2,201)
(1,103)
(2,201)
-
-
(1,103)
(2,201)
1. These amounts were allocated to revenue of nil (2020: $10 million), fuel expenditure of $67 million (2020: ($129) million), foreign exchange gains/(losses) of $3 million (2020: ($57) million) and
income tax expense of ($21) million (2020: $53 million) in the Consolidated Income Statement.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
67
Q AN T A S A N NU A L R E POR T 2 0 21
Consolidated Balance Sheet
As at 30 June 2021
CURRENT ASSETS
Cash and cash equivalents
Receivables
Lease receivables
Other financial assets
Inventories
Assets classified as held for sale
Income tax receivable
Other
Total current assets
NON-CURRENT ASSETS
Receivables
Lease receivables
Other financial assets
Investments accounted for under the equity method
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Other
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Treasury shares
Reserves
Accumulated losses
Notes
21(A)
11
16(B)
27(B), (C)
12
13
9(D)
19
11
16(B)
27(B), (C)
14
15
16(A)
17
18
19
20
21(B)
16(C)
27(C)
22
20
21(B)
16(C)
27(C)
22
23(A)
23(B)
Equity attributable to members of Qantas
Non-controlling interests
Total equity
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
68
2021
$M
2020
$M
2,221
3,520
579
5
176
279
1
-
169
3,430
54
47
185
57
10,787
1,109
849
675
687
14,450
17,880
1,813
3,277
969
383
17
1,136
7,595
44
2,154
5,861
1,016
5
689
9,769
17,364
516
3,186
(18)
432
(3,087)
513
3
516
520
2
216
306
58
137
193
4,952
101
23
139
59
11,726
1,440
1,050
167
369
15,074
20,026
2,351
2,784
868
524
238
1,539
8,304
99
2,256
5,825
1,318
47
651
10,196
18,500
1,526
3,104
(51)
(173)
(1,357)
1,523
3
1,526
Q AN T A S A N NU A L R E POR T 2 0 21
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
30 June 2021
$M
Issued
Capital
Treasury
Shares
Employee
Compensation
Reserve
Hedge
Reserve
Foreign
Currency
Translation
Reserve
Other1
Reserves
Accumulated
Losses
Non-
controlling
Interests
Total
Equity
Balance as at 1 July 2020
3,104
(51)
54
(147)
4
(84)
(1,357)
3
1,526
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
Statutory loss for the year
Other comprehensive (loss)/income
Effective portion of changes in fair
value of cash flow hedges, net of tax
Transfer of effective hedging losses
from hedge reserve to the Consolidated
Income Statement, net of tax
De-designation of fuel and foreign
exchange hedges to the Consolidated
Income Statement, net of tax
Recognition of effective cash flow
hedges on capitalised assets, net of tax
Net changes in hedge reserve for time
value of options, net of tax
Foreign currency translation of
controlled entities
Foreign currency translation of
investments accounted for under the
equity method
Share of other comprehensive income
of investments accounted for under the
equity method
Defined benefit actuarial gains, net
of tax
Fair value gains on investments, net
of tax
Total other comprehensive income for
the year
Total comprehensive (loss)/income for
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TRANSACTIONS WITH OWNERS RECORDED DIRECTLY IN EQUITY
Contributions by and distributions to owners
Capital raising, net of tax
Share-based payments
Shares vested and transferred to
employees/shares unvested and
lapsed
Total contributions by and
distributions to owners
Total transactions with owners
82
-
-
82
82
Balance as at 30 June 2021
3,186
-
-
33
33
33
(18)
-
19
(39)
(20)
(20)
34
-
201
49
15
4
42
-
-
12
-
-
323
323
-
-
-
-
-
-
-
-
-
-
-
10
12
-
-
-
22
22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251
29
280
280
-
-
-
-
-
(1,728)
-
-
-
-
-
-
-
-
-
-
-
(1,728)
(6)
-
4
(2)
(2)
176
26
196
(3,087)
1. Other Reserves as at 30 June 2021 includes the Defined Benefit Reserve of $178 million and the Fair Value Reserve of $18 million.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
(1,728)
201
49
15
4
42
10
12
12
251
29
625
(1,103)
76
19
(2)
93
93
516
69
Q A N T A S A NN U A L R E P O R T 2 0 2 1
Consolidated Statement of Changes in Equity continued
For the year ended 30 June 2021
30 June 2020
$M
Balance as at 1 July 2019
Issued
Capital
Treasury
Shares
1,871
(152)
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
Employee
Compensation
Reserve
Hedge
Reserve
Foreign
Currency
Translation
Reserve
Other1
Reserves
Retained
Earnings
Non-
controlling
Interests
Total
Equity
101
36
2
(28)
1,181
3
3,014
Statutory loss for the year
Other comprehensive (loss)/income
Effective portion of changes in fair
value of cash flow hedges, net of tax
Transfer of effective hedging gains
from hedge reserve to the Consolidated
Income Statement, net of tax
De-designation of fuel and foreign
exchange hedges to the Consolidated
Income Statement, net of tax
Recognition of effective cash flow
hedges on capitalised assets, net of tax
Net changes in hedge reserve for time
value of options, net of tax
Foreign currency translation of
controlled entities
Foreign currency translation of
investments accounted for under the
equity method
Share of other comprehensive loss of
investments accounted for under the
equity method
Defined benefit actuarial losses, net of
tax
Fair value losses on investments, net of
tax
Total other comprehensive
(loss)/income for the year
Total comprehensive (loss)/income for
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TRANSACTIONS WITH OWNERS RECORDED DIRECTLY IN EQUITY
Contributions by and distributions to owners
Share buy-back
Capital raising
Dividends paid
Treasury shares acquired
Share-based payments
Shares vested and transferred to
employees
Total contributions by and
distributions to owners
Total transactions with owners
Balance as at 30 June 2020
(95)
1,328
-
-
-
-
-
-
-
(5)
-
106
1,233
101
1,233
3,104
101
(51)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28
(75)
(47)
(47)
54
-
(205)
(123)
425
(42)
(232)
-
-
(6)
-
-
(183)
(183)
-
-
-
-
-
-
-
-
(147)
-
-
-
-
-
-
(9)
11
-
-
-
2
2
-
-
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
(40)
(16)
(56)
(56)
-
-
-
-
-
-
-
-
(84)
(1,964)
-
-
-
-
-
-
-
-
-
-
-
(1,964)
(348)
-
(204)
-
-
(22)
(574)
(574)
(1,357)
1.
Other reserves as at 30 June 2020 includes the Defined Benefit Reserve of ($73) million and the Fair Value Reserve of ($11) million.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,964)
(205)
(123)
425
(42)
(232)
(9)
11
(6)
(40)
(16)
(237)
(2,201)
(443)
1,328
(204)
(5)
28
9
713
713
3
1,526
70
Q AN T A S A N NU A L R E POR T 2 0 21
Consolidated Cash Flow Statement
For the year ended 30 June 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees (excluding cash payments to employees for
redundancies and related costs and discretionary bonus payments to non-executive
employees) and refunds to customers from receipts in prior periods
Cash payments to employees for redundancies and related costs
Discretionary bonus payments to non-executive employees
Interest received
Interest paid (interest-bearing liabilities)
Interest paid (lease liabilities)
Dividends received from investments accounted for under the equity method
Australian income taxes paid
Foreign income taxes paid
Net cash (outflow)/inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment and intangible assets
Interest paid and capitalised on qualifying assets
Payments for investments held at fair value
Proceeds from disposal of property, plant and equipment
Payments for investments accounted for under the equity method
Net cash (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for share buy-back
Proceeds from share-issuance, net of costs
Payments for treasury shares
Proceeds from interest-bearing liabilities, net of costs
Repayments of interest-bearing liabilities
Repayments of lease liabilities
Proceeds from finance leases
Dividends paid to shareholders
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Notes
2021
$M
2020
$M
7,507
14,460
(6,726)
(12,870)
(926)
-
15
(183)
(73)
-
-
-
(58)
(6)
29
(146)
(82)
15
(255)
(4)
(386)
1,083
(747)
(21)
-
94
(48)
(722)
-
58
-
937
(759)
(420)
3
-
(181)
(1,289)
3,520
(10)
(1,549)
(48)
(22)
50
(2)
(1,571)
(443)
1,342
(5)
2,155
(625)
(367)
-
(204)
1,853
1,365
2,157
(2)
16(C)
9(D)
9(D)
29
8
21(D)
21(D)
16(C)
10(A)
Cash and cash equivalents at the end of the year
21(A)
2,221
3,520
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
71
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
1
(A) REPORTING ENTITY
Qantas Airways Limited (Qantas) is a for-profit company limited by shares, incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange (ASX) and which is subject to the operation of the Qantas Sale Act 1992 (Cth).
The Consolidated Financial Statements for the year ended 30 June 2021 comprise Qantas and its controlled entities (together referred to as
the Qantas Group) and the Qantas Group’s interest in investments accounted for under the equity method.
Qantas has six subsidiaries that are material to the Qantas Group in 2021 and 2020. The parent has majority voting rights in respect of each
of the material subsidiaries. Materiality has been assessed based on the expected long-term contribution of statutory profit to the Qantas
Group.
The Consolidated Financial Statements of Qantas for the year ended 30 June 2021 were authorised for issue in accordance with a resolution
of the Directors on 17 September 2021.
Statement of Compliance
i.
The Consolidated Financial Statements are general purpose financial statements which have been prepared in accordance with the
Australian Accounting Standards (AASB) adopted by the Australian Accounting Standards Board and the Corporations Act 2001 (Cth).
The Consolidated Financial Statements also comply with International Financial Reporting Standards (IFRS) and International Financial
Reporting Interpretations Committee (IFRIC) adopted by the International Accounting Standards Board (IASB).
The Consolidated Financial Statements have been prepared on a going concern basis, which assumes the Group will be able to meet its
obligations as and when they fall due.
ii. Basis of Preparation
The Consolidated Financial Statements are presented in Australian dollars (AUD), which is the functional currency of the Qantas Group, and
have been prepared on the basis of historical cost except for the following material items in the Consolidated Balance Sheet:
– Derivatives at fair value through profit and loss, and investments at fair value through other comprehensive income are measured at fair
value
– Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell
– Net defined benefit asset/(liability) is measured at fair value of plan assets less the present value of the defined benefit obligation.
Qantas is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. In
accordance with that Instrument, all financial information presented has been rounded to the nearest million dollars, unless otherwise stated.
In addition, all financial information presented is representative of the Qantas Group, unless otherwise stated.
(B) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Consolidated Financial Statements requires Management to make judgements, estimates and assumptions that affect
the application of accounting policies and reported amounts of assets, liabilities, income and expenses. It also requires the directors to exercise
their judgment in the process of applying the Group’s accounting policies. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for
making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis, as appropriate to the particular circumstances. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Judgements made by
Management in the application of AASBs that have a significant effect on the Consolidated Financial Statements and estimates with a
significant risk of material adjustment in future periods are included in the following notes:
– Note 1(C) – Impact of COVID-19 on Financial Reporting
– Note 25 – Impairment of Assets and Related Costs
– Note 27(C) – Derivatives and Hedging Instruments
– Note 30 – Superannuation
– Note 37(D) – Summary of Significant Accounting Policies (Revenue)
– Note 37(M) – Summary of Significant Accounting Policies (Provisions).
(C) IMPACT OF COVID-19 ON FINANCIAL REPORTING
The impact of COVID-19 on the Qantas Group has been unprecedented and continues to evolve. The section below outlines key areas of impact
relevant to the Consolidated Financial Statements for the year ended 30 June 2021. Additional information on how the Group has been impacted by
COVID-19 and its ongoing response is provided in the Review of Operations on pages 14 to 28.
Overview of COVID-19 Impact on the Qantas Group and the Group’s Recovery Plan
i.
The measures taken by governments across the world to slow the spread of COVID-19 severely impacted airlines as travel restrictions and
border closures were imposed. These travel restrictions and the resulting decrease in demand has resulted in significant capacity reductions
domestically and internationally. The Group took immediate and decisive action to mitigate the impact of COVID-19, including a reduction in
flight capacity (domestic and international), workforce stand downs, operational cost-out measures, capital expenditure deferrals and
cancellation of proposed shareholder distributions.
72
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
1
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION (CONTINUED)
(C)
IMPACT OF COVID-19 ON FINANCIAL REPORTING (CONTINUED)
i. Overview of COVID-19 Impact on the Qantas Group and the Group’s Recovery Plan (continued)
Governments worldwide have announced relief packages to support affected businesses, including the aviation industry, to mitigate the
impact of COVID-19. The Australian Aviation Financial Relief Package (AAFRP) was introduced to provide refunds or waivers of a range of
government changes to the aviation industry. JobKeeper was introduced to help keep Australians in jobs and support affected businesses
and was in place in the 2020/21 financial year from July 2020 to March 2021. In April 2021, the International Aviation Support (IAS) program
was introduced to maintain a core Australian international aviation capability and ensure Australian airlines can quickly recommence
commercial international flights as international restrictions are lifted.
In addition, the Australian Government commissioned Qantas to conduct various charter repatriation flights and rescue flights. Along with
other Australian domestic airlines, Qantas also operated domestic and regional flights as part of the Regional Airline Network Support (RANS),
Domestic Aviation Network Support (DANS) and Tourism Aviation Network Support (TANS), which are intended to maintain vital air transport
links. Qantas also secured a contract to conduct freight services under the International Freight Assistance Mechanism (IFAM) to ensure
import and export freight routes remain open.
In addition to ongoing operational responses, during the financial year 2020/21 the Group has boosted liquidity by raising $954 million of
additional debt and $575 million in committed undrawn facilities with no financial covenants, as well as a further $72 million from the
finalisation of the retail portion of its $1.4 billion equity raising. Refer to the Capital Structure and Liquidity section below for further details.
Recovery Plan
In June 2020, the Group announced a three-year plan to accelerate the recovery from the COVID-19 crisis and create a stronger platform for
future profitability, long-term shareholder value and to preserve as many jobs as possible.
The immediate focus of the plan is to:
– Rightsize the Group’s workforce, fleet and other costs according to demand projections, with the ability to scale up as flying returns
– Restructure to deliver ongoing cost savings and efficiencies across the Group’s operations in a changing market
– Recapitalise through an equity raising completed in August 2020 to strengthen the Group’s financial resilience to recovery and the
opportunities it presents.
The ongoing impact of the COVID-19 crisis and the structural changes within the aviation industry underscore the importance of the Qantas
Group’s own program of restructuring. The Three-Year Recovery Plan developed in June 2020 has been updated and presented to the Board in
June 2021 (Recovery Plan). The Recovery Plan is designed to address and respond to the impact of the crisis, preserving as many key assets
and skills as the Group can reasonably carry to support the eventual recovery. COVID-19 represents the biggest challenge ever faced by global
aviation and the Group’s response to the crisis has scaled accordingly.
Key actions during the financial year 2020/21 include:
– Delivered $650 million in structural cost benefits, ahead of target. On track for $850 million by financial year 2021/22 and $1 billion in
annual cost improvements from the 2022/23 financial year onwards with greater than 90 per cent of initiatives completed or underway
– Maintained cash focus and agile network management in addressing highly dynamic environment
– Generated positive Statutory Net Free Cash Flow in the second half of the 2020/21 financial year allowing debt reduction to commence.
Cash flow generation driven by domestic recovery, significant Qantas Loyalty cash flow contribution and record Freight performance
– Materially completed cash outflows for deferred payables, refunds and redundancies
– Qantas Loyalty returned to growth and achieved record customer NPS
– Enhanced customer confidence through ‘Fly Well’ and ‘Fly Flexible’ programs
– Conducted international repatriation flights and maintained vital freight routes
– Maintained strong liquidity, increasing committed undrawn facilities to $1.6 billion and retained Baa2 investment grade credit rating.
Looking into financial year 2021/22 towards domestic ramp up and international restart:
– Highly leveraged to recovery in travel demand as vaccine roll out progresses with pace
– Well-positioned to meet expected sharp increase in domestic travel as lockdowns end
– Able to respond with a range of fleet types and agile network
– Planning for disciplined restart of regular long-haul international passenger services
– Maintaining fleet readiness through IFAM and repatriation flights
– Giving customer confidence to fly, as ‘trusted travel advisor’ through ‘Fly Well’ and investment in digital health passport
– Continued focus on balance sheet repair through debt reduction in financial year 2021/22
– Qantas Loyalty growth trajectory continues.
73
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
1
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION (CONTINUED)
(C)
IMPACT OF COVID-19 ON FINANCIAL REPORTING (CONTINUED)
ii. Capital Structure and Liquidity
The Qantas Group’s Financial Framework is designed to achieve top quartile Total Shareholder Return relative to the ASX100 and global airline
peers. The Framework’s key elements are to:
– Maintain an optimal capital structure that minimises the cost of capital by holding an appropriate level of Net Debt.0F0F29F 1 The
appropriate level of Net Debt reflects the Qantas Group’s size, measured by Invested Capital. This is consistent with investment grade
credit metrics
– Deliver ROIC that exceeds the weighted average cost of capital through the cycle
– Make disciplined capital allocation decisions between reinvestment, debt reduction and distribution of surplus capital to shareholders
while maintaining an optimal capital structure.
Surplus capital is determined on a forward-looking basis, which is the difference between the projected Net Debt position and the target Net
Debt position.
The Qantas Group maintains access to a broad range of debt markets, both secured and unsecured. The Qantas Group maintains a prudent
liquidity policy that ensures adequate coverage of liquidity requirements while considering a range of adverse scenarios.
During the 2020/21 financial year, the Group raised $954 million of additional debt and repaid $759 million of debt, including $400 million for
repayment of a 2020/21 bond. The remaining debt raised strengthened short-term liquidity. There is no further material debt maturing until
May 2022 and no financial covenants on the Group’s debt.
During the year, the Group also completed a retail Share Purchase Plan resulting in the issuance of 22.6 million shares at $3.18 per share
(totalling $72 million).
The Group increased its committed undrawn facilities from $1 billion to $1.6 billion, boosting available liquidity.
As at 30 June 2021, the Group’s available liquidity is $3.8 billion, including $2.2 billion of cash and cash equivalents and a $1.6 billion undrawn
facility.
As at 30 June 2021, Net Debt (as measured by the Group’s Financial Framework) is $5.9 billion with no financial covenants.
The Group continues to hold an investment grade credit rating from Moody’s (Baa2).
At the present time, the Group continues to consider that COVID-19 will not impact the Group’s ability to continue as a going concern or to pay
its debts as and when they become due and payable.
1. Net debt includes balance sheet debt and capitalised aircraft lease liabilities under the Group’s Financial Framework. Capitalised aircraft lease liabilities are measured at the fair value of the aircraft
at the lease commencement date and remeasured over the lease term on a principal and interest basis. The residual value of capitalised aircraft lease liabilities denominated in foreign currency is
translated at the long-term exchange rate.
74
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
1
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION (CONTINUED)
(C)
IMPACT OF COVID-19 ON FINANCIAL REPORTING (CONTINUED)
Impact on Accounting Judgements and Estimates
iii.
The Group’s Recovery Plan in response to COVID-19 has influenced certain accounting judgements and estimates impacting the Annual
Report for the year ended 30 June 2021. The Recovery Plan influenced key judgements and estimates within the following areas of the
Financial Report:
Area of Annual Report
Impact on Judgements and Estimates
Impairment testing
The Recovery Plan informed cash flows used in the determination of the recoverable amount of Cash
Generating Units (CGUs) using the value in use method.
Refer to Note 25 for further details on impairment testing.
Fleet strategy
The Recovery Plan informed judgements around the Group’s fleet strategy which influences estimates
impacting property, plant and equipment, right of use assets, lease liabilities and provisions (including
provisions for makegood on leased assets).
Refer to Note 1(C)(i) for further information.
Provision for redundancies
Decisions and actions to implement the Recovery Plan have informed the recognition of redundancy
provisions as at 30 June 2021.
Refer to Note 22 for further details on redundancies.
Hedge designation and hedge
accounting
The Recovery Plan informed key inputs to hedging designation and hedge accounting requirements
including forecast fuel consumption and forecast income and expenditure denominated in foreign
currencies.
Refer to Note 27(C) for details on hedge designation and hedge accounting.
Balance sheet presentation
The Recovery Plan informed judgements around the presentation of balance sheet items, particularly in
relation to the presentation of revenue received in advance as either current or non-current.
Revenue recognition (Impact of
breakage assumptions)
The significant impact of COVID-19, together with strategies within the Recovery Plan, informed
assumptions around customer and member behaviour and customer engagement strategies which
impacted assumptions around breakage.
Income tax
The Recovery Plan informed judgement around the recognition and recoverability of a net deferred tax
asset relating to income tax losses.
Refer to Note 9 for details on Income Tax and Note 18 on Deferred Tax Assets.
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL
2
(A) OPERATING SEGMENTS
The Qantas Group comprises the following operating segments:
QANTAS
GROUP
Qantas
Domestic
Qantas
International
Jetstar
Group
Qantas
Loyalty
Corporate
Passenger Flying Businesses and Air Cargo
and Express Freight Businesses
Customer Loyalty Recognition
Programs
Centralised Management and
Governance
Underlying EBIT
i.
Underlying EBIT is the primary reporting measure used by the Qantas Group’s Chief Operating Decision-Making bodies (CODM), being the Chief
Executive Officer, Group Management Committee and the Board of Directors, for the purpose of assessing the performance of Qantas
Domestic, Qantas International, Jetstar Group, and Qantas Loyalty operating segments. The primary reporting measure of the Corporate
segment is Underlying PBT, as net finance costs are managed centrally and are not allocated to the Qantas Domestic, Qantas International,
Jetstar Group or Qantas Loyalty operating segments.
Underlying EBIT is calculated as Underlying PBT as outlined below (refer to section B) but excluding the impact of net finance costs.
75
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
2
ii. Analysis by Operating Segment
2021
$M
REVENUE AND OTHER INCOME
External segment revenue and other income
Inter-segment revenue and other income
Total segment revenue and other income
Share of net profit/(loss) of investments accounted
for under the equity method
Underlying EBITDA2
Depreciation and amortisation2
Impairment2
Underlying EBIT
Net finance costs
Underlying PBT
ROIC %3
2020
$M
REVENUE AND OTHER INCOME
External segment revenue and other income
Inter-segment revenue and other income
Total segment revenue and other income
Share of net (loss)/profit of investments accounted
for under the equity method
Underlying EBITDA2
Depreciation and amortisation2
Impairment2
Underlying EBIT
Net finance costs
Underlying PBT
ROIC %3
2019
$M
REVENUE AND OTHER INCOME
External segment revenue and other income
Inter-segment revenue and other income
Total segment revenue and other income
Share of net (loss)/profit of investments accounted
for under the equity method
Underlying EBITDA2
Depreciation and amortisation2
Impairment2
Underlying EBIT
Net finance costs
Underlying PBT
ROIC %3
Qantas
Domestic
Qantas
International
Jetstar
Group
Qantas
Loyalty
Corporate
Unallocated/
Eliminations1
Consolidated
2,496
249
2,745
1
159
(746)
(3)
(590)
1,584
14
1,105
35
1,598
1,140
1
(131)
117
(690)
(2)
(129)
(418)
(3)
(575)
(550)
962
22
984
-
333
(56)
(5)
272
(218)
(320)
(538)
-
17
-
17
5
-
5
-
(87)
(12)
-
(99)
(301)
(400)
5,934
-
5,934
(129)
410
(1,922)
(13)
(1,525)
(301)
(1,826)
(23.3%)
Qantas
Domestic
Qantas
International
Jetstar
Group
Qantas
Loyalty
Corporate
Unallocated/
Eliminations1
Consolidated
4,334
338
4,672
3
907
(723)
(11)
173
5,849
228
2,897
109
6,077
3,006
3
(59)
846
(785)
(5)
56
426
(447)
(5)
(26)
1,106
118
1,224
-
390
(49)
-
341
64
(793)
(729)
-
(15)
-
-
(15)
7
-
7
-
(117)
(17)
-
(134)
(271)
(405)
14,257
-
14,257
(53)
2,437
(2,021)
(21)
395
(271)
124
5.8%
Qantas
Domestic
Qantas
International
Jetstar
Group
Qantas
Loyalty
Corporate
Unallocated/
Eliminations1
Consolidated
5,730
368
6,098
8
1,503
(725)
-
778
7,125
295
3,823
138
7,420
3,961
9
6
1,045
(722)
-
323
836
(436)
-
400
1,488
166
1,654
-
414
(38)
-
376
(204)
(967)
(1,171)
-
(98)
-
-
(98)
4
-
4
-
(156)
(15)
-
(171)
(282)
(453)
17,966
-
17,966
23
3,544
(1,936)
-
1,608
(282)
1,326
19.2%
1. Unallocated/Eliminations represents unallocated and other businesses of the Qantas Group that are not considered to be reportable segments including consolidation elimination
entries. It also includes the impact of discount rate changes on provisions (refer to Note 7) and changes in presentation of income/expenses where the determination of whether the
Group is acting as principal or agent is made on consolidation.
2. Underlying EBITDA represents underlying earnings before income tax expense, depreciation, amortisation, net finance costs and impairment. Depreciation and amortisation and
impairment differs from the depreciation and amortisation and impairment recognised in the Consolidated Income Statement due to items not included in Underlying PBT. Refer to
Note 2(B).
3. ROIC % represents Return on Invested Capital (ROIC) EBIT divided by Average Invested Capital. Refer to Note 2(C).
76
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
2
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
(A) OPERATING SEGMENTS (CONTINUED)
iii. Analysis by Operating Segment (continued)
Passenger revenue primarily arises within the Qantas Domestic, Qantas International and Jetstar Group segments. Freight revenue primarily
arises within Qantas International, except when belly space is utilised in Qantas Domestic and Jetstar Group.
Marketing revenue and redemption revenue in relation to the issuance and redemption of Qantas Points is recognised within the Qantas
Loyalty segment. Marketing revenue on inter-segment Qantas Point issuances is eliminated on consolidation. Redemption revenue arising
from Qantas Group flight redemptions is recognised within Net Passenger Revenue on consolidation. The inter-segment arrangements with
Qantas Loyalty are not designed to derive a net profit from inter-segment Qantas Point issuances and redemptions.
Redemption revenue in relation to products provided by suppliers outside the Group, such as Qantas Rewards Store redemptions and other
carrier redemptions is recognised in the Consolidated Income Statement net of related costs, as the Group is an agent. For the purposes of
segment reporting, the Qantas Loyalty segment reports these redemptions on a gross basis. Adjustments are made within consolidation
eliminations to present these redemptions on a net basis at a Group level within Other Revenue and Income.
(B) UNDERLYING PROFIT BEFORE TAX (UNDERLYING PBT) AND RECONCILIATION TO STATUTORY (LOSS)/PROFIT BEFORE TAX
Underlying PBT is a non-statutory measure and is the primary reporting measure used by the CODM for the purpose of assessing the
performance of the Group. The objective of measuring and reporting Underlying PBT is to provide a meaningful and consistent representation
of the underlying performance of each operating segment and the Qantas Group.
Underlying PBT includes the impact of COVID-19 on the operating performance of the Group. Group revenue for the year ended 30 June 2021 as
recognised within Underlying PBT is down $8.3 billion compared to the year ended 30 June 2020, which is consistent with the reduction of
revenue within the Group’s Statutory Loss.
Likewise, the impact of the decisive actions taken by the Group to mitigate the impact of COVID-19 including a reduction in flight capacity
domestically and internationally (including a reduction in costs from fuel and variable cost reductions), workforce stand downs and
operational cost-out measures have also been recognised in Underlying PBT. Government support to mitigate the impact of COVID-19 from
travel restrictions and border closures including the AAFRP, JobKeeper, IAS, RANS, DANS, TANS, government repatriation flights and IFAM
payments, together with costs to operate or payments to employees, are also recorded in Underlying PBT.
Items which are identified by Management and reported to the CODM bodies as not representing the underlying performance of the business
are not included in Underlying PBT. The determination of these items is made after consideration of their nature and materiality and is applied
consistently from period-to-period.
Items not included in Underlying PBT primarily result from revenues or expenses relating to business activities in other reporting periods,
transformational/restructuring initiatives, transactions involving investments, impairments of assets and other transactions outside the
ordinary course of business.
The impact of COVID-19 and the Group’s Recovery Plan have resulted in items not included in Underlying PBT, including asset impairments,
Recovery Plan restructuring costs including redundancies and de-designated hedging due to a significant decrease in flying activity.
RECONCILIATION OF UNDERLYING PBT TO STATUTORY (LOSS)/PROFIT BEFORE TAX
Underlying PBT
Items not included in Underlying PBT
– Transformation costs and discretionary bonuses for non-executive employees1
– Recovery Plan restructuring costs2
– (Impairment)/reversal of impairment of assets and related costs
– De-designation of fuel and foreign exchange hedges
– Net gain on disposal of assets
– Unrealised foreign exchange movements from the adoption of AASB 16 and the IFRIC Fair
value hedging agenda decision
Total items not included in Underlying PBT
Statutory (Loss)/Profit Before Income Tax Expense
1. Costs incurred under the Transformation Program in prior years are reported under Transformation costs.
2. Costs incurred in relation to the Group’s Recovery Plan are reported under Recovery Plan restructuring costs.
2021
$M
2020
$M
2019
$M
(1,826)
124
1,326
-
(319)
(257)
33
18
-
(191)
(642)
(1,428)
(571)
-
-
(260)
-
39
-
192
(105)
(525)
(2,832)
(134)
(2,351)
(2,708)
1,192
77
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
2
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
(B) UNDERLYING PROFIT BEFORE TAX (UNDERLYING PBT) AND RECONCILIATION TO STATUTORY (LOSS)/PROFIT BEFORE TAX (CONTINUED)
In the 2020/21 financial year, the items outside of Underlying PBT included:
Item Outside of
Underlying PBT
Recovery Plan
restructuring costs
Impairment of assets and
related costs
Description
$319 million included people restructuring costs of $297 million and other restructuring costs of $22 million.
People restructuring costs include redundancy costs related to announced restructuring initiatives. Other
restructuring costs primarily resulted from changes to fleet strategy as a result of the Recovery Plan. Included in
other restructuring costs is $7 million of non-cash accelerated depreciation.
Impairments of assets and related costs of $257 million includes:
– $155 million impairment of the Group’s A380 fleet resulting from changes in the recoverable amount or net
realisable value of the assets including from changes in the market value of the aircraft, changes in the
onerous contractual commitments and movement in foreign exchange rates since 30 June 2020
– $73 million impairment of property, plant and equipment and right of use assets relating to aircraft in the
Jetstar Asia cash generating unit
– $3 million impairment relating to the early retirement of the Group’s 747 fleet driven by movement in foreign
exchange rates since 30 June 2020
– $27 million impairment of property, plant and equipment, intangible assets and other assets from the
implementation of restructuring initiatives in the Recovery Plan
– ($1) million of net impairment reversal of assets in relation to the Group’s associates.
Refer to Note 25 for details on impairment of assets and related costs.
De-designation of fuel
and foreign exchange
hedges
The Group hedges fuel price risk in accordance with the Treasury Risk Management Policy. Hedge accounting is
applied when the requirements of AASB 9 Financial Instruments (AASB 9) are met. Where the forecast fuel
purchase transaction is no longer expected to occur, then hedge accounting is discontinued prospectively and
the amount accumulated in equity is reclassified to the Consolidated Income Statement.
The significant decrease in flying activity compared to expectations at 30 June 2020 has resulted in hedge
accounting being discontinued where forecast fuel purchases are no longer expected to occur.
Where the underlying derivatives, while de-designated for hedge accounting purposes, had remained unrealised
or unsettled, foreign exchange and mark-to-market movements have occurred. These movements have also
been recognised as ineffectiveness in the Consolidated Income Statement.
De-designation and ineffectiveness of fuel and foreign exchange hedges of $33 million has been recognised
immediately in the Consolidated Income Statement. Refer to Note 27 for further details.
Net gain on disposal of
assets
$18 million net gain on disposal primarily relates to a $15 million gain on sale of Qantas’ interest in the Joint User
Hydrant Installation.
78
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
2
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
(B) UNDERLYING PROFIT BEFORE TAX (UNDERLYING PBT) AND RECONCILIATION TO STATUTORY (LOSS)/PROFIT BEFORE TAX (CONTINUED)
The 2019/20 financial year included the following items:
Item Outside of
Underlying PBT
Transformation costs
and discretionary
bonuses for non-
executive employees
Recovery Plan
restructuring costs
Impairment of assets
and related costs
De-designation of fuel
and foreign exchange
hedges
Description
$191 million including redundancy and related costs of $44 million, fleet restructuring costs of $62 million
(primarily related to costs for the introduction of the 789 Dreamliners and retirement of the 747 fleet), other
upfront costs of $55 million directly incurred to enable the delivery of transformation benefits and $30 million of
discretionary bonuses to non-executive employees, which is paid after the employees’ post-wage freeze
collective agreement is voted upon and approved.
$642 million including people restructuring costs of $575 million and fleet restructuring costs of $67 million
resulting from the announced Recovery Plan. People restructuring costs include redundancy costs related to the
announced restructure, and the remeasurement of employee entitlement provisions resulting from rightsizing
and restructuring strategies in the Recovery Plan. Fleet restructuring costs resulted from changes to fleet
strategy in the Recovery Plan.
Impairments of assets and related costs includes:
– $1,087 million impairment of the Group’s A380 fleet, including spares, inventories and related onerous contracts
– $23 million impairment relating to the early retirement of the Group’s 747 fleet
– $150 million impairment of property, plant and equipment, intangible assets and other assets not expected to
be recovered in the Recovery Plan
– $25 million impairment of the Group’s investment in Pacific Airlines (formerly Jetstar Pacific)
– $73 million impairment of Goodwill and indefinite lived intangible assets in the Jetstar Asia cash generating unit
– $70 million impairment of the Group’s investment in Helloworld.
The Group hedges fuel price risk in accordance with the Treasury Risk Management policy. Hedge accounting is
applied when the requirements of AASB 9 Financial Instruments are met. Where the forecast fuel purchase
transaction is no longer expected to occur, then hedge accounting is discontinued prospectively, and the
amount accumulated in equity is reclassified to the Consolidated Income Statement.
The significant decrease in flying activity in the last quarter of the 2019/20 financial year and into the 2020/21
financial year has resulted in hedge accounting being discontinued where forecast fuel purchases are no longer
expected to occur. De-designation of fuel and foreign exchange hedges of $571 million has been recognised
immediately in the Consolidated Income Statement. Refer to Note 27 for further details on de-designation of fuel
and foreign exchange hedges.
The 2018/19 financial year included the following items:
Item Outside of
Underlying PBT
Transformation costs
and discretionary
bonuses for non-
executive employees
Reversal of impairment
of associate
Net gain on disposal of
assets
Unrealised foreign
exchange movements
from the adoption of
AASB 16 and the IFRIC
Fair Value hedging
agenda decision
Description
$260 million included redundancy and related costs of $65 million, fleet restructuring costs of $107 million
(primarily related to costs for the introduction of the 789 Dreamliners and retirement of the 747 fleet), other
upfront costs of $55 million directly incurred to enable the delivery of transformation benefits, $27 million of
discretionary bonuses to non-executive employees which is paid after the employees’ post-wage freeze
collective agreement is voted upon and approved, and other costs of $6 million.
$39 million reversal of impairment relating to the Group’s investment in Helloworld Travel Limited. The reversal
of the impairment has been recognised as an item outside of Underlying PBT consistent with the treatment of
the original impairment.
Net gain on disposal of assets of $192 million is comprised of:
– Net gain on disposal of a controlled entity of $47 million arising from the sale of the Qantas Catering business
– Net gain on disposal of airport terminal assets of $141 million primarily relating to the gain on disposal of
Melbourne Domestic Terminal assets
– Net gain on partial disposal of an associate of $4 million relating to the Group’s investment in Helloworld
Travel Limited. The Group sold 2 million shares for $5.50 per share in September 2018.
Following the adoption of AASB 16 and the IFRIC Fair Value hedging agenda decision, the Group put in place
accounting hedge designations to manage the foreign exchange movements of foreign currency by designating
foreign currency interest-bearing liabilities and lease liabilities as the hedging instrument in a cash flow hedge
relationship.
In accordance with AASB 9, these designations apply prospectively from 1 July 2019. For periods before the
designation the foreign exchange movements were recognised immediately in the Consolidated Income Statement.
As the difference between reporting periods arose due to the timing of accounting hedge designations, the impact
on the Consolidated Income Statement in financial year 2018/19 has been recognised outside of Underlying PBT
to ensure comparability.
79
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
2
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
(C) RETURN ON INVESTED CAPITAL
Return on Invested Capital (ROIC %) is a non-statutory measure and is the primary financial return measure of the Group. ROIC % is calculated
as Return on Invested Capital EBIT (ROIC EBIT) divided by Average Invested Capital.
ROIC EBIT
i.
ROIC EBIT is derived by adjusting Underlying EBIT for the period to exclude leased aircraft depreciation under AASB 16 and to include notional
depreciation for these aircraft to account for them as if they were owned.
In addition, for non-aircraft leases, ROIC EBIT is reduced for the full lease payments rather than depreciation under AASB 16 to account for
these items as a service cost. The objective of these adjustments is to show an EBIT result which is indifferent to the financing or ownership
structure of aircraft assets and that treats non-aircraft leases as a service cost rather than a debt repayment.
ROIC EBIT
Underlying EBIT
Add back: Lease depreciation under AASB 16
Less: Notional depreciation1
Less: Cash expenses for non-aircraft leases
ROIC EBIT
Average Invested Capital for the year ended 30 June 2021
ROIC %2
2021
$M
(1,525)
373
(105)
(199)
(1,456)
6,248
(23.3%)
2020
$M
395
402
(108)
(225)
464
8,055
5.8%
1. For calculating ROIC, capitalised leased aircraft are included in the Group's Invested Capital at the AUD market value (referencing AVAC) at the date of commencing operations at the
prevailing AUD/USD rate. This value is depreciated notionally in accordance with the Group's accounting policies, with the calculated depreciation reported above known as notional
depreciation.
2. ROIC % represents Return on Invested Capital (ROIC) EBIT divided by Average Invested Capital. Refer to Note 2(C)(ii) and 2(C)(iii).
ii. Average Invested Capital
The objective of the Group's Financial Framework is to show Invested Capital which is indifferent to financing or ownership structures of
aircraft assets (leased versus owned). Invested Capital includes the net assets of the business other than cash, lease receivables, interest-
bearing liabilities, other financial assets/(liabilities) and tax balances as well as lease liabilities and right of use assets (for leased aircraft,
property and other assets) as measured under AASB 16.
To account for the capital invested in leased aircraft, Invested Capital includes an amount representing the capitalised value of leased
aircraft assets as if they were owned. Invested Capital includes the full capital held in leased aircraft, which is a non-statutory adjustment,
as in accordance with AASB 16 right of use assets are only measured with reference to the lease term.
Average Invested Capital is equal to the average of the monthly Invested Capital for the year.
Invested Capital
Receivables (current and non-current)
Inventories
Other assets (current and non-current)
Investments accounted for under the equity method
Property, plant and equipment
Intangible assets
Assets classified as held for sale
Payables (current and non-current)
Provisions (current and non-current)
Revenue received in advance (current and non-current)
Capitalised aircraft leased assets1
Invested Capital as at 30 June
Average Invested Capital for the year ended 30 June
2021
$M
633
279
856
57
10,787
849
1
(1,857)
(1,825)
(5,431)
1,167
5,516
6,248
2020
$M
621
306
562
59
11,726
1,050
58
(2,450)
(2,190)
(5,040)
1,301
6,003
8,055
1. For calculating ROIC, capitalised leased aircraft are included in the Group's Invested Capital at the AUD market value (referencing AVAC) at the date of commencing operations at the
prevailing AUD/USD rate. This value is notionally depreciated in accordance with the Group's accounting policies with the calculated depreciation reported above as Notional
Depreciation. The carrying value (AUD market value less accumulated notional depreciation) is reported within Invested Capital as capitalised aircraft leased assets.
80
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
2
OPERATING SEGMENTS, UNDERLYING PROFIT BEFORE TAX AND RETURN ON INVESTED CAPITAL (CONTINUED)
(C) RETURN ON INVESTED CAPITAL (CONTINUED)
iii. ROIC %
ROIC %1
1. ROIC % is calculated as Return on Invested Capital EBIT (ROIC EBIT) divided by Average Invested Capital for the year.
iv. ROIC (Statutory EBIT) %
ROIC (Statutory EBIT) %1
2021
%
(23.3)
2021
%
(31.7)
1. ROIC (Statutory EBIT) % is calculated by replacing Underlying EBIT with Statutory EBIT, maintaining a consistent methodology to ROIC % as outlined in Note 2(C) (i) to (iii).
v. Underlying Earnings Per Share
Underlying (Loss)/Earnings Per Share1
2021
cents
(71.3)
2020
%
5.8
2020
%
(29.4)
2020
cents
5.9
1. Underlying Earnings Per Share is calculated as Underlying PBT less tax benefit/expense based on the Group’s effective tax rate of (26.5) per cent (2020: (27.5) per cent) divided by
the weighted average number of shares outstanding during the year, excluding unallocated treasury shares.
3
EARNINGS PER SHARE
Basic loss per share1
Diluted loss per share2
2021
cents
(91.8)
(91.8)
2020
cents
(129.6)
(129.6)
1. Weighted average number of shares used in basic Earnings Per Share calculation of 1,882 million (2020: 1,516 million) excludes unallocated treasury shares.
2. Weighted average number of shares used in basic and diluted Earnings Per Share calculation is the same for the years ended 30 June 2021 and 30 June 2020 as the effect of share
rights expected to vest are anti-dilutive and excluded from the calculation. Weighted average number of shares used in diluted Earnings Per Share calculation of 1,882 million (2020:
1,516 million) excludes unallocated treasury shares.
Statutory loss attributable to members of Qantas
NUMBER OF SHARES
Issued shares as at 1 July
Shares bought back and cancelled
Capital raising
Issued shares as at 30 June
Weighted average number of shares for the year
REVENUE AND OTHER INCOME
4
(A) REVENUE AND OTHER INCOME BY GEOGRAPHIC AREA
Net passenger and freight revenue
Australia
Overseas
Total net passenger and freight revenue
Other revenue and income
Total revenue and other income
2021
$M
(1,728)
2021
Number
M
1,864
-
22
1,886
1,883
2020
$M
(1,964)
2020
Number
M
1,571
(80)
373
1,864
1,518
2021
$M
2020
$M
4,214
868
5,082
852
5,934
9,262
3,966
13,228
1,029
14,257
Net passenger and freight revenue is attributed to a geographic region based on the point of sale, or where not directly available, on a pro-
rata basis. Other revenue and income is not allocated to a geographic region as it is impractical to do so.
81
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
REVENUE AND OTHER INCOME (CONTINUED)
4
(B) OTHER REVENUE AND INCOME
Frequent Flyer marketing revenue and other Qantas Loyalty businesses
Qantas Rewards Store and other redemption revenue1,2
Third-party services revenue
Other income
Total other revenue and income
2021
$M
431
81
128
212
852
1. Frequent Flyer redemption revenue excludes redemptions on Qantas Group flights which are reported as net passenger revenue in the Consolidated Income Statement.
2. Where the Group acts as an agent for redemptions, an adjustment is made within consolidation eliminations to present these redemptions on a net basis.
Notes
15
16(A)
17
2021
$M
1,356
373
200
1,929
2021
$M
(26)
(26)
2021
$M
166
320
139
121
70
-
(4)
246
1,058
5
DEPRECIATION AND AMORTISATION
Property, plant and equipment
Right of use assets
Intangible assets
Total depreciation and amortisation
6 NET GAIN ON DISPOSAL OF ASSETS
Net gain on disposal of property, plant and equipment
Total net gain on disposal of assets
7
OTHER EXPENDITURE
Commissions and other selling costs
Computer and communication
Capacity hire (excluding lease components)
Property occupancy and utility expenses
Marketing and advertising
Discretionary bonuses to non-executive employees
Discount rate changes impact on provisions
Other
Total other expenditure
82
2020
$M
467
96
263
203
1,029
2020
$M
1,446
402
197
2,045
2020
$M
(7)
(7)
2020
$M
506
489
268
176
160
30
7
314
1,950
Note
16(C)
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
8 NET FINANCE COSTS
FINANCE INCOME
Interest income on financial assets measured at amortised cost
Unwind of discount on receivables
Total finance income
FINANCE COSTS
Interest expense on financial liabilities measured at amortised cost
Interest expense on leases
Interest paid and capitalised on qualifying assets1
Total finance costs on financial liabilities
Unwind of discount on provisions and other liabilities
Employee benefits
Other liabilities and provisions
Total unwind of discount on other liabilities and provisions
Total finance costs
Net finance costs
1. The borrowing costs are capitalised using a 3.8 per cent interest rate (2020: 4.9 per cent).
INCOME TAX BENEFIT
9
(A) INCOME TAX RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
Current income tax expense
Current income tax – Australia
Current income tax – foreign
Total current income tax expense
Deferred income tax benefit
Origination and reversal of temporary differences
Benefit of tax losses
Current year deferred income tax benefit
Adjustments for the prior year
Total deferred income tax benefit
Total income tax benefit in the Consolidated Income Statement
(B) RECONCILIATION BETWEEN INCOME TAX BENEFIT AND STATUTORY LOSS BEFORE INCOME TAX
Statutory loss before income tax benefit
Income tax benefit using the domestic corporate tax rate of 30 per cent
Adjusted for:
Differences in loss from investments accounted for under the equity method
Losses for foreign branches not recognised
Losses for controlled entities not recognised
Write-down of investments and non-deductible CGU impairments
Non-assessable gain on property, plant and equipment
Other net non-assessable items
Over/(under) provision from prior periods
Income tax benefit
2021
$M
15
5
20
(240)
(75)
21
(294)
(4)
(23)
(27)
(321)
(301)
2021
$M
-
(1)
(1)
(49)
671
622
2
624
623
2020
$M
29
4
33
(223)
(96)
48
(271)
(15)
(18)
(33)
(304)
(271)
2020
$M
-
(4)
(4)
675
86
761
(13)
748
744
2021
$M
(2,351)
705
2020
$M
(2,708)
812
(38)
(9)
(38)
-
1
-
2
(20)
(5)
(19)
(29)
-
6
(1)
623
744
83
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
9
INCOME TAX BENEFIT (CONTINUED)
(C) INCOME TAX (EXPENSE)/BENEFIT RECOGNISED DIRECTLY IN THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income tax on:
Cash flow hedges
Defined benefit actuarial (gains)/losses
Fair value gains on investments
Income tax (expense)/benefit recognised directly in the Consolidated Statement of Comprehensive Income
(D) RECONCILIATION OF INCOME TAX BENEFIT TO INCOME TAX (PAYABLE)/RECEIVABLE
Income tax benefit
Adjusted for temporary differences:
Receivables
Inventories
Investments accounted for under the equity method
Property, plant and equipment and intangible assets
Right of use assets
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial (liabilities)/assets
Provisions
Other items
Temporary differences
Adjustments for the prior year
Value of recognised tax losses
Tax losses recognised (Australian)1
Tax instalments paid
Income tax (payable)/receivable2
2021
$M
(133)
(108)
(15)
(256)
2021
$M
623
69
(1)
18
71
(66)
11
(78)
4
123
(35)
78
(145)
49
(2)
670
(671)
-
(1)
2020
$M
76
17
(2)
91
2020
$M
744
29
(2)
(23)
(352)
(4)
14
(80)
(15)
(16)
20
(219)
(27)
(675)
13
82
(86)
141
137
1. A deferred tax asset of $671 million has been recognised for income tax losses and is expected to be recovered in future periods.
2. Financial year 2020/21 net income tax payable of $1 million relates to overseas income tax and is reported in payables.
10 DIVIDENDS AND OTHER SHAREHOLDER DISTRIBUTIONS
(A) DIVIDENDS DECLARED AND PAID
During the year ended 30 June 2021, the Group did not declare or pay any dividends. No dividend will be paid in relation to the year ended
30 June 2021.
(B) FRANKING ACCOUNT
Total franking account balance at 30 per cent
2021
$M
-
2020
$M
-
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
– Franking credits that will arise from the receipt of dividends recognised as receivables at the year end
– Franking credits that may be prevented from being distributed in subsequent years.
84
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
11 RECEIVABLES
Trade receivables
Less provision for impairment losses
Total trade receivables
Sundry receivables
Total receivables
2021
$M
Current
Non-current
489
(6)
483
96
579
-
-
-
54
54
Total
489
(6)
483
150
633
The ageing of trade receivables, net of provision for expected credit losses, at 30 June was:1
Not past due
Past due 1–30 days
Past due 31–120 days
Past due 121 days or more
Total trade receivables
2020
$M
Current
Non-current
335
(17)
318
202
520
-
-
-
101
101
2021
$M
386
75
16
6
483
Total
335
(17)
318
303
621
2020
$M
191
86
4
37
318
1. The Group assesses at each reporting date whether the carrying value of financial assets is impaired. Where necessary, a provision for expected credit losses (ECL) is recognised, depending on
whether there has been a significant increase in credit risk, including risk of default occurring since initial recognition. Refer to Note 37(G) for the Group’s accounting policy.
12
INVENTORIES
Engineering expendables
Consumables stores
Total inventories
13 ASSETS CLASSIFIED AS HELD FOR SALE
2021
$M
Aircraft and engines
Total assets classified as held for sale
2020
$M
Aircraft and engines
Total assets classified as held for sale
2021
$M
243
36
279
Opening Net
Book Value
Transferred from
Property, Plant and
Equipment
Disposals
Impairment
58
58
1
1
(55)
(55)
(3)
(3)
Opening Net
Book Value
Transferred from
Property, Plant and
Equipment
Disposals
Impairment
1
1
71
71
(14)
(14)
-
-
2020
$M
256
50
306
Closing Net
Book Value
1
1
Closing Net
Book Value
58
58
The fair value measurement for property, plant and equipment classified as held for sale has been categorised under the fair value hierarchy
as Level 2. Refer to Note 37(C) for a definition of the fair value hierarchy.
85
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD
14
Ownership interest in investments accounted for under the equity method1
Fiji Resorts Limited
Hallmark Aviation Services L.P.
HT & T Travel Philippines, Inc.
Holiday Tours and Travel (Thailand) Ltd.
Holiday Tours and Travel Vietnam Co. Ltd.
Holiday Tours and Travel (GSA) Ltd.
Helloworld Travel Limited2
Jetstar Japan Co. Ltd.
Pacific Airlines3
PT Holidays Tours & Travel
June 2021
%
June 2020
%
21
49
28
37
37
37
12
33
30
37
21
49
28
37
37
37
15
33
30
37
Based on voting rights.
1.
2. The investment in Helloworld Travel Limited was diluted from 15% to 12% due to issue of new shares by Helloworld Travel Limited pursuant to its equity raising.
3. Jetstar Pacific Airline Aviation Joint Stock Company has been rebranded to Pacific Airlines. The Group has discontinued equity accounting for its interest and the investment is
recognised as Held for Sale with a nil carrying value.
Balance as at 1 July
Cash additions
Non-cash additions
Dividends received
Share of net loss
Share of reserves and other movements
Transfer to provisions
Impairment1
Balance as at 30 June
Note
22
25(C)
2021
$M
59
48
18
-
(129)
14
48
(1)
57
2020
$M
217
2
-
(15)
(53)
3
-
(95)
59
1. The Group recognised a net impairment of $1 million (2020: $70 million) in relation to its investment in Helloworld Travel Ltd. (ASX: HLO). The impairment recognised was determined
with reference to the volume weighted average price (VWAP) in the last quarter of the 2020/21 financial year. In the 2019/20 financial year, the Group recognised an impairment of
$25 million in relation to its investment in Pacific Airlines (formerly known as Jetstar Pacific) due to the announced exit of the business, reducing the carrying value of Pacific
Airlines to nil.
86
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
15 PROPERTY, PLANT AND EQUIPMENT
2021
$M
Accumulated
Depreciation and
Impairment
Net Book
Value
-
(218)
(910)
(1,035)
(12,971)
(458)
-
49
69
202
292
8,734
433
1,008
2020
$M
Accumulated
Depreciation and
Impairment
-
(215)
(873)
(1,043)
(11,943)
(432)
-
At Cost
49
288
1,082
1,437
21,728
886
762
(15,592)
10,787
26,232
(14,506)
At Cost
49
287
1,112
1,327
21,705
891
1,008
26,379
Net Book
Value
49
73
209
394
9,785
454
762
11,726
Opening
Net Book
Value
49
73
209
394
9,785
454
762
11,726
Opening
Net Book
Value
49
77
212
418
10,747
490
783
Cash
Additions1 Disposals
Transfers2
-
-
20
11
420
31
281
763
-
-
-
(21)
-
-
-
(21)
-
-
3
(25)
26
(2)
(26)
(24)
Transferred
(to)/from
Assets
Classified as
Held for Sale
Depreciation
Impairment Other3
Closing Net
Book Value
-
-
-
-
(1)
-
-
(1)
-
(3)
(36)
(60)
-
-
(1)
(1)
(1,222)
(223)
(35)
-
-
-
-
(1)
7
(6)
(51)
(15)
(9)
49
69
202
292
8,734
433
1,008
(1,356)
(225)
(75)
10,787
Cash
Additions1 Disposals
Transfers2
Transferred
(to)/from
Assets
Classified as
Held for Sale
Depreciation
Impairment Other3
Closing Net
Book Value
-
-
74
55
982
76
254
-
-
-
(8)
(14)
(1)
-
(23)
-
-
(3)
2
230
(4)
(241)
(16)
-
-
-
-
-
(4)
(34)
(65)
-
-
(41)
-
-
1
-
(8)
49
73
209
394
(72)
(1,300)
(921)
133
9,785
1
-
(43)
-
(40)
(25)
-
(34)
454
762
(71)
(1,446)
(1,002)
67
11,726
12,776
1,441
Freehold land
Buildings
Leasehold improvements
Plant and equipment
Aircraft and engines
Aircraft spare parts
Aircraft deposits
Total property, plant
and equipment
2021
$M
Freehold land
Buildings
Leasehold improvements
Plant and equipment
Aircraft and engines
Aircraft spare parts
Aircraft deposits
Total property, plant
and equipment
2020
$M
Freehold land
Buildings
Leasehold improvements
Plant and equipment
Aircraft and engines
Aircraft spare parts
Aircraft deposits
Total property, plant
and equipment
1. Additions includes capitalised interest of $17 million (2020: $42 million).
2. Transfers includes transfers between categories of property, plant and equipment and transfers from/(to) other balance sheet accounts.
3. Other includes non-cash movements, movements in accrued payments for property, plant and equipment (2021: $46 million, 2020: $113 million) and disposals where the proceeds
have not yet been received (2021: $6 million, 2020: nil).
(A) AIRCRAFT BY GEOGRAPHIC AREA
Aircraft supporting the Group’s global operations are primarily located in Australia, with the exception of those aircraft which are currently in
storage overseas.
(B) SECURED ASSETS
Certain aircraft and engines act as security against related financing facilities. Under the terms of certain financing facilities entered into by
the Qantas Group, the underwriters of these agreements have a fixed charge over certain aircraft and engines to the extent that debt has been
issued directly to those underwriters. The total carrying amount of assets under pledge is $5,980 million (2020: $6,326 million).
87
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(C) CAPITAL EXPENDITURE COMMITMENTS
The Group’s capital expenditure commitments as at 30 June 2021 are $8,114 million (2020: $9,028 million). The Group has certain rights
within its aircraft purchase contracts which can defer the capital expenditure commitments.
The Group’s capital expenditure commitments are predominantly denominated in US dollars. Commitments reported above are translated to the
Group’s Australian dollar presentational currency at the 30 June 2021 closing exchange rate of $0.75 (30 June 2020: $0.69).
16 LEASES
(A) RIGHT OF USE ASSETS
Aircraft
Property
Other
Total right of use assets
2021
$M
Aircraft
Property
Other
Total right of use assets
2020
$M
Aircraft
Property
Other
2021
$M
Accumulated
Depreciation and
Impairment
(2,175)
(951)
(213)
(3,339)
At Cost
2,581
1,583
284
4,448
Opening
Net Book
Value
Additions/
Modifications/
Remeasurements
2020
$M
Accumulated
Depreciation and
Impairment
(1,994)
(845)
(186)
(3,025)
At Cost
2,604
1,527
334
4,465
Net Book
Value
406
632
71
1,109
Transfers1
Depreciation
Other2
610
682
148
1,440
8
113
9
130
3
(1)
(28)
(26)
(186)
(129)
(58)
(373)
(29)
(33)
-
(62)
Net Book
Value
610
682
148
1,440
Closing Net
Book Value
406
632
71
1,109
Opening
Net Book
Value
Additions/
Modifications/
Remeasurements
684
640
95
147
177
129
Transfers1
Depreciation
-
(25)
-
(214)
(127)
(61)
Other2
Closing Net Book
Value
(7)
17
(15)
610
682
148
Total right of use assets
1. Transfers includes transfers from/(to) lease receivables where the Group is a sub-lessor.
2. Other movements include early terminations of $37 million (2020: $3 million), the impairment of other right of use assets, mainly supporting the Group's A380 fleet of nil (2020:
$14 million) and impairment of aircraft right of use assets recognised within the Jetstar Asia CGU of $20 million (2020: nil), foreign exchange movements and changes in the
measurement of make good assets.
(402)
1,419
(25)
453
(5)
1,440
(B) LEASE RECEIVABLES
2021
$M
2020
$M
Finance lease receivable1
Total
Current
Non-current
5
5
47
47
Total
52
52
Current
Non-current
2
2
23
23
Total
25
25
1. The Group has subleased property, plant and equipment and aircraft and classified the sublease as a finance lease. The subleased portion of the right of use asset was derecognised
and the Group recognised a finance lease receivable (net investment in the finance lease). The interest income recognised on the net investment in the finance lease was $2 million
(2020: $0.5m).
(C) LEASE LIABILITIES
Aircraft
Property
Other
Total lease liabilities
88
2021
$M
Current
Non-current
175
154
54
383
296
679
41
1,016
2020
$M
Current
Non-current
282
163
79
524
491
740
87
1,318
Total
471
833
95
1,399
Total
773
903
166
1,842
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
16 LEASES (CONTINUED)
(C) LEASE LIABILITIES (CONTINUED)
2021
$M
Aircraft
Property
Other
Opening
Balance
Additions/
Modifications/
Remeasurements
Lease
Repayments1
Interest
Foreign
Exchange
773
903
166
8
113
9
130
(273)
(145)
(75)
(493)
22
50
3
75
(59)
(9)
(8)
(76)
Additions/
Modifications/
Remeasurements
Lease
Repayments1
Interest
Foreign
Exchange
147
177
129
453
(242)
(142)
(65)
(449)
36
55
5
96
2
2
-
4
Total lease liabilities
1,842
2020
$M
Aircraft
Property
Other
Total lease liabilities
Opening
Balance
830
825
97
1,752
Other2
-
(79)
-
(79)
Other2
-
(14)
-
(14)
Closing
Balance
471
833
95
1,399
Closing
Balance
773
903
166
1,842
1. Lease repayments of $493 million includes $420 million principal repayments and $73 million interest repayments. The lease repayments in financial year 2020/21 include deferred
lease repayments of $49 million from 2020 (2020: Lease repayments of $449 million includes $367 million principal repayments and $82 million interest repayments. The lease
repayments exclude deferred lease repayments of $60 million).
2. Other movements include rental waivers of $31 million (2020: $13 million), early terminations of $39 million (2020: $3 million).
(D) RECOGNISED WITHIN OTHER EXPENSES IN THE CONSOLIDATED INCOME STATEMENT
Lease expense for short-term leases
Variable lease expenses not included in lease liabilities
Rental waivers
17
INTANGIBLE ASSETS
2021
$M
-
2
31
2020
$M
5
-
13
2021
$M
Accumulated
Amortisation
and Impairment
Net Book Value
-
-
(1,394)
-
(4)
(4)
(1,402)
166
35
480
1
-
167
849
At Cost
166
35
1,874
1
4
171
2,251
2020
$M
Accumulated
Amortisation
and Impairment
Net Book Value
-
-
(1,281)
-
(4)
-
(1,285)
162
35
685
1
-
167
1,050
At Cost
162
35
1,966
1
4
167
2,335
Opening Net
Book Value
Cash
Additions1
Transfers2
Amortisation
Impairment
Other3
Closing Net
Book Value
162
35
685
1
167
1,050
-
-
14
-
3
17
-
-
1
-
-
1
-
-
(196)
-
(4)
(200)
-
-
(22)
-
-
(22)
4
-
(2)
-
1
3
Goodwill
Airport landing slots
Software
Brand names and trademarks
Customer contracts/relationships
Contract intangible assets
Total intangible assets
2021
$M
Goodwill
Airport landing slots
Software
Brand names and trademarks
Contract intangible assets
Total intangible assets
1. Additions includes capitalised interest of $4 million.
2. Transfers includes those between categories of intangible assets and transfers from/(to) other balance sheet accounts.
3. Other movements include Goodwill recognised on acquisition of National Jet Systems in July 2020 of $4 million and foreign exchange movements.
166
35
480
1
167
849
89
Opening Net
Book Value
Cash
Additions1
Transfers2
Amortisation
Impairment
Other
Closing Net
Book Value
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
17
INTANGIBLE ASSETS (CONTINUED)
2020
$M
Goodwill
Airport landing slots
Software
Brand names and trademarks
Customer contracts/relationships
Contract intangible assets
209
35
826
28
1
126
Total intangible assets
1,225
-
-
150
-
-
41
191
-
-
1
-
-
-
1
-
-
(197)
-
-
-
(47)
-
(97)
(26)
-
-
(197)
(170)
1. Additions includes capitalised interest of $6 million.
2. Transfers includes those between categories of intangible assets and transfers from/(to) other balance sheet accounts.
18 DEFERRED TAX ASSETS
Deferred tax assets
(A) RECONCILIATION OF DEFERRED TAX ASSETS
2021
$M
Receivables
Inventories
Investments accounted for under the equity method
Property, plant and equipment and intangible assets
Right of use assets
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial assets/(liabilities)
Provisions
Other items
Tax value of prepaid tax instalments
Tax value of recognised tax losses
Total deferred tax assets
Opening
Balance
Recognised in the
Consolidated Income
Statement
Recognised
in Other
Comprehensive
Income
(58)
(13)
(3)
(1,316)
(422)
34
865
(127)
542
(41)
622
(2)
-
86
167
(69)
1
(18)
(71)
66
(11)
78
(4)
(123)
35
(78)
145
-
671
622
-
-
-
-
-
-
-
-
-
(133)
-
(123)
-
-
(256)
-
-
2
(1)
(1)
-
-
2021
$M
675
Other
-
-
-
-
-
-
-
-
-
-
41
22
136
-
142
162
35
685
1
-
167
1,050
2020
$M
167
Closing
Balance
(127)
(12)
(21)
(1,387)
(356)
23
943
(131)
419
(139)
548
22
136
757
675
1. A deferred tax asset of $4 million referable to acquisition of National Jet Systems Pty Ltd and National Jet Operations Services Pty Ltd.
2. A deferred tax asset of $4 million referable to a timing difference associated with deductible expenditure for capital raising and an increase in deferred tax liability of ($2) million
relating to share-based payments recognised in retained earnings.
90
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
18 DEFERRED TAX ASSETS (CONTINUED)
(A) RECONCILIATION OF DEFERRED TAX ASSETS (CONTINUED)
2020
$M
Receivables
Inventories
Investments accounted for under the equity method
Property, plant and equipment and intangible assets
Right of use assets
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial assets/(liabilities)
Provisions
Other items
Tax value of recognised tax losses
Total deferred tax (liabilities)/assets
Opening
Balance
Recognised in the
Consolidated Income
Statement
Recognised
in Other
Comprehensive
Income
Other
(29)
(15)
(26)
(1,668)
(426)
48
785
(142)
526
(97)
403
(53)
-
(694)
(29)
2
23
352
4
(14)
80
15
16
(20)
219
27
86
761
-
-
-
-
-
-
-
-
-
76
-
15
-
91
1. A decrease in deferred tax liability of $9 million relating to share-based payments recognised in retained earnings.
(B) QANTAS GROUP CARRIED FORWARD TAX LOSSES
Tax losses available to be utilised in current year
Total tax losses brought forward
Tax losses utilised against current taxable income
Tax losses recognised
Tax losses carried forward to be utilised in future years1
1. A deferred tax asset of $757 million has been recognised for income tax losses and is expected to be recovered in future periods.
(C) UNRECOGNISED DEFERRED TAX ASSETS
Deferred tax assets have not been recognised with respect to the following items:
Tax losses – New Zealand
Tax losses – Singapore
Tax losses – Hong Kong
Tax losses – Capital losses
Total unrecognised deferred tax assets
19 OTHER ASSETS
Note
2021
$M
Closing
Balance
(58)
(13)
(3)
(1,316)
(422)
34
865
(127)
542
(41)
622
(2)
86
167
2020
$M
-
-
-
(86)
(86)
2020
$M
21
33
13
-
67
-
-
-
-
-
-
-
-
-
-
-
91
-
9
2021
$M
(86)
(86)
-
(671)
(757)
2021
$M
30
46
11
2
89
2020
$M
Current
Non-current
Total
Current
Non-current
Total
Prepayments
Net defined benefit asset
30(B)
Other assets1
Total other assets
99
-
70
169
220
317
150
687
319
317
220
856
121
-
72
193
222
28
119
369
1. Other assets include incremental costs of obtaining a contract. Refer to Note 37(D)(vii) for the Group’s accounting policy.
343
28
191
562
91
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
20 REVENUE RECEIVED IN ADVANCE
Unavailed passenger revenue
Unredeemed Frequent Flyer revenue
Other revenue received in advance
Total revenue received in advance
2021
$M
2020
$M
Current
Non-current
Total
Current
Non-current
Total
2,143
894
240
3,277
-
2,119
35
2,154
2,143
3,013
275
5,431
2,031
617
136
2,784
-
2,200
56
2,256
2,031
2,817
192
5,040
Unavailed passenger revenue relates to sales to passengers in advance of the date of passenger travel. The balance includes tickets relating
to travel with a travel date subsequent to year end and tickets which have been transferred to a travel credit as a result of flight cancellations
from border closures and other restrictions due to the impact of COVID-19.
Tickets generally expire either within 12 months after the planned travel date if they are not used within that time period, or on the date of
planned travel, depending on the terms and conditions. At the time of travel, revenue is also recognised in respect of tickets that are not
expected to be used. Unused tickets are recognised as revenue using estimates based on the terms and conditions of the ticket, experience,
historical and expected future trends.
Travel credits are available to be used for future flights and are typically eligible for refund. Where customers have made refund claims by 30
June 2021, these are no longer classified as unavailed passenger revenue and are reported as payables in the Consolidated Balance Sheet.
Further refund claims are expected, given that the Group’s forecast flight schedule remains severely restricted. Notwithstanding that travel
credits may not be expected to be utilised in the next 12 months, unavailed passenger revenue is classified as current on the basis that the
Group does not have an unconditional right to defer usage of the ticket for at least 12 months.
Unredeemed Frequent Flyer revenue relates to performance obligations associated with Qantas Points which have been issued but not
redeemed. Qantas Points are issued by the Group as part of the Qantas Frequent Flyer program or are sold to third parties such as credit
cards providers, who issue them as part of their loyalty programs. Unredeemed Frequent Flyer revenue is classified as either current or non-
current based on the Group’s expectation of redemption patterns by members within the next 12 months under the Recovery Plan. The non-
current amount of Unredeemed Frequent Flyer revenue will be materially recognised as revenue over three years. Significant changes in
Qantas Points expected to expire unredeemed are recognised within other revenue and income using estimates based on the terms and
conditions of the Frequent Flyer program, experience, historical and expected future trends.
Other revenue received in advance primarily relates to prepaid Qantas Club membership fees, revenue collected on behalf of other airlines,
unavailed cargo revenue and grants or supplier incentives the Group has received but are recognised over time. Other revenue is classified as
current where it is expected to be recognised or transferred to another carrier within the next 12 months.
21 NET ON BALANCE SHEET DEBT
(A) CASH AND CASH EQUIVALENTS
Cash balances
Cash at call
Short-term money market securities and term deposits
Total cash and cash equivalents
2021
$M
143
327
1,751
2,221
2020
$M
249
733
2,538
3,520
Cash and cash equivalents comprise cash at bank and cash on hand, cash at call and short-term money market securities and term deposits
that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Short-term money market securities of $250 million (2020: $76 million) held by the Qantas Group are pledged as collateral under the terms of
certain operational financing facilities when underlying unsecured limits are exceeded. The collateral cannot be sold or repledged in the
absence of default by the Qantas Group.
(B) INTEREST-BEARING LIABILITIES
Bank loans – secured
Bank loans – unsecured
Other loans – secured
Other loans – unsecured
Total interest-bearing liabilities
2021
$M
2020
$M
Current
Non-current
Total
Current
Non-current
Total
433
-
241
295
969
1,628
436
2,328
1,469
5,861
2,061
436
2,569
1,764
6,830
362
-
110
396
868
1,742
320
2,615
1,148
5,825
2,104
320
2,725
1,544
6,693
Certain current and non-current interest-bearing liabilities relate to specific financing of aircraft and engines and are secured by the aircraft
to which they relate (refer to Note 15).
(C) UNDRAWN FACILITIES
At 30 June 2021, the Group has an undrawn Revolving Credit Facility of $1,575 million (2020: $1,000 million).
92
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
21 NET ON BALANCE SHEET DEBT (CONTINUED)
(D) ANALYSIS OF CHANGES IN NET ON BALANCE SHEET DEBT
2021
$M
Interest-bearing
liabilities
Opening
Balance
Debt
Repayment
Debt
Drawdown
6,693
(759)
937
Cash
(3,520)
759
(937)
Net on balance
sheet debt
3,173
-
-
Foreign
Exchange, Mark
to Market and
Non-cash
Movements
Shareholder
Distributions
Treasury
Shares
Equity
Raising
Other
Net Cash
Movement
Closing
Balance
(41)
10
(31)
-
-
-
-
-
-
-
-
6,830
(58)
1,525
(2,221)
(58)
1,525
4,609
2020
$M
Interest-bearing
liabilities
Opening
Balance
Debt
Repayment
Debt
Drawdown
5,137
(625)
2,155
Cash
(2,157)
625
(2,155)
Net on balance
sheet debt
22 PROVISIONS
2,980
-
-
Foreign
Exchange, Mark
to Market and
Non-cash
Movements
26
2
28
2021
$M
Shareholder
Distributions
Treasury
Shares
Equity
Raising
Other
Net Cash
Movement
Closing
Balance
-
647
647
-
5
5
-
-
6,693
(1,342)
855
(3,520)
(1,342)
855
3,173
2020
$M
Annual leave
Long service leave
Redundancies and other employee benefits
Total employee benefits
Onerous contracts
Make good on leased assets
Insurance, legal and other
Total other provisions
Total provisions
Current
Non-current
Total
Current
Non-current
375
340
123
838
31
131
136
298
1,136
-
50
-
50
-
523
116
639
689
375
390
123
888
31
654
252
937
1,825
351
469
569
1,389
65
23
62
150
1,539
-
61
-
61
4
469
117
590
651
Total
351
530
569
1,450
69
492
179
740
2,190
Reconciliations of the movements of each class of provision, other than employee benefits, are set out below:
2021
$M
Onerous contracts
Make good on leased assets
Insurance, legal and other
Total other provisions
Opening
Balance
Provisions
Made
Provisions
Utilised
Unwind of
Discount
Discount Rate
Change
Transfers from
Investments in
Associates
69
492
179
740
11
182
57
250
(47)
(8)
(41)
(96)
-
10
-
10
-
10
6
16
-
-
48
48
Other
(2)
(32)
3
(31)
Closing
Balance
31
654
252
937
93
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
23 CAPITAL
(A) ISSUED CAPITAL
Opening balance: 1,863,491,352 (June 2020: 1,570,505,939) ordinary shares, fully paid
Shares bought back during the year: nil (June 2020: 79,712,857) ordinary shares
Capital raising: 22,553,346 (June 2020: 372,698,270) ordinary shares
Closing balance: 1,886,044,698 (2020: 1,863,491,352) ordinary shares
2021
$M
3,104
-
82
3,186
2020
$M
1,871
(95)
1,328
3,104
On 10 August 2020, the Group completed a retail Share Purchase Plan resulting in the issuance of 22.6 million shares at $3.18 per share
totalling $71.7 million. Equity raising costs were accrued against the capital raising as at June 2020 as a reduction in Issued Capital. The tax
benefit of these costs was recognised in equity in the year ended 30 June 2021, resulting in an increase in Issued Capital of $10 million. The
fully underwritten Institutional Placement in June 2020 and the Share Purchase Plan in July 2020 provided total proceeds of $1,432 million,
resulting in an increase in Issued Capital of $1,410 million, net of tax and fees.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of wind-up, Qantas ordinary shareholders rank after all creditors and are fully entitled to any residual
proceeds on liquidation.
(B) TREASURY SHARES
Treasury shares consist of shares held in trust for Qantas employees in relation to equity compensation plans. As at 30 June 2021, 3,099,413
(2020: 9,299,475) shares were held in trust and classified as treasury shares.
(C) CAPITAL MANAGEMENT
The Qantas Group’s Financial Framework is designed to achieve top quartile Total Shareholder Return relative to the ASX100 and global airline
peers. The Framework’s key elements are to:
– Maintain an optimal capital structure that minimises the cost of capital by holding an appropriate level of Net Debt. The appropriate level
of Net Debt reflects the Qantas Group’s size, measured by Invested Capital. This is consistent with investment grade credit metrics
– Deliver ROIC that exceeds the weighted average cost of capital through the cycle
– Make disciplined capital allocation decisions between reinvestment, debt reduction and distribution of surplus capital to shareholders
while maintaining an optimal capital structure.
Surplus capital is determined on a forward-looking basis, which is the difference between the projected Net Debt position and the target Net
Debt position.
The Qantas Group maintains access to a broad range of debt markets, both secured and unsecured. The Qantas Group maintains a prudent
liquidity policy that ensures adequate coverage of liquidity requirements while considering a range of adverse scenarios.
Net Debt1
Return on Invested Capital (%)
Net capital expenditure3
Shareholder distributions
Metric
$4.5B to $5.6B2
2021
$5.9B
2020
$4.7B
ROIC > WACC
(23.3) per cent
5.8 per cent
$693M
-
$1.57B
$0.6B
1. Net Debt is a non-statutory measure. It includes balance sheet debt and capitalised aircraft lease liabilities under the Group’s Financial Framework. Capitalised aircraft lease
liabilities are measured at fair value at the lease commencement date and remeasured over the lease term on a principal and interest basis. The residual value of the capitalised
aircraft lease liability denominated in a foreign currency is translated at the long-term exchange rate.
2. Target Net Debt range of $4.5 billion to $5.6 billion is based on the Invested Capital of approximately $6 billion as at 30 June 2020.
3. Net capital expenditure is a non-statutory measure which is equal to net investing cash flows included in the Consolidated Cash Flow Statement of $722 million (2020: $1.57 billion)
and the impact to Invested Capital from the disposals/acquisitions of leased aircraft. During the year ended 30 June 2021, there were no new aircraft leases and a reduction in net
capital expenditure of ($29 million) for the return (disposal) of leased aircraft.
94
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
24 GOVERNMENT GRANTS AND ASSISTANCE
To mitigate the impacts of COVID-19, governments have provided businesses, and specifically the aviation sector, with various support
packages in the form of rebates and other financial assistance. The Group has recognised government grants and assistance where there is
reasonable assurance that the Group will comply with all the associated conditions and that the grants/assistance will be received.
Packages
Description
RANS, DANS and
government repatriation
flights
RANS/DANS recognised
within other revenue and
income
Government repatriation
flights recognised within
net passenger revenue
Tourism Aviation Network
Support (TANS)
Recognised within other
revenue and income
International Freight
Assistance Mechanism
(IFAM)
Recognised within net
freight revenue
JobKeeper Payment
(JobKeeper)
Recognised within
manpower and staff-
related expenses
International Aviation
Support (IAS) Package
Recognised within other
revenue and income
This package is underwritten by the Australian Government. The Group operated a series of domestic and regional
flights on behalf of the Australian Government to maintain critical links that had been made commercially unviable
by COVID-related travel restrictions. It includes a baseline network of domestic passenger flights servicing the most
critical metropolitan and regional routes while providing freight belly space capacity. In addition, the Australian
Government commissioned Qantas to conduct various charter repatriation flights.
The Regional Airline Network Support (RANS), Domestic Aviation Network Support (DANS) and government
repatriation flights were operated on a fee-for-service basis, with fare revenue offsetting the cost to the taxpayer.
Income of $118 million was recognised in the Consolidated Income Statement. The costs to operate these flights
were recognised primarily in manpower and staff-related costs, aircraft operating variable, fuel, depreciation and
amortisation and other expenses. On 2 August 2021, the government announced it was extending the DANS and
RANS program until 31 December 2021.
This program is intended to increase the number of flight frequencies to selected regions which have been heavily
impacted by the loss of international tourists above minimum connectivity (aviation surge capacity) and to also
reduce the cost of flying for consumers by discounting ticket prices to those regions through half price airfares.
Discounts are offered on a selected number of routes per week across 15 key tourism regions with the original sale
period between 1 April 2021 and 31 July 2021 for travel by 30 September 2021. On 2 August 2021, the travel and sale
period for the TANS program was extended until 30 November 2021 due to various state lockdowns and border
closures.
Income of $19 million was recognised in the Consolidated Income Statement. The costs to operate these flights were
recognised primarily in manpower and staff-related costs, aircraft operating variable, fuel, depreciation and
amortisation and other expenses.
This mechanism is intended to restore critical global supply chains which have been heavily impacted by COVID-19
containment measures around the world to ensure exporters maintain connectivity to strategic markets. On 11
March 2021, the government announced an extension of the program to the end of September 2021.
Income of $219 million was recognised in the Consolidated Income Statement. The costs to operate these flights
were recognised primarily in manpower and staff-related costs, aircraft operating variable, fuel, depreciation and
amortisation and other expenses.
This program was intended to help keep more Australians in jobs and support businesses affected by the significant
economic impact of COVID-19. The original JobKeeper was in place until 27 September 2020. On 21 July 2020, the
government announced the extension of JobKeeper to 28 March 2021 at modified rates and eligibility. JobKeeper is
recorded net of manpower-related expenses. As one of the most heavily impacted companies, the Qantas Group
recognised $588 million of JobKeeper, which was either paid directly to stood down employees or subsidised the
wages of those still working.
The program is intended to provide support to maintain a core Australian international aviation workforce and
operational capability to ensure airlines can quickly restart commercial international flights once international
restrictions are lifted. Announced on 11 March 2021, the IAS program runs between 1 April 2021 and 31 October 2021.
The funding covers employee support and retention payments to maintain international workforce capability,
training to ensure international workers maintain their skills and currency, maintenance and costs associated with
bringing international aircraft out of long-term storage, and port readiness costs.
Income of $22 million was recognised in the Consolidated Income Statement. The costs to awaken aircraft and the
training of the international workforce was recognised primarily in manpower and staff-related costs, aircraft
operating variable, fuel and other expenses.
Further to the payments made in relation to international readiness, the Group also received $27 million of employee
retention payments. This was wholly passed through to impacted employees and the Group received no benefit.
95
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
24 GOVERNMENT GRANTS AND ASSISTANCE (CONTINUED)
Packages
Description
Australian Airline Financial
Relief Package (AAFRP)1
Recognised within aircraft
operating variable
expenses
Includes the refunding and ongoing waiving of a range of government charges on the industry including aviation fuel
excise, Airservices Australia charges on domestic airline operations1 and domestic and regional aviation security
charges. Applicable charges applying to flights between 1 February 2020 and 31 December 2020 were eligible for
consideration in accordance with the eligibility criteria and related information set out in the grant opportunity
guidelines. Under this package, the Group recognised direct support of $97 million for the year ended 30 June 2021,
offsetting related costs.
Singapore Job Support
Scheme
Recognised within
manpower and staff-
related expenses
New Zealand Aviation
Relief Package
Recognised within aircraft
operating variable
expenses
The Job Support Scheme provides wage support to employers, helping enterprises retain their local employees
(Singapore citizens and permanent residents) during this period of economic uncertainty. Support under the scheme
offset and protected local employees' wages of SGD $6 million.
Includes financial support to airlines to pay passenger-based government charges and to cover airway- related fees
from 1 March 2020 to 30 April 2021 in response to the COVID-19 crisis. Support of $8 million was recognised in the
Consolidated Income Statement, offsetting related costs.
1. The AAFRP also provided support to other suppliers of the Group (including government-owned corporations). The AAFRP package ceased in its original format on 31 December 2020
and on 1 January 2021 the Airservices waiver was reduced to 50 per cent. On 11 March 2021, the Australian Government announced the Domestic Airport Security Cost Support
package (DASCS), which provided funding to meet eligible costs related to mandatory security screening obligations under the Aviation Transport Security Regulations 2005. On 2
August 2021, the Australian Government announced the DASCS program would be extended until 31 December 2021. As a result of the aforementioned support, the providers have
granted waivers to the Group of $135 million for the year ended 30 June 2021.
IMPAIRMENT OF ASSETS AND RELATED COSTS
25
(A) IMPAIRMENT TESTING OF CASH GENERATING UNITS
Given the significant impact of COVID-19, Management has assessed that there are indicators of impairment of the Group’s CGUs and has
undertaken the following:
– Confirmed the identification of the Group’s CGUs
– Tested specific individual assets for impairment
– Completed an impairment test of the Group’s CGUs.
i.
The identification of an asset’s CGU is a critical judgement in performing an impairment test. CGUs are the lowest identifiable group of assets
that generate largely independent cash inflows and are determined based on how performance is monitored and how decisions to acquire
and dispose of the Group’s assets and operations are made.
Identification of CGUs
The identified CGUs by operating segment for the 2020/21 financial year are outlined in the table below:
Operating Segment
Qantas Domestic
Qantas International
Jetstar Group
Qantas Loyalty
CGUs Identified
Qantas Domestic CGU
Qantas International CGU
Qantas Freight CGU
Jetstar Australia/New Zealand CGU
Jetstar Asia CGU
Jetstar Japan CGU
Qantas Loyalty CGU
Impairment Assessment
ii.
AASB 136 Impairment of Assets requires the assessment at the end of each reporting period as to whether there is any indication that an
asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset. The recoverable amount
of an asset is the higher of its fair value less costs of disposal and its value in use.
The recoverable amount is determined for an individual asset where possible, otherwise, the recoverable amount of the CGU to which the
asset belongs shall be determined.
Value in use is the present value of the future cash inflows expected to be derived from an asset or CGU.
Fair value less costs of disposal is the price that would be received to sell an asset in an orderly transaction between market participants at
the measurement date, less the incremental costs directly attributed to disposal.
Where the carrying value of the asset exceeds its recoverable amount, the carrying amount of the asset is reduced to its recoverable amount
through the recognition of an impairment loss.
96
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
IMPAIRMENT OF ASSETS AND RELATED COSTS (CONTINUED)
25
(A) IMPAIRMENT TESTING OF CASH GENERATING UNITS (CONTINUED)
ii.
Impairment Assessment (continued)
Impairment Assessment of Individual Assets
Aircraft
With the impact of COVID-19 and the closure of international borders, the Three-Year Recovery Plan announced in June 2020 expected the
Group’s A380 fleet to be grounded for the foreseeable future. Given the significant uncertainty around the return to service of the fleet, the
cash flows of the Qantas International CGU within the Recovery Plan did not include cash flows relating to the A380 assets. The A380 fleet
was therefore assessed for impairment outside of the Qantas International CGU at 30 June 2020 and 31 December 2020.
At 30 June 2020 and at 31 December 2020, the recoverable amount of the A380 fleet was determined using a fair value less costs of
disposal model. The fair value less costs of disposal was estimated based on valuations provided by two external and independent aircraft
valuers (AVAC and AVITAS), translated at AUD/USD exchange rates prevailing at the end of the relevant reporting period. The Group made
necessary adjustments to these valuations for the level of maintenance life remaining on the aircraft.
For the half-year ended 31 December 2020, there were indicators of further impairment since 30 June 2020 due to a decrease in the
valuations provided by external and independent aircraft valuers and a significant change in AUD/USD foreign exchange rates from $0.69 to
$0.76. As a result, the recoverable amount of the A380 fleet was remeasured using a consistent methodology to the 30 June 2020
impairment test. The recoverable amount of the A380 fleet was below its carrying value and was impaired to the adjusted recoverable
amount.
At the end of the 2020/21 financial year, there were indicators of further impairment since 31 December 2020 due to a decrease in the
valuations provided by external and independent aircraft valuers. As a result, the recoverable amount of the A380 fleet was remeasured using
a consistent methodology to the 30 June 2020 and 31 December 2020 impairment tests. The recoverable amount of the A380 fleet was
below its carrying value and has been impaired to the adjusted recoverable amount.
The Group’s fleet plan approved by the Board in June 2021 expects the majority of the A380 fleet to return to service progressively from
financial year 2022/23. The forecast cash flows of the Qantas International CGU estimated as at 30 June 2021 therefore includes the cash
flows of the Group’s A380 assets. As a result, as at 30 June 2021, the carrying value of the A380 fleet has been allocated to the Qantas
International CGU for the purpose of impairment testing.
It is expected that 10 A380s will return to service and two will be retired as they are surplus to requirements. As non-operating aircraft, the
carrying value of the two aircraft identified for retirement have been further written down to their recoverable amount or net realisable value
based on estimates of disposal, salvage or part-out valuations.
With the Group’s A380 assets being allocated to the Qantas International CGU, any impairment risk of the Group’s A380 fleet will no longer be
assessed with reference to the fair value less costs of disposal of the individual assets, but rather based on the value in use of the assets
within the Qantas International CGU. Any assets identified as inventory are carried at the lower of cost and net realisable value. An
impairment reversal may be required where the Qantas International CGU impairment test reports a surplus and the fair value less costs of
disposal of an A380 asset has increased significantly above its carrying value.
The carrying value of the Group’s A380 fleet within the Qantas International CGU as at 30 June 2021 is $377 million.
Other Property, Plant and Equipment and Intangible Assets
The Group’s response to COVID-19 within the Recovery Plan has included restructuring initiatives that have resulted in certain assets
(including property, plant and equipment and intangible assets) being abandoned or projects being discontinued. Where the recoverable
amount is below the carrying value of these assets, an impairment has been recognised.
97
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
25
IMPAIRMENT OF ASSETS AND RELATED COSTS (CONTINUED)
(A)
IMPAIRMENT TESTING OF CASH GENERATING UNITS (CONTINUED)
ii.
Impairment Assessment (continued)
Impairment Assessment of CGUs
The impairment test for CGUs includes the allocation of assets to identified CGUs and the determination of the recoverable amount of the
CGU based on its value in use. Outlined below are the significant assumptions applied in the determination of the recoverable amount.
Significant
Assumption
Calculation of
recoverable
amount
Individual
assets tested
separately
How It Was Determined
The recoverable amounts of CGUs were determined based on their value in use. The value in use was determined by
discounting the future cash flows forecast in the Recovery Plan.
Assets that have been tested for impairment individually are not allocated to CGUs. As outlined above, as at 30 June 2021
the carrying value of the A380 fleet has been allocated to the Qantas International CGU for impairment testing.
Recovery Plan The Group’s Recovery Plan was developed with reference to expected demand scenarios domestically and internationally.
The immediate focus of the plan is to:
− Rightsize the Group’s workforce, fleet and other costs according to demand projections, with the ability to scale-up as
flying returns
− Restructure to deliver ongoing cost savings and efficiencies across the Group’s operations in a changing market
− Recapitalise through the equity raising completed in August 2020 to strengthen the Group’s financial resilience to
recovery and the opportunities it presents.
The long-term annual ongoing restructuring benefit to the Group of the Recovery Plan is estimated to be $1 billion from
financial year 2022/23 onwards.
As the impact of COVID-19 continues to evolve, it is extremely challenging to predict the full extent and duration of the
impact on the Group’s operations. The Group’s Recovery Plan and the structural changes achieved to date and underway
mean the Group is well-positioned to respond to the changing environment.
For the year ended 30 June 2021, the Group has delivered $650 million in annualised structural cost benefits, ahead of
target. The Group is on track to deliver $850 million by financial year 2021/22 and $1 billion in annual cost improvements
from the 2022/23 financial year onwards with greater than 90 per cent of initiatives completed or underway.
Period of cash
flows forecast
The Group’s Recovery Plan is a three-year plan. The financial forecasts have been extended if necessary to the year where
capacity recovery is expected to reach full run-rate. For the purposes of performing an impairment test using value in use
under AASB 136, the final year of the forecast has been used to inform the determination of the terminal year. Given the
uncertainty of the impact and timing of COVID-19, the Group has adjusted the cash flow forecast under the Recovery Plan
for these uncertainties rather than adjusting the discount rate.
Cash flows
Cash flows were projected based on the Board-approved Recovery Plan. Cash flows to determine a terminal value were
extrapolated using a constant growth rate of 2.5 per cent per annum, which does not exceed the long-term average
growth rate for the industry. Cash outflows include capital and maintenance expenditure for the purchase of aircraft
and other property, plant and equipment. These cash outflows do not include capital expenditure that enhances the
current performance of assets and related cash flows have been treated consistently.
Discount rate
A pre-tax discount rate of 10 per cent per annum has been used in discounting the projected cash flows of the CGUs,
reflecting a market estimate of the weighted average cost of capital of the Qantas Group (2020: 10 per cent per annum).
Given the uncertainty of the impact and timing of COVID-19, the Group has adjusted the cash flows under the Recovery
Plan for these uncertainties rather than adjusting the discount rate.
AUD/USD: 0.75
Foreign
exchange
rate used
98
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
25
IMPAIRMENT OF ASSETS AND RELATED COSTS (CONTINUED)
(A)
IMPAIRMENT TESTING OF CASH GENERATING UNITS (CONTINUED)
ii.
Impairment Assessment (continued)
Significant
Assumption
How It Was Determined
Sensitivity to
significant
changes in
assumptions
Pre-COVID-19, the Group was reporting ROIC in excess of the Group’s Weighted Average Cost of Capital. For example, the
12-month ROIC as at 31 December 2019 was 19.6 per cent, and as at 30 June 2019 was 19.2 per cent, compared to the
Group’s WACC of 10 per cent. This, combined with an assessment of other factors under AASB 136, evidenced that pre-
COVID-19 there were no indicators of impairment of the Group’s CGUs.
Sensitivity to Changes in Cash Flows (CGUs other than Jetstar CGUs in Asia)
The terminal year in the impairment test has the most material impact on the determination of the recoverable amount
and of the surplus between the recoverable amount and carrying value of CGUs. The earlier years in the Recovery Plan,
while impacting the measurement of the recoverable amount, do not materially impact the surplus identified.
The outcomes of the impairment test have been assessed against the expected impact of localised lockdowns and state
border restrictions within the domestic market and the pausing of the Trans-Tasman ‘travel bubble’ that occurred
subsequent to 30 June 2021 and prior to the release of this report. These events are expected to primarily impact the first
half of the 2021/22 financial year. The Group is well positioned to meet the expected sharp increase in domestic travel as
lockdowns end and is highly leveraged to recovery in travel demand as the vaccine roll out progresses with pace. The
short-term impacts do not change the overall recovery expectations or the forecast terminal year and therefore do not
change the conclusions of the impairment tests.
Reasonably possible changes in the short-term to the timing of domestic and international recovery are unlikely to result
in impairment of the CGUs, assuming that the overall recovery expectations remain. The terminal value cash flow is in
excess of the break-even cash flow and reasonably possible changes in this assumption do not result in impairment.
Sensitivity to Changes in Cash Flows (Jetstar CGUs in Asia)
As outlined below, the recoverable amount of the Jetstar Asia CGU was below the carrying amount of the Jetstar Asia
CGU, resulting in further impairments. As a result, the Group recognised impairment in the Jetstar Asia CGU of Goodwill
and indefinite lived intangible assets in the 2019/20 financial year and of property, plant and equipment and right of use
assets in the 2020/21 financial year. The impairments were allocated to individual assets to the extent that the assets
were not reduced below their individual fair value less costs of disposal.
Reasonably possible changes in forecast cash flows would further reduce the estimated recoverable amount of the CGU.
Goodwill and indefinite lived intangible assets have been fully impaired, and property, plant and equipment and right of
use assets have been impaired to individual fair value less costs of disposal. AASB 136 requires that any allocation of CGU
impairment should not reduce the asset below its individual fair value less costs of disposal. As a result, any additional
impairment would only be recognised if there was a reduction in the individual fair value less costs of disposal of the
individual assets.
The fair value less costs of disposal could change depending on valuations provided by two external and independent
aircraft valuers (AVAC and AVITAS), changes in AUD/USD exchange rates, or changes in the level of maintenance life
remaining on the aircraft other than already accounted for through depreciation.
The carrying value of the Jetstar Japan CGU at 30 June 2021 is nil.
The Group has assessed each CGU to determine whether there is any indication that the CGU may be impaired.
CGUs other than Jetstar Asia CGU
No impairment was recognised within the Qantas Domestic, Qantas International, Qantas Loyalty, Qantas Freight, Jetstar Australia/New
Zealand and Jetstar Japan CGUs during the year ended 30 June 2021. As noted above, the Qantas International CGU includes the carrying
value of the A380 fleet ($377 million) as at 30 June 2021.
Jetstar Asia CGU
At 30 June 2020, the Group recognised impairment of the Goodwill and indefinite lived intangible assets in the Jetstar Asia CGU. Following
recognition of this impairment, the recoverable amount was equal to the carrying value of assets allocated to the CGU.
As disclosed in the 2020 Annual Report, any reasonably possible change in forecast cash flows or assumptions would further reduce the
estimated recoverable amount below the remaining carrying value of the CGU. As Goodwill and indefinite lived intangible assets have been
fully impaired, any further impairment would be allocated to property, plant and equipment and right of use assets, to the extent they are not
reduced below their fair value less costs of disposal on an individual basis.
The impact of COVID-19 travel restrictions on Jetstar Asia in Singapore since 30 June 2020 has been more severe than expected at 30 June
2020 with borders remaining closed and ‘travel bubbles’ not eventuating. The expected easing of border restrictions has been further delayed
which is significant given Jetstar Asia relies exclusively on international travel. For the half-year ended 31 December 2020, this represented
an indicator of further impairment of the Jetstar Asia CGU.
99
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
25
IMPAIRMENT OF ASSETS AND RELATED COSTS (CONTINUED)
(A)
IMPAIRMENT TESTING OF CASH GENERATING UNITS (CONTINUED)
Impairment Assessment (continued)
ii.
An impairment test of the Jetstar Asia CGU was undertaken as at 31 December 2020 using updated cash flow projections to calculate the
updated recoverable amount. The recoverable amount determined was below the carrying amount of the Jetstar Asia CGU, resulting in further
impairments.
As the Goodwill and indefinite lived intangible assets of the CGU have been fully impaired at 30 June 2020, the impairments were allocated to
property, plant and equipment and right of use assets to the extent that the assets were not reduced below their individual fair value less
costs of disposal. The fair value less costs of disposal was estimated based on valuations provided by two external and independent aircraft
valuers (AVAC and AVITAS), translated at 31 December 2020 into AUD/USD exchange rates. Necessary adjustments to these valuations were
made for the level of maintenance life remaining on the aircraft.
There continues to be significant uncertainty regarding the impact of COVID-19 on the future performance of the Jetstar Asia CGU. As a result,
another impairment test of the Jetstar Asia CGU was undertaken as at 30 June 2021 using updated cash flow projections to calculate the
updated recoverable amount. The recoverable amount was compared against the carrying amount of the Jetstar Asia CGU. In addition, the
individual fair value less costs of disposals were estimated. This assessment resulted in minor changes to the impairment recognised at 31
December 2020.
(B) CARRYING VALUE OF GOODWILL AND INDEFINITE LIVED INTANGIBLE ASSETS
The following CGUs have goodwill and other intangible assets with indefinite useful lives as follows:
Goodwill
Qantas Domestic1
Qantas Loyalty
Qantas Freight
Jetstar Australia and New Zealand
Total goodwill
Other intangible assets with indefinite useful lives
Qantas International
Jetstar Australia and New Zealand
Total other intangible assets with indefinite useful lives
2021
$M
2020
$M
14
12
49
91
166
35
1
36
10
12
49
91
162
35
1
36
1. Goodwill allocated to Qantas Domestic increased by $4 million due to the acquisition of National Jet Systems Limited on 31 July 2020.
Impairment of Individual Assets
(C) RESULTS OF THE GROUP’S IMPAIRMENT TEST
i.
The Group recognised impairment of $198 million (2020: $1,254 million) in respect of individual assets, which primarily relates to the Group’s
A380 fleet. As a result of the additional impairment recognised in respect of the A380s of $155 million (2020: $1,087 million), the remaining
carrying value of the aircraft and engines (including related engineering spares and inventory) at 30 June 2021 is $377 million (30 June 2020:
$611 million).
ii. CGU Impairments
The Group recognised an impairment of $73 million in respect of the property, plant and equipment and right of use assets in the Jetstar Asia
CGU (2020: $73 million in respect of the Goodwill and indefinite lived intangible assets).
No impairment was recognised within the Qantas Domestic, Qantas International, Qantas Loyalty, Qantas Freight, Jetstar Australia/New
Zealand and Jetstar Japan CGUs during the year ended 30 June 2021 (2020: $nil). The carrying value of the Jetstar Japan CGU at 30 June
2021 is nil.
iii. Other Impairments
Investments accounted for under the equity method
The Group recognised a net impairment of $1 million (2020: $70 million) in relation to its investment in Helloworld Travel Ltd. (ASX: HLO). The
impairment recognised was determined with reference to the volume weighted average price (VWAP) in the last quarter of the 2020/21
financial year.
Assets held for sale
The Group recognised a $10 million impairment of the Group’s investment in Pacific Airlines (formerly Jetstar Pacific), relating to the recycling
of deferred currency movements within the foreign currency translation reserve in Pacific Airlines to the Consolidated Income Statement on
transfer of the investment to assets held for sale (2020: $25 million impairment of the investment due to the announced exit of the business).
100
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
25
IMPAIRMENT OF ASSETS AND RELATED COSTS (CONTINUED)
iv. Summary of Impairments and Liabilities recognised
Impairment of individual assets
Impairment of A380s and onerous contractual commitments relating to A380s
Impairment of 747s held for sale
Impairment of software intangibles and onerous contractual commitments
Impairment of property, plant and equipment and recognition of exit costs
Total impairment of individual assets
CGU impairment
Impairment of Jetstar Asia CGU
Total CGU impairment
Other (reversal of impairment)/impairment
Impairment of investment in Helloworld
Impairment of investment in Pacific Airlines
Other assets
Total other (reversal of impairment)/impairment
Total impairment of assets and related costs
2021
$M
2020
$M
155
3
33
7
198
73
73
1
10
(12)
(1)
270
1,087
23
97
47
1,254
73
73
70
25
34
129
1,456
26 SHARE-BASED PAYMENTS
The Group provides benefits to Executives of the Group in the form of share-based payments, whereby Executives render services in
exchange for Rights over shares. The total equity-settled share-based payment expense for the year was $19 million (2020: $28 million). The
total cash-settled share-based payment expense for the year was $0.5 million (2020: $0.35 million). Further details regarding the operation
of equity plans for Executives are outlined in the Remuneration Report from pages 36 to 62.
(A) LONG TERM INCENTIVE PLAN (LTIP)
Generally, participation in the LTIP is limited to Senior Executives of the Qantas Group in key roles or other participants who have been
identified as high potential Executives. All Rights are redeemable on a one-for-one basis for Qantas shares, subject to the achievement of
performance hurdles. Dividends are not payable on the Rights. For more information on the operation of the LTIP, see pages 51 to 53.
Performance Rights Reconciliation
Rights outstanding as at 1 July
Rights granted during the year
Rights forfeited during the year
Rights exercised during the year
Rights lapsed during the year
Rights outstanding as at 30 June
Rights exercisable as at 30 June
2021
2020
Number of
Rights
Number of
Rights
9,607,136
12,699,500
12,123,500
4,086,000
(2,879,567)
(1,175,189)
(1,134,203)
(6,003,175)
(1,148,297)
-
16,568,569
9,607,136
-
-
The Rights outstanding as at 30 June 2021 included 2,387,000 Rights under the 2019-2021 LTIP. 827,568 Rights vested and converted to shares
and 908,432 Rights were forfeited following the testing of performance hurdles as at 30 June 2021 and after applying service conditions and the
Board’s approval of the 2019-2020 LTIP vesting outcome on 25 August 2021. As noted in the Remuneration Report on page 37, the Board has
agreed with the CEO to defer the decision as to whether his Rights under the 2019-2021 LTIP will be forfeited or allowed to convert to shares
until at least August 2022. Therefore, 651,000 Rights under the 2019-2021 LTIP remain unvested.
In addition, as at 30 June 2021, 301,284 Rights were outstanding relating to the 2019-2021 LTIP, which were to be settled in cash. 150,642
Rights vested and were settled in cash and 150,642 Rights forfeited following the testing of performance hurdles as at 30 June 2021 and the
Board’s approval of the 2019-2021 LTIP vesting outcome on 25 August 2021. Following this there are no remaining outstanding Rights which
will be cash settled.
The Rights outstanding as at 30 June 2020 included 2,969,500 Rights under the 2018-2020 LTIP. 1,134,203 Rights vested and converted to
shares and 1,148,297 Rights were forfeited following the testing of performance hurdles as at 30 June 2020 and after applying service
conditions and the Board’s approval of the 2018-2020 LTIP vesting outcome on 21 August 2020. As noted in the Remuneration Report on
page 59, the Board has agreed with the CEO to further defer the decision as to whether his Rights under the 2018-2020 LTIP will be forfeited
or allowed to convert to shares until August 2022. Therefore 687,000 Rights under the 2018-2020 LTIP remain unvested.
101
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
26 SHARE-BASED PAYMENTS (CONTINUED)
(A) LONG TERM INCENTIVE PLAN (LTIP) (CONTINUED)
i.
The estimated value of Rights granted was determined at grant date using a Monte Carlo model. The weighted average fair value of Rights
granted during the year was $2.33 (2020: $3.97).
Fair Value Calculation
Inputs into the Models
Rights granted
Weighted average share value
Expected volatility
Dividend yield
Risk-free interest rate
2021
2020
11 September 2020
23 October 2020
4 October 2019
25 October 2019
10,774,500
1,349,000
3,343,000
743,000
$3.82
35.0%
1.6%
0.30%
$4.55
35.0%
1.3%
0.30%
$6.37
25.0%
4.3%
0.60%
$6.25
25.0%
4.4%
0.70%
The expected volatility was determined having regard to the historical volatility of Qantas shares and the implied volatility on exchange traded
options. The risk-free rate was the yield on an Australian Government Bond at the grant date matching the remaining useful lives of the plans.
The yield is converted into a continuously compounded rate in the model. The expected life assumes immediate exercise after vesting.
(B) SHORT TERM INCENTIVE PLAN (STIP)
For details on the operation of the STIP see pages 49 to 51. There were nil awards of Qantas shares made under the 2019/20 STIP during the
year ended 30 June 2021 (2020: 369,196 awards under the 2018/19 STIP).
(C) MANAGER INCENTIVE PLAN (MIP)
The MIP is the annual incentive plan for the broader Management group. Each year, to the extent that the plan’s performance conditions are
achieved, this group may receive an award that is a combination of cash and restricted shares. The scorecard performance outcomes are the
same as those for STIP. For scorecard performance outcomes, refer to the details of the operation of the STIP on pages 49 to 51. The CEO
retains discretion over any awards made under the MIP. There were nil awards of Qantas shares made under the 2019/20 MIP during the year
ended 30 June 2021 (2020: 4,278,606 awards under the 2018/19 MIP).
102
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT
(A) RISKS
The Qantas Group is subject to financial risks, which are an inherent part of the operations of an airline. The Qantas Group manages these risk
exposures using various financial instruments and governed by a set of policies approved by the Board. The Qantas Group’s policy is not to
enter into, issue or hold derivative financial instruments for speculative trading purposes.
The Qantas Group uses different methods to assess and manage different types of financial risk to which it is exposed. These methods
include correlations between risk types, sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and ageing
analysis and sensitivity analysis for liquidity and credit risk. A summary of these risks has been presented below:
Risk
Nature of Risk
Management of Risk
Liquidity risk
Difficulty in meeting financial liability
obligations.
Remaining within optimal capital structure, targeting a minimum liquidity
level, ensuring long-term commitments are managed, maintaining access to a
variety of additional funding sources and managing maturity profiles.
Interest rate
risk
Foreign exchange
risk
Fuel price risk
Credit risk
Fluctuations in the fair value or future
cash flows of a financial instrument
because of changes in market
interest rates.
Fluctuations in the fair value of future
cash flows or assets/liabilities
denominated in a currency other than
AUD because of changes in foreign
exchange rates.
Exposure of future AUD fuel to
unfavourable USD-denominated price
movements and foreign exchange
movements.
Potential loss from a transaction
in the event of a default by a
counterparty during the term or
on settlement of a transaction.
Floating versus fixed rate debt framework, interest rate swaps, forward rate
agreements and options.
Forward foreign exchange contracts, currency options, cross-currency swaps
and designation of non-derivative foreign currency liabilities in a cash flow
hedge relationship.
USD price – options and swaps on jet kerosene, gasoil and crude oil.
Foreign exchange risk – foreign exchange contracts and currency options.
Trade debtor counterparties – use of International Air Transport Association
(IATA) clearing mechanism which undertakes its own credit review of members,
and stringent credit policies where the Group provides credit to customers directly.
Other financial asset counterparties – transact only with counterparties that
have acceptable credit ratings and counterparty limits.
i.
Liquidity Risk
Nature of the risk:
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities.
Liquidity risk management:
The Qantas Group manages liquidity risk by targeting a minimum liquidity level, ensuring long-term commitments are managed with respect
to forecast available cash inflows, maintaining access to a variety of additional funding sources, including commercial paper and standby
facilities, managing maturity profiles and maintaining an unencumbered pool of assets. Qantas may from time to time seek to purchase
and retire outstanding debt through cash purchases in open market transactions, privately negotiated transactions or otherwise. Any such
repurchases would depend on prevailing market conditions, liquidity requirements and possibly other factors.
The Qantas Group has maintained a prudent liquidity policy during the 2020/21 financial year, ensuring adequate coverage of liquidity
requirements while considering a range of adverse scenarios.
During the first half of 2020/21, $839 million of additional debt was raised through a $500 million medium-term note issuance, a $125 million
tap issue of the 2026 bond and a $214 million drawdown of secured funding. Scheduled debt repayments of $132 million were made and the
Group prepaid $70 million of the 2021 bond otherwise due in June 2021.
In the second half of 2020/21, a further $115 million of additional unsecured debt was raised through a term loan facility. Scheduled debt
repayments of $227 million were made and the Group repaid $330 million of the remaining 2021 bond. The Group continues to have no
financial covenants on any of its debt.
During the year, the Group also completed the retail Share Purchase Plan for eligible existing shareholders which raised $72 million.
As at 30 June 2021, the Group’s available liquidity was $3.8 billion, including $2.2 billion of cash and cash equivalents and $1.6 billion in
standby facilities maturing in financial year 2022/23 and 2023/24. In addition to this, the Group maintains an unencumbered asset base
of approximately $2.5 billion, including 41 per cent of the Group’s fleet, land, spare engines and other assets.
103
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT (CONTINUED)
(A) RISKS (CONTINUED)
Liquidity Risk (continued)
i.
The following table summarises the contractual timing of cash flows, including estimated interest payments, of financial liabilities and
derivative instruments. The contractual amount assumes current interest rates and foreign exchange rates. The amounts disclosed in the
table are undiscounted.
2021
$M
Financial liabilities
Payables
Lease liabilities1
Bank loans – secured2
Bank loans – unsecured2
Other loans – secured2
Other loans – unsecured2
Derivatives – outflows
Net other financial assets/liabilities – inflows
Total financial liabilities
2020
$M
Financial liabilities
Payables
Lease liabilities1
Bank loans – secured2
Bank loans – unsecured2
Other loans – secured2
Other loans – unsecured2
Derivatives – inflows
Derivatives – outflows
Net other financial assets/liabilities – inflows
Less Than
1 Year
2 to 3 Years
4 to 5 Years
More Than
5 Years
1,813
397
475
7
292
388
2
(162)
3,212
44
623
719
15
772
374
-
(32)
2,515
-
234
405
446
426
106
-
-
-
485
639
-
1,435
1,394
-
-
Total
1,857
1,739
2,238
468
2,925
2,262
2
(194)
1,617
3,953
11,297
Less Than
1 Year
2 to 3 Years
4 to 5 Years
More Than
5 Years
Total
2,351
516
407
4
165
487
(1)
5
18
99
773
648
8
726
390
-
2
10
-
311
512
333
440
297
-
-
-
-
578
757
-
1,820
669
-
-
-
2,450
2,178
2,324
345
3,151
1,843
(1)
7
28
Total financial liabilities
3,952
2,656
1,893
3,824
12,325
1. This represents the Group’s contractual undiscounted cash flows relating to leases.
2. Recognised financial liability maturity values are shown pre-hedging.
Interest Rate Risk
ii.
Nature of the risk:
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Qantas Group has exposure to movements in interest rates arising from its portfolio of interest rate sensitive
assets and liabilities, which are predominantly in AUD and USD currencies. These principally include corporate debt, leases and cash.
Management of interest rate risk:
The Qantas Group manages interest rate risk by using a floating versus fixed rate debt framework. The relative mix of fixed and floating
interest rate funding is managed by using interest rate swaps, forward rate agreements and options. As at 30 June 2021, interest-bearing
liabilities amounted to $6,830 million (2020: $6,693 million). The fixed/floating split is 41 per cent and 59 per cent respectively (2020: 40 per
cent and 60 per cent). As noted in Note 23(C), the Group manages its exposure to interest rate risk with reference to the Group’s Financial
Framework where the fixed/floating ratio is measured against Net Debt. The Group’s Net Debt is a non-statutory measure and includes on
balance sheet debt, cash and capitalised aircraft lease liabilities. The ratio of fixed/floating on Net Debt is 63 per cent and 37 per cent
respectively, which assumes cash is treated as floating (2020: 78 per cent and 22 per cent). As at 30 June 2021, other financial assets and
liabilities included derivative financial instruments relating to debt obligations and future interest payments totalling $2 million (liability)
(2020: $7 million (liability)). These are recognised at fair value.
104
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT (CONTINUED)
(A) RISKS (CONTINUED)
Interest Rate Risk (continued)
ii.
Sensitivity to interest rate risk:
$M
100bps increase in interest rates2
Variable rate interest-bearing instruments (net of cash)
Derivatives designated in a cash flow hedge relationship
100bps decrease in interest rates2
Variable rate interest-bearing instruments (net of cash)
Derivatives designated in a cash flow hedge relationship
1. Equity (Before Tax) does not include sensitivity recognised in Profit/(Loss) Before Tax.
2. Sensitivity analysis assumes hedge designations as at 30 June 2021 remain unchanged.
Profit Before Tax
Equity (Before Tax)1
2021
2020
2021
2020
(20)
-
20
-
(8)
-
8
-
-
-
-
-
-
1
-
-
Under AASB 16, interest rate movements on lease liabilities are treated as modifications against the corresponding right of use asset and
lease liability. As such, there is no immediate impact to the Consolidated Income Statement or Other Comprehensive Income and as a result,
interest rate movements on lease liabilities are not included as an interest rate sensitivity.
iii. Foreign Exchange Risk
Nature of the risk:
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not
the functional currency of the Group. The Group operates internationally and is exposed to foreign exchange risk, primarily the US dollar. The
source and nature of this risk arises from operations, capital expenditure and revaluation risk. The revaluation risk primarily exists in interest
bearing liabilities, lease liabilities and other financial assets and liabilities. The Group hedges foreign exchange risk with the objective of
minimising volatility of the Australian currency cost of highly probable forecast purchases and disposals of property, plant and equipment
and other revenue and operating expenditures.
Management of foreign exchange risk:
Forward foreign exchange contracts and currency options are used to hedge a portion of net foreign currency exposures in accordance with
Qantas Group policy. Net foreign currency exposures, including foreign currency purchases and disposals of property, plant and equipment,
may be hedged out to two years within specific parameters. Any hedging outside these parameters requires approval by the Board. For the
year ended 30 June 2021, other financial assets and liabilities including derivative financial instruments relating to the hedging of future
capital expenditure payments were nil (2020: $15 million (net asset)) and those relating to the hedging of future operating expenditure
payments totalled $12 million (net asset) (2020: $15 million (net asset)). These are recognised at fair value.
Non-derivative financial liabilities including interest-bearing liabilities and lease liabilities are designated in a cash flow hedge relationship to
hedge forecast foreign currency revenue. These interest-bearing liabilities and lease liabilities have a maturity between one and seven years.
To the extent a foreign exchange gain or loss is incurred, and the cash flow hedge is deemed effective, this is deferred until the revenue is
realised. As at 30 June 2021, total unrealised foreign exchange gains on hedges of revenue designated to non-derivative financial liabilities
was $109 million (2020: $3 million losses).
Sensitivity to foreign exchange risk:
$M
20% movement in Foreign Exchange Risk2,3
20% (2020: 20%) USD depreciation
20% (2020: 20%) USD appreciation
Profit Before Tax
Equity (Before Tax)1
2021
2020
2021
2020
-
-
(68)
99
(190)
285
(373)
610
1. Equity (Before Tax) does not include sensitivity recognised in Profit/(Loss) Before Tax.
2. Sensitivity analysis assumes hedge designations as at 30 June 21 remain unchanged. Sensitivity analysis on foreign currency pairs of 20 per cent represent reasonable volatility
in market conditions.
3. Sensitivity analysis includes foreign currency interest-bearing liabilities, lease liabilities and derivatives.
105
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT (CONTINUED)
(A) RISKS (CONTINUED)
iv. Fuel Price Risk
Nature of the risk:
Exposure of future AUD fuel costs to unfavourable USD-denominated price and foreign exchange movements.
Management of future AUD fuel costs risk:
The Qantas Group uses options and swaps on jet kerosene, gasoil and crude oil to hedge exposure to movements in the USD price of aviation
fuel. Qantas considers the crude component to be a separately identifiable and measurable component of aviation fuel. In identifying this
component, the Group considers long-term correlation levels between crude hedging products and the underlying jet fuel exposure. The
foreign exchange risk in the total fuel cost is separately hedged using foreign exchange contracts and currency options. Hedging is conducted
in accordance with Qantas Group policy. Fuel consumption out to two years may be hedged within specific parameters, with any hedging
outside these parameters requiring approval by the Board. For the year ended 30 June 2021, other financial assets and liabilities included fuel
and foreign exchange derivatives totalling $181 million (net asset) (2020: $57 million (net liability)). These are recognised at fair value.
Sensitivity to foreign exchange and fuel price risk:
$M
20% movement in AUD fuel costs2
Profit Before Tax
Equity (Before Tax)1
2021
2020
2021
2020
20% (2020: 20%) USD depreciation, 20% (2020: 20%) increase per barrel
in fuel indices
20% (2020: 20%) USD appreciation, 20% (2020: 20%) decrease per barrel
in fuel indices
-
-
41
(29)
69
122
30
42
1. Equity (Before Tax) does not include sensitivity recognised in Profit/(Loss) Before Tax.
2. Sensitivity analysis assumes hedge designations as at 30 June 2021 remain unchanged. Sensitivity analysis on foreign currency pairs and fuel indices of 20 per cent represents
reasonable volatility in market conditions. Sensitivity analysis assumes an offset between USD and fuel price indices based on observed market movements.
v. Credit Risk
Nature of the risk:
Credit risk is the potential loss from a transaction in the event of default by the counterparty during the term of the transaction or on
settlement of the transaction. The Group has credit exposure in respect of trade receivables and other financial instruments in the ordinary
course of business. The maximum exposure to credit risk is represented by the carrying value of financial assets.
Management of credit risk:
The Qantas Group conducts transactions with the following major types of counterparties:
– Trade debtor counterparties: The credit risk is the recognised amount, net of any impairment losses. As at 30 June 2021, trade debtors
amounted to $483 million (2020: $318 million). The Qantas Group has credit risk associated with travel agents, codeshare partners,
industry settlement organisations, and credit provided to direct customers, such as large airline, loyalty and freight corporate customers.
A significant proportion of receivables are settled through the International Air Transport Association (IATA) clearing mechanism which
undertakes its own credit review of members. The Qantas Group minimises this credit risk through the application of stringent credit
policies and accreditation of travel agents through industry programs
– Other financial asset counterparties: The Qantas Group restricts its dealings to counterparties that have acceptable credit ratings. Should
the rating of a counterparty fall below certain levels, internal policy dictates that approval by the Board is required to maintain the level of the
counterparty exposure. Alternatively, Management may consider closing out positions with the counterparty or novate open positions to
another counterparty with acceptable credit ratings.
The Qantas Group minimises the concentration of credit risk by undertaking transactions with a large number of customers and
counterparties in various countries in accordance with Board-approved policy. As at 30 June 2021, the credit risk of the Qantas Group to
counterparties in relation to other financial assets, cash and cash equivalents, and other financial liabilities amounted to $2,416 million (2020:
$3,311million). Refer to Note 27(C) for offsetting disclosures of contractual arrangements. The Qantas Group’s credit exposure in relation to
these assets is with counterparties that have a minimum credit rating of A-/A3, unless individually approved by the Board.
106
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT (CONTINUED)
(B) 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 assets and liabilities is determined by valuing them at the present value of future contracted cash
flows. The fair value of forward foreign exchange and fuel contracts is determined as the unrealised gain/loss at balance date by reference to
market exchange rates and fuel prices. The fair value of interest rate swaps is determined as the present value of future contracted cash
flows. Cash flows are discounted using standard valuation techniques at the applicable market yield, having regard to the timing of the cash
flows. The fair value of options is determined using standard valuation techniques. Other financial assets and liabilities represent the fair
value of investments and derivative financial instruments recognised on the Consolidated Balance Sheet. Refer to Note 37(C) for a definition
of the fair value hierarchy.
June 2021
Carrying Amount Held at
Fair Value
Through
Profit and
Loss
Fair Value
Through Other
Comprehensive
Income3
Amortised
Cost
June 2020
Carrying Amount Held at
Fair Value
Through
Profit and
Loss
Fair Value
Through Other
Comprehensive
Income
Amortised
Cost
Fair
Value
2,222
633
361
3,216
1,857
7,608
22
2,221
633
-
2,854
1,857
6,830
-
-
-
213
213
-
-
22
22
-
-
148
148
-
-
-
-
-
-
251
251
-
-
285
285
-
-
104
104
-
-
-
-
Fair
Value
3,522
646
355
4,523
2,450
7,450
285
3,520
646
-
4,166
2,450
6,693
-
$M
Cash and cash equivalents
Receivables
Other financial assets1
Financial asset
Payables
Interest-bearing liabilities2
Other financial liabilities1
Financial liabilities
8,687
9,487
9,143 10,185
1. Other financial assets and liabilities represents the fair value of equity investments and derivative financial instruments recognised on the Consolidated Balance Sheet. Derivative
financial instruments have been measured at fair value using Level 2 inputs in estimating their fair values. Equity instruments have been measured at fair value using Level 1 or
Level 2 inputs in estimating their fair value.
2. The fair value of interest-bearing liabilities is calculated as the present value of outstanding contractual cashflows discounted at a risk-free rate.
3. As at 30 June 2021, $146 million of the $148 million (2020: $96 million of the $104 million) of other financial assets relates to the Group’s investment in Alliance Airlines Limited
(ASX: AQZ), which has been accounted for as an investment held at fair value through other comprehensive income under AASB 9.
During the year, the Group recognised fair value changes in relation to listed and unlisted equity investments, net of tax in Other
Comprehensive Income of $29 million gain (2020: ($16) million loss). The Group recognised fair value changes, net of tax of $35 million
(2020: $7 million gain) in respect of listed equity investment using Level 1 inputs. The Group recognised fair value changes, net of tax of
($6) million loss (2020: ($23) million loss) in respect of unlisted equity investments using Level 2 inputs.
(C) DERIVATIVES AND HEDGING INSTRUMENTS
The following section summarises derivative financial instruments in the Consolidated Financial Statements:
Type of Hedge
Description
Derivative
Cash Flow Hedges
A derivative or financial instrument to
hedge the exposure to variability in cash
flows attributable to a particular risk
associated with an asset, liability or
forecast transaction.
Exchange derivative contracts to hedge future AUD fuel costs and
foreign currency operational payments (forwards, swaps or options).
Interest rate derivative contracts to hedge future interest payments
(forwards, swaps or options).
Foreign exchange derivative contracts to hedge future capital
expenditure payments (forwards or options).
The Group’s derivative assets and liabilities as at 30 June 2021 are detailed below:
2021
2020
Current
Non-current1
Total
Current
Non-current1
Total
$M
Derivative assets
Designated as cash flow hedges
De-designated derivatives
Total other financial assets
Derivative liabilities
Designated as cash flow hedges
De-designated derivatives
Total other financial liabilities
Net other financial assets/(liabilities)
1. Other financial assets in the balance sheet also includes investments in equity instruments of $148 million (2020: $104 million) recognised at fair value through other
comprehensive income (refer to Note 27(B)).
176
-
176
(17)
-
(17)
159
37
-
37
(5)
-
(5)
32
213
-
213
(22)
-
(22)
191
66
150
216
(95)
(143)
(238)
(22)
35
-
35
(47)
-
(47)
(12)
101
150
251
(142)
(143)
(285)
(34)
107
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
27 FINANCIAL RISK MANAGEMENT (CONTINUED)
(C) DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)
Offsetting
i.
The Group enters into contractual arrangements such as the International Swaps and Derivatives Association (ISDA) Master Agreement where,
upon the occurrence of a credit event (such as default), a termination value is calculated and only a single net amount is payable in
settlement of all transactions that are capable of offset under the terms of the contract. The ISDA agreements do not meet the criteria
for offsetting in the Consolidated Balance Sheet and consequently, financial assets and liabilities are recognised as gross. This is because
the Group does not have any current legally enforceable right to offset recognised amounts, as the right to offset is enforceable only on
the occurrence of future events. The amounts shown as financial assets and financial liabilities would each have been $21 million lower
(2020: $185 million lower) in the event of the right to offset being currently enforceable.
ii. Hedge Reserve
The effective portion of the cumulative net change in the fair value of derivative financial instruments designated as a cash flow hedge and
the cumulative change in fair value arising from the time value of options are included in the hedge reserve. These options relate entirely to
transaction-related hedged items. For further information on accounting for derivative financial instruments as cash flow hedges, refer to
Note 37(C). For the year ended 30 June 2021, $101 million gain (2020: ($122) million loss) is expected to be released to the Consolidated
Income Statement within one year and $75 million gain (2020: ($25) million loss) after one year. Other financial assets and liabilities
represent the fair value of derivative financial instruments recognised on the Consolidated Balance Sheet. Refer to Note 37(C) for a definition
of the fair value hierarchy.
iii. De-designated Hedging
The Group has applied judgement in assessing whether forecast purchases are still expected to occur. Given the significant decrease in flying
activity compared to expectations at 30 June 2020, $21 million of hedge losses were de-designated and recognised immediately in the
Consolidated Income Statement. Prospective changes in fair value of de-designated hedging were accounted for through the Consolidated
Income Statement, resulting in a $33 million gain. The amount recognised in the Consolidated Income Statement also includes foreign
exchange movements with a $21 million gain since de-designation. The net impact ($33m gain) has been reported in the Consolidated
Income Statement as de-designation and ineffectiveness of fuel and foreign exchange hedges.
iv. Hedge Accounting
Nominal Amount
of Hedging
Instrument and
Hedged Item
Carrying Amount of the
Hedging Instrument1,2
Hedge Rates
Assets
Liabilities
Change in Value
of the Hedging
Instrument Used
for Calculating
Hedge
Ineffective-ness
Change in Value
of the Hedged
Item used for
Calculating
Hedge
Ineffective-ness
Change in Value of
the Hedging
Instrument
Recognised
in Other
Comprehensive
Income
Hedge
Ineffective-
ness
Recognised in
Profit or Loss
Amount
Reclassified
from the Cash
Flow Hedge
Reserve to
Profit or Loss
De-designated
Cash Flow
hedges
Reclassified to
Profit or Loss3
M
$M
$M
$M
$M
$M
$M
$M
$M
$M
15 Barrels
847 USD
926 USD
- USD
100 AUD
AUD / Barrel
63-114
AUD / USD
0.66–0.78
AUD / USD
0.69
AUD / USD
-
Fixed
4.45%-5.99%
196
(15)
185
(185)
185
16
(4)
(13)
13
(13)
-
1
-
(878)
111
(111)
111
(1)
(2)
-
4
-
(4)
-
4
-
-
-
-
-
67
3
-
-
-
21
-
-
-
-
As at
30 June 2021
Cash flow hedges
AUD fuel costs
(up to 3 years)
Operational
expenditure
(up to 2 years)
Revenue
(up to 7 years)
Capital expenditure
(up to 2 years)
Interest
(up to 2 years)
1. Derivative cash flow hedging instruments are located within the Other Financial Assets and Other Financial Liabilities on the Consolidated Balance Sheet and include costs
of hedging. The carrying amount of the hedging instrument is presented in AUD where the hedged item equals the nominal amount of the hedging instrument.
2. The revenue hedging instrument is a non-derivative financial liability with the carrying amount presented in USD and is located within Interest-bearing Liabilities and
Lease Liabilities.
3. $33 million of hedge gains were de-designated and recognised to the Consolidated Income Statement for the year ended 30 June 2021. This includes ($21 million) released from
Hedge Reserve and $54 million of foreign exchange movements and fair value changes since de-designation.
108
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
28 AUDITOR’S REMUNERATION
AUDIT AND AUDIT-RELATED SERVICES
Audit and review of Financial Report
Regulatory assurance services
Total audit and audit-related services
OTHER SERVICES
Other assurance services
Taxation services
Due diligence services
Other non-audit services
Total other services
Total auditor’s remuneration
29 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
RECONCILIATION OF STATUTORY LOSS FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES
Statutory loss for the year
Adjusted for:
Depreciation and amortisation
Impairment of assets and related costs
Hedging-related activities
Share of net loss of investments accounted for under the equity method
Share-based payments
Amortisation of deferred financing fees and lease benefits
Net gain on disposal of assets
Discount rate changes impact on provisions
Other items
Dividends received from investments accounted for under the equity method
Changes in other items:
Receivables
Inventories
Other assets
Payables
Revenue received in advance
Provisions
Deferred tax assets/liabilities and tax payable/receivable
Net cash (outflow)/inflow from operating activities
Notes
5
25(C)
14
26
6
7
14
2021
$’000
2020
$’000
3,545
4
3,549
148
269
5
25
447
3,625
65
3,690
323
153
113
71
660
3,996
4,350
2021
$M
2020
$M
(1,728)
(1,964)
1,929
270
(64)
129
19
15
(26)
(4)
51
-
(14)
19
58
(416)
402
(403)
(623)
(386)
2,045
1,456
419
53
28
15
(7)
7
(49)
15
531
(24)
112
(196)
(955)
608
(1,011)
1,083
109
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
30 SUPERANNUATION
The Qantas Superannuation Plan (QSP) is a hybrid defined benefit/defined contribution fund with multiple divisions that commenced
operation in June 1939. In addition to the QSP, there are a number of small overseas defined benefit plans. The Qantas Group makes
contributions to defined benefit plans that provide defined benefit amounts for employees upon retirement. Under the plans, employees are
entitled to retirement benefits determined, at least in part, by reference to a formula based on years of membership and salary levels.
The defined benefit plans are legally separated from the Qantas Group. Responsibility for governance of the plans, including investment
decisions and plan rules, rests solely with the Trustee of the plan. The Trustee of the QSP is a corporate trustee which has a Board comprising
five company-appointed Directors and five member-elected Directors.
The QSP’s defined benefit plan exposes the Group to a number of risks, the most significant of which are detailed below:
– Investment risk: The investment strategy for the assets attributable to the QSP’s defined benefit liabilities is to progressively de-risk the
defined benefit investment portfolio as the funding position improves over time. If investment returns underperform expectations, the
Group may be required to provide additional funding to the QSP
– Interest rate risk: Changes in bond yields, such as a decrease in corporate bond yields, will increase defined benefit liabilities through the
discount rate assumed
– Inflation risk: The defined benefit liabilities are linked to salary inflation, and higher salary inflation will lead to higher liabilities.
(A) FUNDING
Employer contributions to the defined benefit divisions of the QSP are based on recommendations by the QSP’s plan actuary. It is estimated
that $35 million of normal employer contributions will be paid by the Qantas Group to its defined benefit plans in 2021/22.
In addition, the Trustee of the QSP and the Group have in place an Additional Funding Plan (AFP), last agreed in 2019, which is an evergreen
restoration plan and addresses the requirements of APRA Prudential Standard SPS 160. The determination of Qantas’ additional employer
contributions under the AFP is triggered if the quarterly determination of the Defined Benefit Vested Benefits Index (DB VBI) indicates that the
DB VBI has been below 100 per cent for two consecutive quarters, or the value of the DB VBI has fallen from a value in excess of 100 per cent
at the previous quarter to a value that is less than 96 per cent. The DB VBI is the ratio of the QSP’s assets attributable to the defined benefit
liabilities to the total defined benefit amount that the QSP would be required to pay if all members were to voluntarily leave the plan on the
funding valuation date. Additional benefit payment top-up contributions may also be payable if after two consecutive quarters, the DB
Retrenchment Benefits Index is less than 100 per cent, the DB VBI is below 105 per cent, and retrenchments occur that place a greater than
VBI level of funding strain on the Plan assets. The last additional contribution required under the AFP was paid into the QSP by the Group in
December 2016. The QSP’s financial position is monitored by the Trustee each quarter.
(B) MOVEMENT IN NET DEFINED BENEFIT (ASSET)/LIABILITY
Present Value
of Obligation
$M
Fair Value of
Plan Assets
$M
Net Defined Benefit
(Asset)/Liability1
$M
Balance as at 1 July
Included in the Consolidated Income Statement
Current service cost
Interest expense/(income)
Contributions by plan participants
Losses on curtailments
2021
2020
2021
2020
2,442
2,392
(2,470)
(2,499)
110
57
-
8
127
71
-
-
-
(72)
(22)
-
-
(57)
(10)
-
(67)
(94)
108
2021
(28)
110
-
(10)
8
Total amount included in manpower and staff-related expenditure
175
198
Included in the Consolidated Statement of Comprehensive Income
Return on plan assets, excluding interest income
Losses from change in demographic assumptions
Gains from change in financial assumptions
Experience (gains)/losses
Exchange differences on foreign plans
Total amount recognised in other comprehensive income
Contributions by employer
Benefit payments
Assets distributed/liabilities extinguished on settlements from redundancies
-
3
(91)
(19)
(4)
(111)
-
(208)
(536)
-
37
(43)
14
1
9
-
(157)
-
(252)
50
(252)
-
-
-
4
(248)
(38)
208
536
-
-
-
(2)
48
(82)
157
-
3
(91)
(19)
-
(359)
(38)
-
-
Balance as at 30 June
1,762
2,442
(2,079)
(2,470)
(317)
(28)
1. The net defined benefit asset is included in non-current other assets (refer to Note 19).
110
2020
(107)
127
(1)
(22)
-
104
50
37
(43)
14
(1)
57
(82)
-
-
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
30 SUPERANNUATION (CONTINUED)
(C) PLAN ASSETS
The major categories of plan assets as a percentage of total plan assets of the Group’s defined benefit plans are as follows:
Australian equity1,2
Global equity1
– United States
– Europe
– Japan
– Other
Private equity
Fixed interest1
– Government bonds
– Other
Credit1
– Corporate debt
– Other
Hedge funds
Property and infrastructure
Agriculture
Timberland
Cash and cash equivalents1
Total
2021
%
13
12
3
1
3
6
13
14
12
8
1
4
4
2
4
100
2020
%
13
10
3
2
3
3
13
12
10
6
6
5
-
2
12
100
1. The majority of these plan assets have a quoted market price in an active market.
2. As at 30 June 2021, QSP assets in shares of Qantas Airways Limited (ASX:QAN) are $2,635,470 (2020: $3,493,454).
The trustee of the QSP is responsible for setting the investment strategy and objectives for the QSP’s assets to support the defined benefit
liabilities. The QSP does not use any asset-liability matching strategies. It utilises traditional investment management techniques to manage
the defined benefit assets.
(D) ACTUARIAL ASSUMPTIONS AND SENSITIVITY
The significant actuarial assumptions (expressed as weighted averages per annum) were as follows:
Discount rate
Long-term future salary increases1
2021
%
3
2
2020
%
3
3
1. For the 30 June 2021 actuarial calculation, specific increase rates were assumed for years 1 to 5, averaging 1.5 per cent and then 2 per cent for the remaining duration of the plan
(30 June 2020: salary increases of 3 per cent in years 1 to 4 and 2 per cent for the remaining duration of the plan were assumed).
The weighted average duration of the QSP’s defined benefit obligation as at 30 June 2021 was 10 years (2020: 11 years). The sensitivity of the
defined benefit obligation to changes in the significant assumption is as follows:
Impact on Defined Benefit Obligation
30 June 2021
30 June 2020
Discount rate
Future salary increase
Change in
Assumption
1%
1%
Increase in Assumption Decrease in Assumption
Increase in Assumption Decrease in Assumption
Decrease by 12%
Increase by 11.9%
Decrease by 10.9%
Increase by 12.9%
Increase by 4.5%
Decrease by 6.9%
Increase by 10.5%
Decrease by 9.1%
Defined Contribution Fund
A defined contribution expense of $107 million has been recognised for the year ended 30 June 2021 (2020: $183 million).
111
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
31 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly-owned companies) instrument 2016/785 (Instrument), the wholly-owned entities identified below
are relieved from the Corporations Act 2001 (Cth) requirements for preparation, audit, distribution and lodgement of Financial Statements
and Directors’ Reports:
AAL Aviation Limited
Airlink Pty Ltd
National Jet Operations Services Pty Ltd
Qantas Ground Services Pty Ltd
Network Aviation Holdings Pty Ltd
Qantas Group Flight Training (Australia) Pty Ltd
Australian Air Express Pty Ltd
Network Aviation Pty Ltd
Qantas Group Flight Training Pty Ltd
Australian Airlines Limited
Network Holding Investments Pty Ltd
Qantas Information Technology Limited
Australian Regional Airlines Pty Ltd
Network Turbine Solutions Pty Ltd
Qantas Road Express Pty Ltd
Eastern Australia Airlines Pty Ltd
Express Freighters Australia (Operations)
Pty Ltd
Osnet Jets Pty Ltd
Q H Tours Limited
Qantas Ventures Pty Limited
QF Cabin Crew Australia Pty Ltd
Express Freighters Australia Pty Ltd
Qantas Asia Investment Company Pty Ltd
Regional Airlines Charter Pty Ltd
Impulse Airlines Holdings Pty Ltd
Qantas Courier Limited
Sunstate Airlines (Qld) Pty Ltd
Jetstar Airways Pty Ltd
Qantas Domestic Pty Ltd
The Network Holding Trust
Jetstar Asia Holdings Pty Ltd
Qantas Freight Enterprises Limited
The Network Trust
Jetstar Group Pty Ltd
Jetstar Services Pty Ltd
Qantas Frequent Flyer Limited
Vii Pty Limited
Qantas Frequent Flyer Operations Pty Ltd
National Jet Systems Pty Ltd
Qantas Group Accommodation Pty Ltd
It is a condition of the Instrument that Qantas and each of the controlled entities eligible to obtain relief under the Instrument enter into a
Deed of Cross Guarantee (Deed). Under the Deed, Qantas guarantees to each creditor payment in full of any debt upon the winding up under
certain provisions of the Corporations Act 2001 (Cth) of any of the controlled entities that are party to the Deed. If the winding up occurs under
other provisions of the Corporations Act 2001 (Cth), Qantas will only be liable if, six months after a resolution or order for the winding up of the
controlled entity, any debt of a creditor of that controlled entity has not been paid in full. Each controlled entity that is party to the Deed has
given similar guarantees in the event that Qantas is wound up.
Qantas and its eligible controlled entities first entered into a Deed on 4 June 2001. Subsequently, additional controlled entities became party
to the Deed by way of Assumption Deeds dated 17 June 2002, 26 June 2006, 29 June 2007, 30 June 2008, 29 June 2009, 16 June 2010,
25 November 2010, 4 April 2011, 13 October 2011, 20 November 2012, 26 November 2015, 26 June 2017, 2 November 2017 and 31 July 2020.
The Consolidated Condensed Income Statement and Consolidated Condensed Balance Sheet for Qantas and each of its controlled entities
that are party to the Deed are set out below. The principles of consolidation are:
– Transactions, balances and unrealised gains and losses on transactions between entities that are party to the Deed are eliminated
– Investments in entities that are not party to the Deed are carried at cost less any accumulated impairment
– Dividends received from entities that are not party to the Deed are recognised as income.
(A) CONSOLIDATED CONDENSED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2021
Revenue and other income
Expenditure
Impairment of assets and related costs
Statutory loss before income tax benefit and net finance costs
Finance income
Finance costs
Net finance costs
Statutory loss before income tax benefit
Income tax benefit
Statutory loss for the year
(Accumulated losses)/Retained earnings as at 1 July
Dividends paid
Share buy-back
Capital raising, net of tax
Shares vested and transferred to employees/ shares vested and lapsed
2021
$M
5,894
(7,560)
(346)
(2,012)
15
(307)
(292)
(2,304)
624
(1,680)
(1,465)
-
-
(6)
4
2020
$M
13,882
(14,743)
(1,575)
(2,436)
21
(281)
(260)
(2,696)
745
(1,951)
1,060
(204)
(348)
-
(22)
Accumulated Losses loss as at 30 June
(3,147)
(1,465)
112
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
31 DEED OF CROSS GUARANTEE (CONTINUED)
(B) CONSOLIDATED CONDENSED BALANCE SHEET AS AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Receivables
Other financial assets
Inventories
Assets classified as held for sale
Income tax receivables
Other
Total current assets
NON-CURRENT ASSETS
Receivables
Other financial assets
Investments in subsidiaries
Investments accounted for under the equity method
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Other
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Treasury shares
Reserves
Accumulated losses
Equity attributable to members of Qantas
Non-controlling interests
Total equity
2021
$M
2020
$M
2,183
1,266
176
279
1
-
161
4,066
425
185
19
55
10,774
1,091
828
665
687
14,729
18,795
2,487
3,270
1,097
380
17
1,054
8,305
44
2,154
6,191
1,015
5
660
10,069
18,374
421
3,186
(18)
400
(3,147)
421
-
421
3,472
1,354
216
306
58
137
179
5,722
515
139
7
59
11,664
1,389
1,029
166
446
15,414
21,136
3,059
2,764
989
518
238
1,522
9,090
99
2,256
6,283
1,317
47
627
10,629
19,719
1,417
3,104
(51)
(171)
(1,465)
1,417
-
1,417
113
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
32 RELATED PARTIES
(A) REMUNERATION OF KEY MANAGEMENT PERSONNEL
The aggregate remuneration of the KMP of the Qantas Group is set out below:
Short-term employee benefits
Post-employment benefits1
Other long-term benefits2
Share-based payments
2021
$’000
8,744
657
351
6,302
16,054
2020
$’000
7,333
611
27
6,308
14,279
1. Post-employment benefits include superannuation and post-employment travel benefits.
2. Other long-term benefits include movements in annual leave and long service leave balances. The accounting value of other long-term benefits may be negative, for example, where
an Executive’s annual leave balance decreases as a result of taking more than the 20 days’ annual leave they accrue during the year.
Further details in relation to the remuneration of KMP are included in the Directors’ Report from pages 36 to 62.
(B) NON-EXECUTIVE DIRECTOR FEE SACRIFICE SHARE ACQUISITION PLAN
In December 2019, a Non-Executive Director Fee Sacrifice Share Acquisition Plan was introduced whereby Non-Executive Directors can elect
to sacrifice a percentage of their Board or Board and Committee fees in return for a grant of Rights to the equivalent value of the same
number of Qantas ordinary shares. Each Right granted will convert automatically to one fully-paid Qantas ordinary share at the conversion
date, which is six months from the grant date subject to the individual remaining as a Non-Executive Director on the conversion date. The
plan is designed to provide Non-Executive Directors the opportunity to build their shareholding in a tax effective manner and to further align
their interests with the interests of shareholders.
Non-Executive Director Fee Sacrifice Share Acquisition Plan -
Rights Reconciliation
Rights outstanding as at 1 July
Rights acquired during the year by Fee Sacrifice
Rights converted to ordinary shares during the year
Rights outstanding as at 30 June
(C) OTHER RELATED PARTY TRANSACTIONS – ASSOCIATES
Transactions with associates are conducted on normal terms and conditions.
Material transactions between the Qantas Group and associates include:
2021
2020
Number of Rights
Number of Rights
-
64,487
(20,462)
44,025
-
-
-
-
– The Qantas Group provides airline seats on domestic and international routes to Helloworld Ltd for sale through its travel agency network
– The Qantas Group has established a business service agreement with a Jetstar-branded airline in Japan (Jetstar Japan). As part of the
business service agreement, amongst other services, Qantas allows Jetstar Japan’s credit card transactions to be acquired through the
Qantas Group’s contractual arrangements
– The Qantas Group as part of shareholder arrangements co-guarantees the finance lease obligations for two A320 aircraft on behalf of
Jetstar Japan to the external lessors in exchange for guarantee fees to the Qantas Group. The Qantas Group with other shareholders of
Jetstar Japan provides limited guarantees to support unsecured debt of Jetstar Japan which was raised to increase liquidity in response
to COVID-19.
114
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
33 PARENT ENTITY DISCLOSURES – QANTAS AIRWAYS LIMITED
(A) CONDENSED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2021
Revenue and other income
Expenditure
Impairment of assets and related costs1
Statutory loss before income tax benefit and net finance costs
Net finance costs
Statutory loss before income tax benefit
Income tax benefit
Statutory loss for the year
2021
$M
2,639
(4,256)
(334)
(1,951)
(266)
(2,217)
674
(1,543)
2020
$M
9,229
(10,523)
(1,455)
(2,749)
(221)
(2,970)
833
(2,137)
1.
Impairment of assets and related costs includes the impairment of investments in subsidiaries and intercompany loans of $105 million (2020: $220 million).
(B) CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021
Statutory loss for the year
Effective portion of changes in fair value of cash flow hedges, net of tax
Transfer of hedging losses/(gains) from hedge reserve to the Condensed Income Statement, net of tax
De-designation of fuel and foreign exchange hedges to the Condensed Income Statement, net of tax
Recognition of effective cash flow hedges on capitalised assets, net of tax
Net changes in hedge reserve for time value of options, net of tax
Fair value gains on investments, net of tax
Foreign currency translation of investments accounted for under the equity method
Defined benefit actuarial gains/(losses), net of tax
Total other comprehensive income/(loss) for the year
Total comprehensive loss for the year
2021
$M
2020
$M
(1,543)
(2,137)
201
49
15
4
42
251
(2)
29
589
(954)
(205)
(123)
425
(42)
(232)
(16)
-
(38)
(231)
(2,368)
115
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
33 PARENT ENTITY DISCLOSURES – QANTAS AIRWAYS LIMITED (CONTINUED)
(C) CONDENSED BALANCE SHEET AS AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Receivables
Intercompany receivables
Other financial assets
Inventories
Assets classified as held for sale
Income tax receivable
Other
Total current assets
NON-CURRENT ASSETS
Receivables
Intercompany receivables
Investments in subsidiaries
Other financial assets
Investments accounted for under the equity method
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Other
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Intercompany payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Payables
Revenue received in advance
Interest-bearing liabilities
Lease liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Treasury shares
Other reserves
Profit reserves
Retained losses
Total equity
116
2021
$M
2020
$M
2,194
374
5,961
176
165
1
-
136
9,007
85
330
432
185
19
9,444
1,009
591
596
687
13,378
22,385
1,204
6,396
2,495
1,097
312
17
829
12,350
44
2,148
6,191
971
5
334
9,693
22,043
342
3,569
264
5,626
216
189
58
137
148
10,207
123
597
420
139
18
10,238
1,254
765
153
368
14,075
24,282
1,790
5,914
2,258
988
449
238
1,296
12,933
99
2,186
6,284
1,245
47
285
10,146
23,079
1,203
3,186
(18)
400
1,774
(5,000)
342
3,104
(51)
(169)
1,774
(3,455)
1,203
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
33 PARENT ENTITY DISCLOSURES – QANTAS AIRWAYS LIMITED (CONTINUED)
(D) DIVIDENDS DECLARED AND PAID
During the year ended 30 June 2021, Qantas Airways Limited did not declare or pay any dividends. No dividend will be paid in relation to the
year ended 30 June 2021.
(E) CAPITAL EXPENDITURE COMMITMENTS
The capital expenditure commitments held by the parent entity are the same as those held by the Group as disclosed in Note 15(C).
(F) CONTINGENT LIABILITIES
The contingent liabilities held by the parent entity are the same as those held by the Group as disclosed in Note 34.
(G) PARENT ENTITY GUARANTEES IN RESPECT OF DEBTS OF ITS SUBSIDIARIES
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of its subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the Deed are disclosed in Note 31.
The parent entity related parties in respect to the provision of guarantees are primarily the same as those held by the Group, which are
disclosed in Note 32.
(H) INTEREST-BEARING LIABILITIES
The parent entity has total interest-bearing liabilities of $7,288 million (2020: $7,272 million), of which $1,035 million (2020: $1,253 million)
represents secured loans payable to controlled entities. Of the $6,253 million (2020: $6,019 million) payable to other parties, $4,055 million
(2020: $4,154 million) represents secured bank loans and other secured loans, with the remaining balance representing unsecured loans.
34 CONTINGENT LIABILITIES
Details of contingent liabilities are set out below. The Directors are of the opinion that provisions are not required with respect to
these matters, as it is not probable that a future outflow of economic benefits will be required or that the amount is not capable of reliable
measurement.
(C) GUARANTEES
The Qantas Group co-guarantees the finance lease obligations for two A320 aircraft on behalf of Jetstar Japan to the external lessors in
exchange for guarantee fees to the Qantas Group. The Qantas Group, in conjunction with Japan Airlines, provided a joint guarantee to support
the unsecured debt of Jetstar Japan to increase liquidity in response to COVID-19.
As part of the business service agreements, the Qantas Group has extended support to the Jetstar-branded airline in Japan (Jetstar Japan)
by allowing its credit card transactions to be acquired through the Qantas Group’s contractual arrangements.
Qantas has also entered into guarantees in the normal course of business to secure a self-insurance licence under the Safety, Rehabilitation
and Compensation Act 1988, the New South Wales Workers’ Compensation Act, the Victorian Accident Compensation Act and the Queensland
Workers’ Compensation Act and Rehabilitation Act, to support non-aircraft lease commitments and other arrangements entered into with
third parties. Due to specific self-insurance provisions raised, the Directors are of the opinion that the probability of having to make a
payment under these guarantees is remote.
(D) LITIGATION
From time to time Qantas is subject to claims and litigation during the normal course of business. The Directors have given consideration to
such matters, which are or may be subject to litigation at year end and, subject to specific provisions raised, are of the opinion that no material
contingent liability exists.
35 POST-BALANCE SHEET DATE EVENTS
Subsequent to 30 June 2021, various Australian state governments reimposed certain restrictions on interstate travel or imposed localised or
state-wide lockdowns of various durations. In addition, the Trans-Tasman ‘travel bubble’ was paused. These government restrictions
impacted demand for domestic and Trans-Tasman travel and the Group responded by adjusting capacity.
The Group’s Recovery Plan is a three-year plan, and while these non-adjusting post-balance sheet date events have impacted the timing of
demand recovery, this is expected to have a short-term impact and not change materially the overall recovery strategy of the Three-Year
Recovery Plan.
On 30 July 2021, the Federal Court handed down its decision in favour of the Transport Workers Union (TWU) regarding the Group’s
outsourcing of the remaining ground handling functions. The decision has not considered any implications of this judgement around
requirements to reinstate workers or pay compensation or penalties. In addition, the Group has appealed this judgement, which will now
proceed to the Full Federal Court. The Federal Court decision and the outcome of the appeal are considered a contingent liability and no
adjustment has been recognised in the financial statements for the year ended 30 June 2021.
On 16 September 2021, the Group completed a seven-year $500 million unsecured bond, which will be used to boost liquidity, repay maturing
debt and help in the balance sheet repair program.
117
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
36 MATERIAL BUSINESS RISKS
The aviation industry is subject to numerous inherent risks that can impact operations if left untreated. In rare circumstances ‘black swan’
risk events can materialise, resulting in unexpected consequences such as those that the aviation industry is experiencing due to COVID-19.
The COVID-19 pandemic has impacted Qantas’ operations significantly, including its strategic and financial objectives.
Material business risks arising from COVID-19, notably liquidity risks, are being critically managed to ensure the ongoing sustainability of
the Group. The Recovery Plan delivered $650 million of cost restructuring benefits in financial year 2020/21 and is on track to deliver the
targeted $1 billion of ongoing structural cost benefits by financial year 2022/23. As the impact of COVID-19 evolves, the Group continues to
plan for a wide range of scenarios and risks to ensure the Group is well-positioned to achieve the required level of transformation to support
target outcomes.
Other inherent risks that can impact the Group’s operations include exposure to changes in economic conditions, changes in government
regulations, fuel and foreign exchange volatility and other exogenous events such as aviation incidents, natural disasters or international
conflicts.
COVID-19 outbreak management: Although Australia has recorded low levels of community transmission of COVID-19 when compared with other
jurisdictions, outbreaks have occurred in most states, with the risk of future outbreaks ever present given the new virus variants and the status of
the vaccine roll out in Australia. Through its ‘Fly Well’ and ‘Work Well’ programs, Qantas has introduced initiatives aimed at preventing the
introduction and spread of COVID-19 in workplaces and aircraft for the protection of our people and our customers. COVID-19 community
transmission case numbers are closely monitored by the Group with a layered response framework in place to ensure controls are rapidly
deployed in line with the level of risk posed. These controls not only seek to protect health but also support business continuity.
General economic conditions post-crisis: As air travel is closely linked with economic growth, the Qantas Group’s operating and financial
performance is influenced by a variety of general economic and business conditions in Australia and overseas. A sustained decline in
consumer and business demand as part of a broader deterioration of economic conditions is likely to have a materially adverse effect on the
financial condition and business of the Qantas Group.
COVID-19 has created considerable uncertainty and volatility surrounding these macroeconomic factors, and any further deterioration may
have a materially adverse impact on the business, financial condition and prospects of the Qantas Group.
Employee relations: The Qantas Group operates in a highly regulated employment market and a portion of the Qantas Group’s employees are
represented by unions and are party to collective bargaining arrangements. Any significant enterprise bargaining dispute between the Qantas
Group and its employees, including in relation to the Recovery Plan, could lead employees to take industrial action, including work
stoppages. This could disrupt the Qantas Group’s day-to-day operations and adversely affect business performance, potentially leading to
reputational damage.
The slower rate of vaccine roll out and the prolonged closure of the Australian border due to the COVID-19 crisis has necessitated the
extended stand down of the majority of the Qantas and Jetstar International workforce. In addition, the domestic lockdowns and the knock-
on impact of border closures by states and territories due to the Delta variant has resulted in the stand down of certain Domestic work
groups. The Group recognises that this situation requires increased efforts to ensure that our people remain connected to the organisation,
and their health and wellbeing is supported. Relevant information continues to be communicated to our people through a series of channels,
including regular Town Hall meetings hosted by the Group Executive Committee, with several thousand employees remotely joining these
sessions. Employee mental health continues to be a key area of focus, with enhanced services provided through our Employee Assistance
Program as well as manager toolkits to assist with increasing awareness, identification, support and monitoring of employee mental health.
The Qantas Group also has certain key management personnel whose institutional knowledge, expertise, relationships and experience are
considered important to the continued success of the business. The loss of key personnel could adversely impact the Qantas Group’s business
and future performance.
Customer risk: The ongoing success of the Qantas Group depends to a large degree on customer satisfaction and loyalty, particularly in light
of the significant competition for passengers that characterises the aviation industry.
The significant financial and operational challenges posed by COVID-19, the impact of the pandemic on the travel industry, the opening and
closing of domestic and international borders and the response of the Qantas Group to these challenges could also impact customer
satisfaction and loyalty. In particular, a diminution of customer satisfaction due to the cancellation and refund policies of the Qantas Group in
the context of COVID-19 may impact the Qantas Group’s reputation and its ability to attract customers in the future, exacerbated by a
potential decline in customer confidence in travelling due to border restrictions and health risks.
In addition, the Qantas Group is vulnerable to longer-term changes in consumer preferences in relation to its service offerings, the markets in
which it operates, and consumer and business sentiment towards travel, including environmental considerations. Any failure by the Qantas
Group to predict or respond to such changes in a timely and cost-effective manner may adversely impact the Qantas Group’s future operating
and financial performance.
Climate change: The Qantas Group is subject to short-term and long-term climate-related physical and transition risks (including both
increasing customer and investor climate change expectations and government climate change policy risks). These risks are an inherent part
of the operations of an airline and are managed by undertaking scenario analysis, strengthening governance, technology, operational and
market-based controls, including proactive consideration of how changing factors (including global climate policies) impact the proximity of
climate-related risks. The Qantas Group has also set ambitious but achievable targets to reduce our emissions by capping emissions at 2019
levels and achieving net-zero emissions by 2050, while also investing in the development of sustainable aviation fuels. The Qantas Group is
responding to increased demand for transparency on identification and management of climate-related risks by aligning our corporate
disclosures with the Taskforce on Climate-Related Financial Disclosures (TCFD).
These disclosures are available at https://www.qantas.com/au/en/qantas-group/acting-responsibly/our-planet.html.
118
Q AN T A S A N NU A L R E POR T 2 0 21
Notes to the Financial Statements continued
For the year ended 30 June 2021
36 MATERIAL BUSINESS RISKS (CONTINUED)
Competitive intensity: Ordinarily, the international and domestic aviation markets in which the Qantas Group operates are highly competitive,
and growth in market capacity ahead of underlying demand impacts profitability on an industry-wide basis. Its competitors include many
major foreign airlines (including government-owned or controlled airlines), some with more financial resources or lower cost structures than
Qantas. This competition may increase with the expansion of existing airlines, the consolidation of existing airlines and/or the creation of
alliances between airlines, or new airlines entering the market.
Australia’s aviation policies favour the creation of a more competitive environment, including more liberal rights of entry into Australian
domestic and international markets. These policies have attracted offshore competitors (predominantly state-sponsored airlines) to the
Australian international aviation market, which has further increased competition for passengers on international routes. Additionally,
the Qantas Group ordinarily faces high levels of price competition in the markets in which it operates, which places significant pressure
on the Qantas Group to price match by offering heavily discounted fares. Aggressive pricing by competitors seeking to gain market share
can adversely affect the Qantas Group’s revenues and yield performance. The financial impact of any discounting of fares as a result of
competitive pressures is exacerbated by the high fixed costs and low profit margins that characterise the aviation industry. The combined
effect of these factors may have a materially adverse effect on the revenue and financial condition of the Group.
Brand reputation: The Qantas brand carries significant commercial value, and the continued success of the Qantas Group relies on the
maintenance of a positive reputation and brand recognition among customers, suppliers, strategic partners and governments. Any negative
publicity (for example, due to a safety incident, labour dispute, regulatory investigation or public customer complaint) may damage Qantas’
reputation and have a negative impact on its business operations and financial performance. The Customer Insights team constantly
monitors customer satisfaction through post-flight surveys and regularly monitors trust in the Qantas Group brands alongside ongoing
research and development of Qantas Group products to mitigate this risk.
Fuel and foreign exchange volatility: The Qantas Group is subject to fuel and foreign exchange risks. These risks are an inherent part of the
operations of an airline. The continued focus on forecasting and the operational agility of our aviation operations are supporting the Group to
manage the residual uncertainty. Accordingly, the size of the Group’s fuel and foreign exchange risk will vary in line with operational changes.
The Qantas Group manages fuel and foreign exchange risks through a comprehensive hedging program. Qantas will continue to hedge its fuel
and foreign exchange risk in line with this program. The Group has a mix of collars and outright options in place to cover fuel price risk and is
actively managed for changes in capacity due to border closures.
Cyber security and data governance: As cyber breaches and attacks surge globally and remote ways of working continue due to COVID-19,
the Qantas Group remains focused on embedding cyber security, privacy and data governance into business processes, taking a security and
privacy by design approach and creating a cybersafe and privacy orientated culture that builds on an established safety culture. The Group is
also enhancing its Data Governance Framework to ensure ethical and commercial data risks are managed in addition to data protection and
privacy. Qantas has a defined Risk and Control Framework, aligned with industry standards, which is designed to protect the confidentiality,
integrity, availability and privacy of data and to maintain compliance with regulatory requirements. The Qantas Group's cyber security and
data privacy-related controls operate to reduce the likelihood and severity of cyber security and data privacy related incidents and related
impacts. The Group’s cyber and data privacy risks are continuously monitored by the Group Cyber and Privacy Committee and are subject to
independent assurance including for material third-party suppliers.
Key business partners and alliances: The Qantas Group has relationships with a number of key business partners. In order to continue to
maximise mutual benefit from both a financial and customer proposition perspective, governance structures are in place to track and report
performance against common strategic objectives. The Qantas Group continues to proactively build relationships with existing and new
industry partners through ongoing dialogue with relevant authorities and stakeholder groups.
Key supplier risk: The Qantas Group is dependent on third-party providers for some principal business processes that are integral to its business.
The failure of these providers to adequately perform their service obligations, or other unexpected interruptions of services, may cause significant
disruption to the Group’s operations and have an adverse impact on financial performance. Qantas uses its Business Continuity Plans to cover the
risk of supply failures and has contingency plans in place to respond to key supplier interruption.
Risk of increase in airport services-related costs or change in availability of airport facilities: The Qantas Group is exposed to the risk of
increases in airport services-related costs (including air traffic control, airport, transit, take-off and landing fees and security charges). The
availability and cost of airport facilities are fundamental to the ability of the Qantas Group to operate.
These costs represent a significant portion of the Qantas Group’s operating costs. Most Australian airports are privately owned, and owners
have flexibility to increase charges to airlines. There can be no assurance that major airport operators will not continue to increase their fees or
that the Qantas Group will not incur new costs in Australia or elsewhere (for example, additional fees assessed against environmental criteria
such as emissions levels or noise pollution). Further, it is likely that security and health measures around the world will continue to be
increased in response to the COVID-19 experience and the perceived threat of terrorism, which may lead to increases in airport clearance and
security charges. To the extent that the Qantas Group is unable to pass on any fee increases to its customers, these developments could have
a material adverse effect on the Qantas Group’s operational results and financial position.
In addition, health concerns during the COVID-19 crisis and in the period following it are likely to impact the availability of airport slots and
facilities in ways that are difficult to predict. This could have a materially adverse effect on the Qantas Group’s operations and Recovery Plan.
An overview of the Group Risk Management Framework is contained in the Qantas Group Business Practices Document available at
www.qantas.com.au.
119
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Notes to the Financial Statements continued
For the year ended 30 June 2021
Controlled Entities
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
i.
Controlled entities are entities controlled by the Group. Control exists when the Group is exposed to or has rights to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
controlled entities are included in the Consolidated Financial Statements from the date on which control commences until the date on which
control ceases.
ii. Non-Controlling Interests
Non-controlling interests in the results and equity of controlled entities are shown separately in the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Balance Sheet.
iii. Equity Accounted Investments
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies
of an entity. Significant influence is evidenced through, but not limited to, the voting power of the Group, representation on the Board of
Directors and participation in policy-making processes. Interests in associates are accounted for under the equity accounting method and
initially recognised at cost, including transaction costs. Subsequent to initial recognition, the Consolidated Financial Statements include the
Group’s share of profit or loss and other comprehensive income of equity accounted investees, until the date on which significant influence
ceases. Dividends received or receivable reduce the carrying amount of the equity accounted investment.
When the Group’s share of total comprehensive losses exceeds the equity accounted carrying value of an associate, the Group’s carrying
amount is reduced to nil and recognition of further losses is discontinued, except to the extent that the Group has incurred legal or
constructive obligations to fund an associate’s operations or has made payments on behalf of an associate, which are recognised within
Provisions.
When an associate is disposed of in its entirety or partially such that significant influence is lost or classified as an asset held for sale, the
cumulative amount in the foreign currency translation reserve related to that associate is reclassified to the Consolidated Income Statement
as part of the gain or loss on disposal. When the Group disposes of only part of an associate while retaining significant influence, the relevant
proportion of the cumulative amount in the foreign currency translation reserve related to that associate is reclassified to the Consolidated
Income Statement.
The carrying amount of equity accounted investments is tested for impairment in accordance with the policy described in Note 37(G).
iv. Transactions Eliminated on Consolidation
Intra-group transactions, balances and unrealised gains and losses on transactions between controlled entities are eliminated in the
Consolidated Financial Statements. Unrealised gains and losses arising from transactions with investments accounted for under the equity
method are eliminated to the extent of the Group’s interest in the associate.
Foreign Currency Transactions
(B) FOREIGN CURRENCY
i.
Transactions in foreign currencies are translated into the respective functional currencies of the Group’s companies at the exchange rates at
the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in the Consolidated
Income Statement.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the
reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional
currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a
foreign currency are translated at the exchange rate at the date of the transactions.
Foreign Operations
ii.
The assets and liabilities and the income and expenditure of foreign operations that have a functional currency other than AUD are translated
into AUD as follows:
– assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
– income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates
– all resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign currency translation
reserve, except to the extent that the translation difference is allocated to non-controlling interests.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost or classified as
an asset held for sale, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to the
Consolidated Income Statement as part of the gain or loss on disposal. If the Group disposes of part of its interests in a subsidiary but retains
control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only
part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is
reclassified to the Consolidated Income Statement.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) FINANCIAL INSTRUMENTS
Non-Derivative Financial Instruments
Recognition, Measurement and Derecognition of Non-Derivative Financial Assets
i.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs related to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through
profit or loss are expensed.
The Group subsequently classifies its financial assets in the following measurement categories:
– Those to be measured subsequently at fair value (either through the Consolidated Income Statement or the Consolidated Statement of
Comprehensive Income)
– Those to be measured at amortised cost.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, are settled or the
Group transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership are transferred.
ii. Recognition, Measurement and Derecognition of Non-Derivative Financial Liabilities
At initial recognition, the Group measures a non-derivative financial liability at its fair value, less transaction costs.
The Group subsequently measures non-derivative financial liabilities at amortised cost, with any difference between cost and redemption
value being recognised in the Consolidated Income Statement over the period of the borrowings using the effective interest rate method.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. The Group also derecognises a
financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new
financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, where there is a extinguishment/substantial modification or transfer, the difference between the
carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in the
profit or loss.
Derivative Financial Instruments
Derivative financial instruments are recognised at fair value both initially and on an ongoing basis. The accounting for subsequent changes in
fair value depends on whether the derivative is a designated hedging instrument, and if so, the nature of the item being hedged and the type
of hedge relationship designated. The Group designates derivatives as either hedges of the fair value of recognised assets or liabilities or a firm
commitment (fair value hedges), or as hedges of a particular risk associated with the cash flows of recognised assets and liabilities or of highly
probable forecast transactions (cash flow hedges). At the inception of the transactions, the Qantas Group documents the economic
relationship between hedging instruments and hedged items, including the risk management objective and strategy for undertaking each
transaction. The Qantas Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the hedging
instruments that are used in hedge transactions have been and will continue to be highly effective.
From time to time, certain derivative financial instruments do not qualify for hedge accounting, notwithstanding that the derivatives are held
to hedge identified exposures. Any changes in the fair value of a derivative instrument or part of a derivative instrument that do not qualify for
hedge accounting are classified as ineffective and recognised immediately in the Consolidated Income Statement.
Fair Value Hedges
i.
Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the
Consolidated Income Statement, together with any changes in the fair value of the hedged asset or liability or firm commitment attributable
to the hedged risk.
ii. Cash Flow Hedges
Where a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is
recognised in the Consolidated Statement of Comprehensive Income and accumulated within hedge reserve. Any ineffective portion of
changes in the fair value of the derivative is recognised immediately in the Consolidated Income Statement.
The amount accumulated in equity is retained in the Hedge Reserve and reclassified to the Consolidated Income Statement in the same
period or periods during which the hedged forecast cash flows affect profit or loss or the hedged item affects profit or loss. Where the hedged
item is capital in nature, the cumulative gain or loss recognised in the hedge reserve is transferred to the carrying amount of the asset when
the asset is recognised.
If the forecast transaction is no longer highly probable, the hedging instrument expires or is sold, terminated or exercised, or the designation
is revoked, then hedge accounting is de-designated prospectively. In this instance, the amounts accumulated in the Hedge Reserve are
recognised in the period in which the original hedged item transaction ultimately occurs or reclassified to the Consolidated Income
Statement immediately if the forecast transaction is subsequently considered no longer probable. If the forecast transaction is no longer
probable, hedge accounting is de-designated and the amount accumulated in the Hedge Reserve is reclassified to the Consolidated Income
Statement immediately.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) FINANCIAL INSTRUMENTS (CONTINUED)
iii. Cost of Hedging
The time value of an option, the forward element of a forward contract and any foreign currency basis spread is excluded from
the designation of a financial instrument and accounted for as a cost of hedging. The fair value changes of these elements are recognised in
other comprehensive income and depending on the nature of the hedged item, will either be transferred to the Consolidated Income
Statement in the same period that the underlying transaction affects the Consolidated Income Statement or capitalised into the initial
carrying value of the asset.
iv. Fair Value Calculations
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair value of
financial instruments that are not traded in an active market is estimated using valuation techniques consistent with accepted market
practice. The Qantas Group uses a variety of methods and input assumptions that are based on market conditions existing at the balance
sheet date. The different methods of estimating the fair value of these items have been defined in the Consolidated Financial Statements
as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Financial Guarantee Contracts
v.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at
fair value and subsequently at the higher of:
– The amount determined in accordance with the expected credit loss model under AASB 9 Financial Instruments, and
– The amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of
AASB 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual
payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that
would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of associates are provided
for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.
Net Passenger and Net Freight Revenue
(D) REVENUE RECOGNITION
i.
Net passenger revenue primarily arises within the Qantas Domestic, Qantas International and Jetstar Group segments. Net freight revenue
primarily arises within the Qantas International segment except where belly space is utilised in Qantas Domestic and the Jetstar Group.
Passenger, freight revenue, capacity hire and air charter revenue are recognised when the travel or service is provided. Revenue recognised
on travel is net of sales discounts, passenger and freight interline/IATA commission and the Goods and Services Tax. Net freight revenue
includes amounts the Group receives as operating lease income in relation to freighters leased to customers.
At the time of expected travel, revenue is also recognised in respect of tickets that are not expected to be used. Unused tickets are recognised
as revenue using estimates based on the terms and conditions of the ticket, experience, historical and expected future trends. The Group
generally does not recognise revenue in respect of unredeemed travel credits due to the extended redemption conditions and typically, the
ability for the passenger to request a refund.
Passenger travel and freight services are generally paid for in advance of travel and are deferred on the balance sheet as revenue received in
advance. Travel credits are classified as revenue received in advance where they are available for future flights or in certain circumstances
for refund, if requested. Where customers have made refund claims these are classified as payables, where the balance of refunds is material
in aggregate.
Where the passenger is also a Qantas Frequent Flyer member and earns Qantas Points on travel, the allocation of revenue is on a proportional
basis using relative stand-alone selling prices and the consideration allocated to Qantas Points is deferred as unrecognised redemption
revenue.
Consideration received in relation to certain ancillary services regarding passenger travel such as credit card fees and change fees are not
considered to be distinct from the passenger flight. Revenue relating to these ancillary services is deferred until uplift to align with the related
passenger travel. These amounts are included within net passenger revenue.
Passenger recoveries (including fuel surcharge on passenger tickets) are included in net passenger revenue. Freight fuel surcharge
is included in net freight revenue.
ii. Frequent Flyer Marketing Revenue and Other Qantas Loyalty Businesses
Marketing revenue associated with the issuance of Qantas Points is recognised within the Qantas Loyalty segment as the service is
performed over time (typically this approximates the timing of the issuance of Qantas Points). Marketing revenue is measured as the
difference between the stand-alone selling price of a Qantas Point and the consideration received, using the residual approach. The stand-
alone selling price of a Qantas Point is determined using estimation techniques based on the value of redemption options for which Qantas Points
could be redeemed and considers the proportion of Qantas Points not expected to be redeemed. The consideration for Qantas Points is typically
received within normal credit terms following the issuance of points.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(D) REVENUE RECOGNITION (CONTINUED)
ii. Frequent Flyer Marketing Revenue and Other Qantas Loyalty Businesses (continued)
Marketing revenue on inter-segment Qantas Point issuances is eliminated on consolidation.
Revenue from other Qantas Loyalty businesses includes commission revenue where Qantas Loyalty is acting as a sales agent. Commission
revenue is measured based on its relative stand-alone selling price and is recognised on satisfaction of the performance obligation which is
typically the transfer of the underlying good or service to the customer.
iii. Frequent Flyer Redemption Revenue
The consideration for issuance of Qantas Points is typically received in advance of redemption and is deferred as unrecognised redemption
revenue. Redemption revenue is recognised within the Qantas Loyalty segment when Qantas Points are redeemed.
Redemption revenue is measured based on the weighted average value of the points redeemed. Redemption revenue arising from Qantas
Group flight redemptions is recognised when the passenger is uplifted and within net passenger revenue on consolidation.
Redemption revenue in relation to products provided by suppliers outside the Group, such as Qantas Reward Store redemptions and other
carrier redemptions, is recognised in the income statement net of related costs where the Group is an agent. For the purposes of segment
reporting, the Qantas Loyalty segment reports these redemptions on a gross basis. Adjustments are made within consolidation eliminations
to present these redemptions on a net basis at a Group level within other revenue. Obligations for returns or refunds in relation to redemptions
from the Qantas Rewards Store are recognised where material.
Significant changes in issued Qantas Points expected to expire unredeemed are recognised within other income. The Group uses estimates
based on terms and conditions of the Frequent Flyer program, experience, historical and expected future trends to determine any amount
recognised.
iv. Other Carrier Commissions and Commissions from Third Parties
The Group considers whether it is a principal or agent in relation to services by considering whether it has a performance obligation to provide
services to the customer or whether the obligation is to arrange for services to be provided by a third party, such as another carrier or a
third party. Other carrier commission revenue is included within third party services revenue and is generally recognised on uplift by the
other carrier. Consideration for other carrier commissions is received within normal credit terms through IATA. Commissions from third parties
are typically recognised when the underlying good or service has been transferred to the end-customer.
Freight Terminal Fees
v.
Revenue from Freight terminal fees is measured based on its stand-alone selling price and is recognised on satisfaction of the performance
obligation, which is typically the transfer of the underlying service to the customer. Invoices are issued according to contractual terms.
vi. Qantas Club Membership
Qantas Club Membership revenue is measured based on its stand-alone selling price and is recognised on satisfaction of the performance
obligation, which is typically straight-line over the membership period. The deferred revenue is included in other revenue received in advance.
vii. Incremental Costs of Obtaining a Contract
The incremental cost of obtaining a contract is capitalised and amortised over the expected period of benefits to the Group and in line with
the pattern those benefits are expected to arise. The Group recognises the incremental costs of obtaining a contract as an expense when
incurred where the amortisation period of the asset that would have been recognised is one year or less.
(E) GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
Group expects to comply with the conditions. Note 24 provides further information on how the Group accounts for government grants.
Tax Compliance
(F) TAXES
i.
The Qantas Group is committed to embedding risk management practices to support the achievement of compliance objectives and fulfil
corporate governance obligations. Tax risk management is governed by both the Qantas Group Risk Management Policy and the Qantas Group
Tax Risk Management Policy, ensuring corporate governance obligations with respect to tax risks are met. The Qantas Group has paid all taxes
that it owes and all tax compliance obligations are up to date. The Australian Taxation Office (ATO) has advised that the Qantas Group is a key
taxpayer, continuing to have a ‘low’ likelihood of non-compliance. The ATO also acknowledged Qantas’ continued commitment to engage
cooperatively and transparently to mitigate tax risks, including obtaining tax certainty on key transactions through the use of binding Private
Rulings and entering into a multi-tax Annual Compliance Arrangement (ACA).
Tax Treaties
Due to the operation of income tax treaties and specific rules dealing with airlines, the Qantas Group appropriately reports the majority of its
income in Australia, with only a small component being reported in foreign jurisdictions (for the purpose of determining liability to company tax).
Current Income Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year, and any adjustment to tax payable or
receivable with respect to previous years. It is measured using tax rates enacted or substantially enacted at the balance sheet date where the
Group and its subsidiaries operate and generate taxable income or loss.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) TAXES (CONTINUED)
Tax Compliance (continued)
i.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
– Temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or loss
– Temporary differences relating to investments in controlled entities and associates and jointly controlled entities to the extent that they
will probably not reverse in the foreseeable future
– Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences only to the extent that it is
probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Such reductions are reversed when the
probability of future taxable profits improves. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, using tax rates enacted or substantially enacted at the reporting date. Qantas provides for income tax in both
Australia and overseas jurisdictions where a liability exists.
Income Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Consolidated Income Statement except to
the extent that it relates to items recognised directly in equity or in other comprehensive income, in which case it is recognised in equity or in
other comprehensive income.
ii. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable
from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the
expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the
taxation authority is included as a current asset or liability in the Consolidated Balance Sheet. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the taxation authority are classified as operating cash flows.
iii. Tax Consolidation
Qantas and its Australian wholly-owned controlled entities, trusts and partnerships are part of a tax consolidated group. As a consequence, all
members of the tax consolidated group are taxed as a single entity.
Non-Financial Assets
(G) IMPAIRMENT
i.
The carrying amounts of non-financial assets such as equity accounted investments, property, plant and equipment, goodwill and intangible
assets and other assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. For the purpose of assessing impairment,
goodwill and indefinite lived intangible assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash
generating units). Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
Assets which primarily generate cash flows as a group, such as aircraft, are typically assessed on a cash generating unit (CGU) basis,
inclusive of related infrastructure and intangible assets and compared to net cash inflows for the CGU. Where assets are no longer expected
to contribute to the cash flows of a CGU, they are tested for impairment separately. Identification of an asset’s CGU requires significant
judgement, as it requires identification of the lowest aggregation of assets that generate largely independent cash inflows. In Management’s
judgement, the lowest aggregation of assets which give rise to CGUs as defined by AASB 136 Impairment of Assets are the Qantas Domestic
CGU, Qantas International CGU, Qantas Loyalty CGU, Qantas Freight CGU, Jetstar Asia CGU, Jetstar Japan CGU and the Jetstar Australia/New
Zealand CGU. Estimated net cash flows used in determining recoverable amounts are discounted to their net present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the assets or CGU.
An impairment loss is recognised for the amount by which the asset’s or CGU’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and value in use. Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. The maximum
amount of any impairment reversal is the lower of:
– The amount necessary to bring the carrying amount of the asset to its recoverable amount (if it is determinable), and
– The amount necessary to restore the assets of the CGU to their pre-impairment carrying amounts less subsequent depreciation or
amortisation that would have been recognised.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G)
IMPAIRMENT (CONTINUED)
ii. Financial Assets
The carrying value of financial assets is assessed at each reporting date to determine whether there is any objective evidence that it is
impaired. Where necessary, the Group recognises provisions for expected credit loss (ECL) at amortised cost, based on 12-month or lifetime
losses depending on whether there has been a significant increase in credit risk, including risk of default occurring, since initial recognition.
For significant customers, the Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the
risk of loss (including but not limited to external ratings, audited financial statements, management accounts and cash flow projections and
available press information about customers) and applying experienced credit judgment. For other customers, ECL is assessed based on
credit risk characteristics and the days past due. It is then measured based on actual historical credit loss experienced over the past years,
along with other factors, to reflect differences between the economic conditions during the period over which the historical data has been
collected, current conditions and the Group's view of macroeconomic conditions over the expected lives of the receivables. The Group
considers a financial asset to be in default when the counterparty is unlikely to pay its credit obligations in full.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL,
the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including
forward-looking information. A financial asset is written off when there is no reasonable expectation of recovery, such as the debtor failing to
engage in a repayment plan with the Group.
(H) PROPERTY, PLANT AND EQUIPMENT
i.
Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Items of property, plant and
equipment are initially recorded at cost, being the fair value of the consideration provided plus incidental costs directly attributable to the
acquisition.
Costs to dismantle and remove assets
The cost of acquired assets includes the initial estimate of costs of dismantling and removing the items and restoring the site on which they
are located. Changes in the measurement of existing liabilities resulting from changes in foreign exchange rates, timing or expected outflow
of resources required to settle the obligation, or from changes in the discount rate are recognised as an adjustment to the asset recognised.
The unwinding of the discount is treated as a finance expense in the Consolidated Income Statement.
Gains or losses on cash flow hedges of the purchase of assets
The cost also may include transfers from the hedge reserve of any gain or loss on qualifying cash flow hedges of foreign currency purchases
of property, plant and equipment in accordance with Note 37(C).
Capitalisation of interest
Interest attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and
added to the cost of the asset. All other borrowing costs are recognised in the Income Statement in the year in which they are incurred.
ii. Subsequent Expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the
Group.
iii. Depreciation
Depreciation is provided on a straight-line basis on all items of property, plant and equipment except for freehold land, which is not
depreciated. The depreciation rates of owned assets are calculated to allocate the cost or valuation of an asset, less any estimated residual
value, over the asset’s estimated useful life to the Qantas Group. Assets are depreciated from the date of acquisition or, with respect to
internally constructed assets, from the time an asset is available for use. The costs of improvements to assets are depreciated over the
shorter of the remaining useful life of the asset or the estimated useful life of the improvement.
The principal asset depreciation periods and estimated residual value percentages applied where material are:
Buildings and leasehold improvements
Plant and equipment
Passenger aircraft and engines
Freighter aircraft and engines
Aircraft spare parts
Years
Residual Value (%)
0 – 40
2.5 – 20
2.5 – 25
2.5 – 20
15 – 20
0
0
0 – 10
0 – 10
0 – 10
Useful lives and residual values are reviewed annually and adjusted where appropriate, having regard to commercial and technological
developments, the estimated useful life of assets to the Qantas Group and the long-term fleet plan.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(H) PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
iv. Maintenance and Overhaul Costs
Embedded Maintenance
An element of the cost of an acquired aircraft is attributed to its service potential, reflecting the maintenance condition of its engines and
airframe. This cost is depreciated over the shorter of the period to the next major inspection event, the remaining life of the asset or the
remaining lease term.
Subsequent Maintenance Expenditure
The costs of subsequent major cyclical maintenance checks for owned and leased aircraft are recognised as an asset and depreciated over
the shorter of the scheduled usage periods to the next major inspection event, the remaining life of the aircraft or lease term (as appropriate to
their estimated residual value). Maintenance checks which are covered by third-party maintenance agreements where there is a transfer of
risk and legal obligation are expensed on the basis of hours flown. All other maintenance costs are expensed as incurred.
Modifications
Modifications that enhance the operating performance or extend the useful lives of aircraft are capitalised and depreciated over the
remaining estimated useful life of the asset or remaining lease term (as appropriate to their estimated residual value).
v. Manufacturers’ Credits
The Qantas Group receives credits from manufacturers in connection with the acquisition of certain aircraft and engines. These credits are
recorded as a reduction to the cost of the related aircraft and engines, when the credits are utilised by the Group.
(I) LEASES
The Group predominantly leases passenger aircraft and engines, freighter aircraft, domestic and international properties, and equipment.
Lease contracts are typically entered into for fixed periods but may have extension options.
Initial Recognition
i.
Leases (other than those described below) are recognised as a lease liability with a corresponding right of use asset at the date at which the
leased asset is available for use by the Group.
Scope
AASB 16 applies to contracts which convey the right to control the use of an identified asset for a period of time in exchange for consideration.
Control is conveyed where the Group has both the right to direct the use of the identified asset and to obtain substantially all the economic
benefits from the use of the asset throughout the period of use.
Short-term leases (expected lease term of 12 months or less from the commencement date and that do not contain a purchase option) and
leases of low-value assets are not recognised as lease liabilities. Lease payments on short-term leases and leases of low-value assets are
recognised as an expense in the Consolidated Income Statement as incurred.
For contracts that include lease components and non-lease components, these are separated based on their relative stand-alone selling
prices. The lease component is recognised as a lease under AASB 16 and the non-lease component is recognised as an expense in the
Consolidated Income Statement as incurred. This includes, for example, certain capacity hire arrangements where a third party provides
aircraft (lease component) to the Group, together with other services such as crew and maintenance (non-lease components), which are
recognised within capacity hire expense.
Lease liability
At the lease commencement date, lease liabilities are initially measured at the present value of lease payments over the lease term.
Lease payments include fixed payments (less any lease incentives receivable), variable payments that are based on an index or a rate
(initially measured using the index or rate as at the commencement date) and, where relevant, the exercise price of a purchase option (where
it is reasonably certain that option will be exercised).
The lease term includes the non-cancellable period for which the Group has contracted to lease the asset, together with any option terms to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not
to be exercised. When determining the lease term for cancellable leases or renewable leases, the Group considers both the broader economics of
the contract (and not only contractual termination payments) and whether each of the parties has the right to terminate the lease without
permission from the other party with no more than an insignificant penalty. Such leases include, for example, leases which have expired and
are legally cancellable by both the lessor and lessee and/or leases which contain holdover arrangements which allow the lessee to continue
to occupy the property beyond the lease end date until the arrangement is cancelled by either the lessee or the lessor.
Lease payments are discounted using the Group's incremental borrowing rate where the implicit interest rate in the lease is not readily
determined. The Group's incremental borrowing rate is the rate that the Group would have to pay to borrow the funds necessary to obtain an
asset of similar value or the right to use an asset in an economic environment with similar terms and conditions.
Right of use asset
At the lease commencement date, right of use assets are measured at an amount equal to the initial measurement of the lease liability
(adjusted for any lease payments made at or before the commencement date), and an initial estimate of the present value of restoration or
return costs that arise at lease commencement (with the corresponding amount recognised as a provision under AASB 137 Provisions, Contingent
Liabilities and Contingent Assets), less any lease incentives received.
ii. Subsequent Measurement
Lease liability
Lease payments are allocated between principal and interest payments. The interest expense is recognised in the Consolidated Income
Statement over the lease term to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(I) LEASES (CONTINUED)
ii. Subsequent Measurement (continued)
Lease liabilities denominated in currencies other than the Group's functional currency are translated to Australian dollars at each reporting
date, however, the right of use asset is recognised at the foreign exchange rate at initial recognition.
In accordance with the Group's Treasury Risk Management Policy, certain foreign currency lease liabilities (for example, aircraft leases
denominated in US dollars) have been designated as a hedging instrument of future corresponding foreign currency revenues (for example,
US dollar revenues) in a cash flow hedge relationship. The effective portion of the foreign exchange revaluation of the lease liability is
recognised in other comprehensive income and is recycled to the Consolidated Income Statement within net passenger revenue when
the hedged item is realised.
The lease liability is remeasured where there is a change in future lease payments arising from a change in index or rate, if there is a change
in the Group's estimate of amounts expected to be payable under a residual value guarantee, or if there is a change in the lease term,
including the Group’s assessment of whether it will exercise a purchase, extension or termination option within the lease contract
(reassessed where there is a significant event or change in circumstances that is within the Group's control and affects the ability to exercise,
or not to exercise, an option). Where the lease liability is remeasured in this way, a corresponding adjustment is recognised to the right of use
asset or is recorded in the Consolidated Income Statement if the carrying amount of the right of use asset has been reduced to zero.
Right of use asset
Right of use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. The right of
use asset is adjusted for certain changes in the lease liability. The right of use asset is also adjusted for changes in the measurement of the
restoration provision recognised for return costs that arise at lease commencement.
iii. Amendment to AASB 16
In May 2020, the IASB issued amendments to AASB 16 to provide an optional relief to lessees from applying AASB 16’s guidance on lease
modification accounting for rent concessions if they are a direct consequence of COVID-19 and meet certain conditions specified in the
amendment. The practical expedient allows the lessee to recognise a forgiveness or waiver of lease payments as a variable lease payment in
the income statement and a corresponding derecognition of the part of the lease liability that has been extinguished by the forgiveness or
waiver of lease payments. The practical expedient also provides guidance on accounting for rent deferrals whereby a change in lease payment
that reduces the payment in one period and proportionally increases the payment in another does not extinguish the lessee’s lease liability nor
changes the consideration for the lease. The lessee would continue to recognise lease payment deferrals within the lease liability.
The Group has determined that it meets the conditions to apply the practical expedient and has applied the practical expedient in accounting
for rent concessions. The impact of the application of this practical expedient is disclosed in Note 16.
iv. Lease revenue
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each
lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating lease. As part of this
assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
Where the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease
classification of a sub-lease with reference to the right to use asset arising from the head lease, not with reference to the underlying asset. If a
head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating
lease. The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term within net
freight revenue and other revenue and income.
(J)
i.
INTANGIBLE ASSETS
Recognition and Measurement
Goodwill
Goodwill has an indefinite useful life and is stated at cost less any accumulated impairment losses. With respect to
investments accounted for under the equity method, the carrying amount of goodwill is included in the carrying
amount of the investment.
Airport landing slots
Airport landing slots have an indefinite useful life. Airport landing slots are not amortised and are stated at cost
less any accumulated impairment losses.
Brand names and
trademarks
Brand names and trademarks have an indefinite useful life and are carried at cost less any accumulated
impairment losses.
Software
Software is stated at cost less accumulated amortisation and impairment losses. Software development
expenditure, including the cost of materials, direct labour and other direct costs, is only recognised as an asset
when the Qantas Group controls future economic benefits as a result of the costs incurred and it is probable that
those future economic benefits will eventuate and the costs can be measured reliably.
Contract intangible
assets
Contract intangible assets are stated at cost less accumulated amortisation. Amortisation commences when the
asset is ready for use.
The Group considers that there are no individual intangible assets that are material for additional disclosure within the financial statements.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(J)
INTANGIBLE ASSETS (CONTINUED)
ii. Subsequent Expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
All other expenditure, including expenditure on internally-generated goodwill and brands, is recognised in the Consolidated Income Statement
as incurred.
iii. Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over
their estimated useful lives and is recognised in the Consolidated Income Statement. Goodwill, brand names and trademarks and airport
landing slots are indefinite lived intangible assets and are allocated to the relevant CGU. These indefinite lived intangible assets are not
amortised but tested annually for impairment. Contract intangible assets are not amortised until such time as the intangible asset is ready for
use but are tested annually for impairment.
The principal amortisation periods and estimated residual value percentages applied where material is:
Software
Contract intangible assets
Years
2 – 10 years
0 – 40 years
Residual Value %
0%
0%
(K) INVENTORIES
Inventories are valued at the lower of cost and net realisable value. The cost is determined by the weighted average cost method. Inventories include
mainly engineering expendables, consumable stores and work-in-progress.
(L) PAYABLES
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year which are unpaid. The
amounts are unsecured and are usually paid within 30-60 days of recognition. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently
measured at amortised cost using the effective interest method, if the effect of discounting is material.
(M) PROVISIONS
A provision is recognised if, as a result of a past event, there is a present legal or constructive obligation that can be measured reliably, and it
is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are not recognised for future operating
losses.
If the effect is material, a provision is determined by discounting the best estimate of the expected future cash flows required to settle the
obligation at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is treated as a finance expense in the Consolidated Income Statement.
Obligations are presented as current liabilities in the balance sheet if the Group does not have an unconditional right to defer settlement for at
least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.
Liabilities for wages, salaries and annual leave vesting to employees are recognised in respect of employees’
services up to the end of the reporting period. These liabilities are measured at the amounts expected to be paid
when they are settled and include related on-costs, such as workers’ compensation insurance, superannuation
and payroll tax. The annual leave provision is discounted using corporate bond rates which most closely match the
expected settlement dates of the provision.
The liability for long service leave is recognised as a provision for employee benefits and measured at the present
value of estimated future payments to be made in respect of services provided by employees up to the end of the
reporting period. The provision is calculated using expected future increases in wage and salary rates including
related on-costs and expected settlement dates based on expected employee usage. The provision is discounted
using corporate bond rates which most closely match the expected settlement dates of the provision. The
unwinding of the discount is treated as a finance expense in the Consolidated Income Statement.
Remeasurements as a result of experience adjustments and changes in assumptions are recognised in the
Consolidated Income Statement.
Redundancy provisions are recognised as an expense at the earlier of when the Group can no longer withdraw the
offer of those benefits and when the Group recognises costs for a restructuring. These benefits are expected to be
settled wholly within 12 months of the end of the reporting period.
Other employee benefits such as discretionary bonus amounts due to non-executive employees are recognised as
a provision where the Group has a legal or constructive obligation to make the payment to non-executive
employees and the amount can be reliably measured.
An onerous contract is a contract in which the unavoidable cost of meeting the obligations under the contract
exceeds the economic benefit expected to be received.
A provision for onerous contracts is measured at the present value of the lower of the expected cost of
terminating the contract and the expected net cost of continuing with the contract. Before a provision is
established, the Group recognises any impairment loss on the assets associated with that contract.
Wages, salaries and
annual leave
Long service leave
Redundancies and
other employee
benefits
Onerous contracts
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(M) PROVISIONS (CONTINUED)
Make good on
leased assets
Insurance, legal
and other
Aircraft: An initial estimate of the present value of restoration or return costs that arise at lease commencement
are recognised as a provision with a corresponding amount recognised as part of the initial recognition of the right
of use asset and depreciated over the lease term. Changes in this provision are recognised as an adjustment to
the right of use asset.
Provisions for return costs that occur over the lease term through usage or the passage of time are recognised as
an expense when they occur. The determination of provisions for return costs requires significant judgement and
is estimated in USD based on the forecast costs expected to be incurred when the aircraft is returned to or
purchased from the lessor, calculated using expected future increases in costs and discounted to present value
using the Group’s incremental borrowing rate. The expense is recognised pro-rata over the period to an expected
lease return date. Movements in the provision due to changes in foreign exchange rates and discount rates as well
as changes in estimates of forecast return costs expected to be incurred or expected lease return dates are
recognised in the Consolidated Income Statement.
Property and environment: An initial estimate of the present value of restoration costs that arise at lease
commencement are recognised as a provision with a corresponding amount recognised as part of the initial
recognition of the right of use asset and depreciated over the lease term. Changes in this provision are recognised
as an adjustment to the right of use asset.
Where the usage of property or land gives rise to an obligation for rehabilitation, the Group recognises a provision
for the costs associated with restoration.
Insurance: The Qantas Group self-insures for risks associated with workers’ compensation in certain jurisdictions.
Qantas has made a provision for all notified and assessed workers’ compensation liabilities, together with an
estimate of liabilities incurred but not reported, based on an independent actuarial assessment. The provision is
discounted using pre-tax rates that reflect current market assessments of the time value of money and the risks
specific to the liabilities and which have maturity dates approximating the terms of Qantas’ obligations. Workers’
compensation for all remaining employees is commercially insured.
Legal and other provisions: These are recognised where they are incurred as a result of a past event, there is a
legal or constructive obligation that can be measured reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
(N) OTHER EMPLOYEE BENEFITS
Employee share plans
The grant date fair value of equity-settled share-based payment awards granted to employees is recognised as an expense, with a
corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the
number of awards for which related service and non-market performance conditions are expected to be met, such that the amount ultimately
recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For
share-based payment awards with market performance conditions, the grant date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of equity-based entitlements settled in cash is recognised as an employee expense with a corresponding increase in liability
over the period during which employees unconditionally become entitled to payment. The liability is remeasured at each reporting date and at
settlement date based on the fair value. Any changes in the fair value of the liability are recognised as an employee expense in the
Consolidated Income Statement.
Defined contribution superannuation plans
The Qantas Group contributes to employee defined contribution superannuation plans. Contributions to these plans are recognised as an
expense in the Consolidated Income Statement as incurred.
Defined benefit superannuation plans
The Qantas Group’s net obligation with respect to defined benefit superannuation plans is calculated separately for each plan. The Qantas
Superannuation Plan has been split based on the divisions which relate to accumulation members and defined benefit members. Only defined
benefit members are included in the Qantas Group’s net obligation calculations. The calculation estimates the amount of future benefit that
employees have earned in 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 then deducted.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the
calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the
form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits,
consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability or asset, which comprise actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling, are recognised immediately in other comprehensive income. The Group determines the net
interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then-net defined benefit liability/(asset), taking into account any changes in
the net defined benefit liability/(asset) during the period as a result of contributions and benefit payments. Net interest expense and other
expenses related to defined benefit plans are recognised in the Consolidated Income Statement.
The discount rate used is the corporate bond rate which has a maturity date that approximates the expected terms of Qantas’ obligations.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in
the Consolidated Income Statement as past service costs. The Group recognises gains and losses on the settlement of a defined benefit
plan when the settlement occurs.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(O) NET FINANCE COSTS
Net finance costs comprise interest payable on borrowings calculated using the effective interest method, unwinding of the discount rate on
lease liabilities, provisions and receivables, interest receivable on funds invested and gains and losses on mark-to-market movements in fair
value hedges.
Finance income is recognised in the Consolidated Income Statement as it accrues, using the effective interest method.
Finance costs are recognised in the Consolidated Income Statement as incurred, except where interest costs relate to qualifying assets, in
which case they are capitalised to the cost of the assets. Qualifying assets are assets that necessarily take a substantial period of time to be
made ready for intended use. Where funds are borrowed generally, borrowing costs are capitalised using the average interest rate applicable
to the Qantas Group’s debt facilities.
Ordinary Shares
(P) CAPITAL AND RESERVES
i.
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares are recognised as a deduction
from equity, net of tax.
ii. Repurchase of Share Capital
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.
iii. Treasury Shares
Shares held by the Qantas-sponsored Employee Share Plan Trust are recognised as treasury shares and deducted from equity.
iv. Employee Compensation Reserve
The fair value of equity plans granted is recognised in the employee compensation reserve over the vesting period. This reserve will
be reversed against treasury shares when the underlying shares vest and transfer to the employee at the fair value. The difference between
the fair value at grant date and the cost of treasury shares used is recognised in retained earnings (net of tax).
v. Hedge Reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments and the
cumulative change in fair value arising from the time value of options related to future forecast transactions. Gains or losses relating to
ineffective portions are recognised immediately in the Consolidated Income Statement.
The amounts within Hedge Reserve are reclassified to the Consolidated Income Statement in the same period or periods during which the
hedged forecast cash flows affect profit or loss or the hedged item affects profit or loss. Where the hedged item is capital in nature, the
cumulative gain or loss recognised in the hedge reserve is transferred to the carrying amount of the asset when the asset is recognised.If the
forecast transaction is no longer highly probable, the hedging instrument expires or is sold, terminated or exercised, or the designation is
revoked, then hedge accounting is de-designated prospectively. In this instance, the amounts accumulated in the Hedge Reserve are
recognised in the period in which the original hedged item transaction ultimately occurs or reclassified to the Consolidated Income
Statement immediately if the forecast transaction is subsequently considered no longer probable. If the forecast transaction is no longer
probable, hedge accounting is de-designated and the amount accumulated in the Hedge Reserve is reclassified to the Consolidated Income
Statement immediately.
vi. Foreign Currency Translation Reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the Financial Statements
of foreign controlled entities and investments accounted for under the equity method.
vii. Other Reserves
Other reserves includes the defined benefit reserve, comprising the remeasurements of the net defined benefit asset/(liability), which
is recognised in other comprehensive income in accordance with AASB 119 Employee Benefits, and the fair value reserve, comprising the fair
value gains/(losses) on investments at fair value through other comprehensive income.
viii. Dividends
A provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group, on or
before the end of the reporting period but not distributed at the end of the reporting period. Where the Group has revoked a declared dividend, it is
no longer recognised as a provision.
(Q) COMPARATIVES
Where applicable, comparative balances have been reclassified to align with current year presentation.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(R) SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the CODM, being the Chief Executive Officer,
Group Management Committee and the Board of Directors.
Underlying EBIT is the primary reporting measure used by the CODM for the purpose of assessing the performance of the operating segments,
with the exception of the Corporate segment which is assessed using Underlying PBT. Underlying EBIT of the Qantas Group’s operating segments
is prepared and presented on the basis that it reflects the revenue earned and the expenses incurred by each operating segment. The
significant accounting policies applied in implementing this basis of preparation are set out below. These accounting policies have been
consistently applied to all periods presented in the Consolidated Financial Statements.
Segment Performance
Measure
External segment
revenue
Inter-segment
revenue
Share of net profit/(loss)
of investments accounted
for under the equity
method
Underlying EBITDA
Basis of Preparation
External segment revenue is reported by operating segments as follows:
– Net passenger revenue is reported by the operating segment that operated the relevant flight or provided
the relevant service. For Qantas Airlines, where a multi-sector ticket covering international and domestic
travel is sold, the revenue is reported by Qantas International and Qantas Domestic on a pro-rata basis
using an industry standard allocation process
– Other revenue is reported by the operating segment that earned the revenue.
Inter-segment revenue for Qantas Domestic, Qantas International and Jetstar Group operating segments
primarily represents:
– Net passenger revenue arising from the redemption of Frequent Flyer points for Qantas Group flights by
Qantas Loyalty
– Net freight revenue from the utilisation of Qantas Group’s aircraft belly space.
Inter-segment revenue for Qantas Loyalty primarily represents marketing revenue arising from the issuance of
Frequent Flyer points to Qantas Domestic, Qantas International and Jetstar Group. Inter-segment revenue
transactions, which are eliminated on consolidation, occur in the ordinary course of business at prices that
approximate market prices. The inter-segment arrangements with Qantas Loyalty are not designed to derive a
net profit from inter-segment Frequent Flyer point issuances and redemptions.
Share of net profit/(loss) of investments accounted for under the equity method is reported by the operating
segment that is accountable for the management of the investment. The share of net profit/(loss) of
investments accounted for under the equity method for Qantas Airlines’ investments has been equally shared
between Qantas Domestic and Qantas International.
The significant expenses impacting Underlying EBITDA are as follows:
– Manpower and staff-related costs are reported by the operating segment that utilises the manpower. Where
manpower supports both Qantas Domestic and Qantas International, costs are reported by using an
appropriate allocation methodology
– Fuel expenditure is reported by the segment that consumes the fuel in its operations
– Aircraft operating variable costs are reported by the segment that incurs these costs
– All other expenditure is reported by the operating segment to which it is directly attributable or, in the case of
Qantas Airlines, between Qantas Domestic and Qantas International using an appropriate allocation
methodology.
To apply this accounting policy, where necessary, expenditure is recharged between operating segments as a
cost recovery.
The impact of discount rate changes on provisions, and changes in presentation of income/expenses where
the determination of whether the Group is acting as principal or agent is made on consolidation.
Depreciation and
amortisation
Qantas Domestic, Qantas International and Jetstar Group report depreciation expenses for passenger and
freight aircraft owned or leased by the Qantas Group and flown by the segment. Other depreciation and
amortisation is reported by the segment that uses the related asset.
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Notes to the Financial Statements continued
For the year ended 30 June 2021
38 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED BY THE GROUP
A number of new accounting amendments and interpretations have been issued that are not yet effective and not yet adopted by the Group
for the financial year ended 30 June 2021. The Group intends to adopt the following new or amended standards and interpretations, if
applicable, when they become effective, with no significant impact being expected on the Consolidated Financial Statements of the Group:
– Amendments to AASB 9, AASB 7, AASB 4 and AASB 16 Interest Rate Benchmark Reform phase 2
– Amendments to AASB 101 Classification of Liabilities as Current or Non-current
– Amendments to AASB 3 Reference to Conceptual Framework.
In April 2021, IFRIC issued a final agenda decision regarding configuration or customisation costs in a cloud computing arrangement. The
decision provides additional guidance on how to determine whether configuration or customisation expenditure relating to cloud computing
arrangements can be recognised as an intangible asset and if not, over what time period the expenditure is recognised in the Income
Statement. Where material, the application of this agenda decision could result in the reclassification of intangible assets to prepayments in
the Statement of Financial Position or the immediate recognition of an expense in the Consolidated Income Statement.
The agenda decision has no formal effective date, however, the International Accounting Standards Board expects that preparers are entitled
to sufficient time to determine and implement any change. Given the agenda decision was finalised in April 2021 and the complexity of the
assessment criteria and implementation on a full retrospective basis, the Group has not adopted this agenda decision in the financial
statements for the year ended 30 June 2021. The Group has developed an analysis and impact assessment plan of software capitalised
within intangible assets and upon completion will adopt the agenda decision as soon as practicable with any material adjustments required to
be recognised retrospectively as a change in accounting policy.
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Directors’ Declaration
For the year ended 30 June 2021
1. In the opinion of the Directors of Qantas Airways Limited (Qantas):
a. The Consolidated Financial Statements and Notes are in accordance with the Corporations Act 2001 (Cth), including:
i. Giving a true and fair view of the financial position of the Qantas Group as at 30 June 2021 and of its performance for the financial
year ended on that date
ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001
b. There are reasonable grounds to believe that Qantas will be able to pay its debts as and when they become due and payable.
2. There are reasonable grounds to believe that Qantas and the controlled entities will be able to meet any obligations or liabilities to which
they are or may become subject to by virtue of the Deed of Cross Guarantee between Qantas and those controlled entities pursuant to ASIC
Corporations (Wholly-owned companies) instrument 2016/785 (Instrument).
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) from the Chief Executive
Officer and the Chief Financial Officer for the year ended 30 June 2021.
4. The Directors draw attention to Note 1(A) which includes a statement of compliance with International Financial Reporting Standards.
Signed in accordance with a Resolution of the Directors:
Richard Goyder
Chairman
Alan Joyce
Chief Executive Officer
17 September 2021
17 September 2021
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report
For the year ended 30 June 2021
To the Shareholders of Qantas Airways Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the Financial Report of Qantas Airways Limited (the
Company).
The Group consists of the Company and the entities it controlled at
the year end and from time to time during the financial year.
In our opinion, the accompanying Financial Report of the Company is in
accordance with the Corporations Act 2001, including:
– giving a true and fair view of the Group’s financial position as at
30 June 2021 and of its financial performance for the year ended
on that date; and
– complying with Australian Accounting Standards and the
Corporations Regulations 2001.
The Financial Report comprises the:
– Consolidated Balance Sheet as at 30 June 2021
– Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Statement of Changes in
Equity, and Consolidated Cash Flow Statement for the year then
ended
– Notes including a summary of significant accounting policies
– Directors’ Declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of
our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
– Recoverability of non-current assets, in particular aircraft and
related assets
– Passenger revenue recognition
– Frequent Flyer revenue recognition
– Derivative financial instrument accounting
Key Audit Matters are those matters that, in our professional
judgment, were of most significance in our audit of the Financial
Report of the current period.
These matters were addressed in the context of our audit of the
Financial Report as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
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Independent Auditor’s Report continued
For the year ended 30 June 2021
Recoverability of non-current assets, in particular aircraft, and other related assets
Refer to Notes 12, 15, 17 and 25 to the Financial Report
THE KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Assessment of the recoverability of non-current assets,
including aircraft, related spare parts and inventory was a key
audit matter due to:
– the significant cumulative value and long-lived nature of
these assets;
– the inherent uncertainty regarding the duration and severity
of COVID-19 related domestic and international travel
restrictions and resultant decrease in travel demand;
– the estimates and assumptions used in the cashflow
projections which form the basis of the recoverable amounts
attributable to the Group’s Cash Generating Units (“CGUs”)
require significant judgement; and
– the recognition of an impairment of $228m related to A380
and A320 aircraft, spare parts and inventory, determined by
estimating fair value less costs of disposal with reference to
external valuations.
We focused on significant forward-looking assumptions and
judgements, specifically:
– the Group’s Board approved Recovery Plan and terminal year
growth rate used in the Group’s CGU discounted cash flow
models; and
– the fair value less costs of disposal (FVLCD) model, the
application of external valuations, and adjustments to
reflect remaining maintenance life for the A380 and A320
aircraft and related assets.
We involved valuation specialists to supplement our senior
audit team members in assessing this key audit matter.
Our procedures for assessing the CGU value in use models included:
– meeting with management to understand the impact of COVID-19 on the
Group, the mitigation strategies the Group is adopting in response and
how these are reflected in the Board approved Recovery Plan.
– comparing the assumptions in the Recovery Plan relating to the easing
of international and domestic travel restrictions and return of travel
demand to Australian Federal and State Government announcements
and published views of market commentators, and publicly available
aviation industry reports relating to the impact COVID-19 pandemic has
on global passenger demand.
– analysing the Group’s monitoring and management of activities based
on internal reporting and the Recovery Plan to assess the allocation of
assets to CGUs and the identification of idle assets.
– considering the appropriateness of and assessing the integrity of the
value in use model applied by the Group for CGU impairment testing
against the requirements of the accounting standards.
– comparing the forecast cash flows and capital expenditure contained in
the value in use models to the Board approved Recovery Plan.
– considering the sensitivity of the models by varying key assumptions,
such as expected profile of recovery for the Group, terminal growth rates
and discount rates, within a reasonably possible range. We considered
the interdependencies of key assumptions and what the Group
considers to be reasonably possible.
– we challenged the Group’s forecast cash flow and growth assumptions.
We compared the recovery period and terminal growth rates to
authoritative published studies from external sources. We used our
knowledge of the Group and our industry experience. We sourced
authoritative and credible inputs from our specialists.
– working with our valuation specialists, we independently developed a
discount rate range using market data for comparable entities, adjusted
by risk factors specific to the Group.
Working with our global aviation valuation specialists, our procedures for
assessing the fair value less costs of disposal (FVLCD) model used for
estimating the recoverable value of A380 and A320 aircraft, spare parts
and inventory included:
– meeting with appraisers from the two independent international aircraft
valuation specialists to understand their valuation methodology, key
assumptions, outlook for the aircraft type and to discuss the
reasonableness of the Group’s adjustments to reflect the remaining
maintenance life of the aircraft.
– assessing the competence, capability and objectivity of the independent
aircraft valuation specialists.
– comparing key inputs in the model to the relevant internal or external
sources, including the Group’s accounting records, engineering records,
invoices for maintenance activity, external price lists, Airbus fact sheets
and foreign currency translation rates.
– assessing the integrity of the modelling used, including the accuracy of
the underlying calculation and formulae.
We assessed the disclosures in the Financial Report using our
understanding of the issue obtained from our testing and against the
requirements of the accounting standards, including those made with
respect to judgements and estimates.
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report continued
For the year ended 30 June 2021
Passenger revenue recognition
Refer to Note 4(A) and 37(D)(i) to the Financial Report
THE KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Recognition of passenger revenue is a key audit matter due to:
– its financial significance to the Group;
– the high volume of relatively low value passenger tickets;
– judgement within the estimate for the proportion of unused
tickets which are expected to expire (breakage); and
– audit effort arising from a variety of ticket conditions and
points of sale.
Travel restrictions as a result of the COVID-19 pandemic have
resulted in a significant decline in global and domestic travel
demand, which resulted in a significant number of cancelled
flights during the reporting period. These flight cancellations
have caused a significant reduction in passenger revenue and
forward bookings and also necessitated the payment of certain
customer refunds. Historical trend information which has been
used in the past to estimate breakage, has been supplemented
by forward-looking estimation with regard to the current
conditions and changes to conditions of carriage to determine
breakage at 30 June 2021.
Given the dependence on IT systems and controls, we involved
our IT specialists in addressing this key audit matter.
Our procedures included:
– for key revenue streams, we assessed the Group’s identification of
performance obligations and revenue recognised by comparing to the
relevant features of the underlying contracts.
– with the assistance of our IT specialists, we analysed the end to end
flow of ticket information through multiple passenger revenue IT
systems and interfaces to evaluate the recognition of revenue against
accounting standards.
– with the assistance of our IT specialists, we tested the key controls
restricting access to authorised users and preventing unauthorised
changes to the IT systems. We tested key controls within the system
relating to ticket validation and the recognition of revenue at flight date.
– testing key controls related to management review and approval of
manual changes to revenue accounting records where tickets have
been identified as exceptions to automated validation.
– checking a sample of passenger revenue transactions to underlying
records including evidence of payment and flight records to assess the
accuracy of the revenue recognised.
– checking a sample of passenger revenue received in advance to
underlying records to assess the completeness of revenue recognised.
– assessing the Group’s ability to reliably estimate ticket breakage by
comparing previous estimates to actual outcomes. We met with senior
management to understand the Group’s responses regarding ticket
holders impacted by cancelled flights from the COVID-19 pandemic.
Through these discussions, reviews of the Group’s external
announcements and documented internal policies, we understood the
effects of cancelled flights on breakage estimates.
– checking the calculation and IT system reports in the Group’s
expectation of the proportion of tickets which will expire unused. We
evaluated the Group’s breakage assumptions against historical trends,
adjusting for the forecast impact of COVID-19 on customer behaviour,
and assessed for indicators of bias, using our industry knowledge.
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report continued
For the year ended 30 June 2021
Frequent Flyer revenue recognition
Refer to Note 4(B) to the Financial Report
THE KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Recognition of Frequent Flyer revenue is a key audit matter due
to the high level of audit effort and judgement required by us in
assessing the Group’s assumptions underpinning the amount
deferred as Unredeemed Frequent Flyer revenue. We focused
on the Group’s assumptions used in their estimation of the:
– stand-alone selling price of the Qantas Points: this is based
on the observable price of available rewards weighted in
proportion to the expected redemptions, based on historical
experience, and impacted by future uncertain customer
behaviour; and
– expected proportion of Qantas Points to be redeemed by
members in the future (breakage): the Group uses actuarial
experts to estimate the expected proportion of Qantas
Points to be redeemed by members in the future, also based
on future unpredictable customer behaviour.
The Group was impacted by global travel restrictions
implemented in response to the COVID-19 pandemic which
resulted in a significant reduction in the volume of Qantas
Points earned and redeemed for flights and resulted in
revisions to the program. The increased uncertainty relating to
the future volume of Qantas Points earned and redeemed for
flights and other changes to the Frequent Flyer program
required additional audit effort in the current year.
Given the complex judgements, we involved our actuarial
specialists to supplement our senior team members in
addressing this key audit matter.
Our procedures included:
– we assessed the Group’s methodology used to estimate the stand-alone
selling price of the Qantas Points against the requirements of AASB 15
Revenue from Contracts with Customers and the Group’s accounting
policy.
– we tested the integrity of the calculation used to estimate the stand-
alone selling price of Qantas Points, including the accuracy of the
underlying calculation formulas.
– we assessed the key inputs of the various redemption channels used to
estimate the stand-alone selling price of expected future redemptions.
We did this by comparing a sample to observable market values, such
as comparable market air fares. We compared the weighting used in the
calculation to historic redemption patterns, taking into consideration the
estimated future volume of Qantas Points redeemed for flights and our
understanding of other changes in the Frequent Flyer program.
– involving our actuarial specialists, we assessed the appropriateness of
the Group’s breakage calculation by developing an independent model
using our understanding of the Frequent Flyer program, accounting
standard requirements and comparing it to the Group’s calculation.
– involving our actuarial specialists, we assessed key breakage
assumptions against historical experience, recent trends and the
estimated future volume of Qantas Points earned and redeemed for
flights based on the Board approved Recovery Plan and our
understanding of other changes in the Frequent Flyer program.
– we compared the forecast easing of international and domestic travel
restrictions and return of travel demand in the Recovery Plan to
Australian Federal and State Government announcements and
published views of market commentators seeking authoritative and
credible sources.
– we checked the accuracy of points activity data used in the calculation
of breakage to source Qantas Point’s system and reports.
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report continued
For the year ended 30 June 2021
Derivative financial instrument accounting
Refer to Note 27 to the Financial Report
THE KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Cash flow hedge accounting and valuation of financial
instruments is a key audit matter due to:
– the complexity inherent in the Group’s estimation of the fair
value of derivative financial instruments. The Group uses
market standard valuation techniques to determine the fair
value of options, swaps and cross-currency swaps not
traded in active markets;
– the impact of changes in the underlying market price of fuel
and foreign exchange rates which are key inputs to the
derivative valuations;
– the complexity in the Group’s cash flow hedge accounting
relationships driven by an active financial risk management
strategy, including the restructuring of specific exposures
over time;
– the volume of transactions and counterparties;
– the hedging of a high proportion of forecast future cash
flows; and
– the significance of the Group’s financial risk management
program on the financial results.
The Group continued to be impacted by COVID-19, resulting
in greater uncertainty in forecasting flying activity and fuel
consumption. This has resulted in the de-designation of hedge
relationships and release of deferred gains and losses to the
income statement where hedged items were no longer considered
probable. This required additional audit effort due to estimation
uncertainty in consumption forecasts and identifying the
appropriate derivatives for de-designation within restructured
positions.
In assessing this key audit matter, we involved our valuation
specialists to supplement our senior team members, who
understand methods, inputs and assumptions relevant to the
Group’s derivative portfolio.
Our procedures included:
– testing the Group’s key internal controls. These included the Group’s
controls associated with:
– assessment and approval of the details of trades to counterparty
confirmations;
– assessment of hedge accounting designation; and
– assessment of the volume of hedged exposures compared to total
exposures.
– we compared financial instrument fair values in the Group’s accounting
records to the records in the treasury risk management system.
– with the assistance of our valuation specialists, we independently
estimated the fair values of the Group’s financial instruments as at
30 June 2021 using recognised market valuation methodologies and
inputs. We adjusted these fair values for the range of acceptable market
valuation techniques in estimating fair values of instruments not traded
in active markets. We compared the Group's valuations recorded in the
general ledger to these fair value ranges.
– we tested a sample of cash flow hedge accounting designations against
the requirements of the accounting standard. This included a sample of
the restructured positions involving multiple derivatives.
– we compared the Group’s forecast fuel consumption against the Board
approved Recovery Plan and ensured consistency with other key
forward looking assumptions.
– we tested the Group’s derecognition of hedge relationships where the
hedged item is no longer considered probable.
– we evaluated the appropriateness of the classification and presentation
of derivative financial instruments and related financial risk
management disclosures against accounting standard requirements.
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report continued
For the year ended 30 June 2021
Other Information
Other Information is financial and non-financial information in Qantas Airways Limited’s annual reporting which is provided in addition to the
Financial Report and the Auditor's Report. The Directors are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the
Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have
performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of Directors for the Financial Report
The Directors are responsible for:
– preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations
Act 2001
– implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error
– assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting
is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
– to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or
error; and
– to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing
Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the Financial Report.
A further description of our responsibilities for the Audit of the Financial Report is located at the Auditing and Assurance Standards Board
website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.
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Q AN T A S A N NU A L R E POR T 2 0 21
Independent Auditor’s Report continued
For the year ended 30 June 2021
REPORT ON THE REMUNERATION REPORT
Opinion
In our opinion, the Remuneration Report of Qantas Airways Limited
for the year ended 30 June 2021, complies with Section 300A of the
Corporations Act 2001.
DIRECTORS’ RESPONSIBILITIES
The Directors of the Company are responsible for the preparation
and presentation of the Remuneration Report in accordance with
Section 300A of the Corporations Act 2001.
OUR RESPONSIBILITIES
We have audited the Remuneration Report included in pages 36 to
62 of the Directors’ report for the year ended 30 June 2021.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian
Auditing Standards.
KPMG
Andrew Yates
Partner
Sydney
17 September 2021
Caoimhe Toouli
Partner
Sydney
17 September 2021
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Q AN T A S A N NU A L R E POR T 2 0 21
Shareholder Information
For the year ended 30 June 2021
The shareholder information set out below was applicable as at 13 August 2021.
TWENTY LARGEST SHAREHOLDERS
Shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Citicorp Nominees Pty Limited (Colonial First State INV A/C)
HSBC Custody Nominees (Australia) Limited – A/C 2
BNP Paribas Noms Pty Ltd (DRP)
HSBC Custody Nominees (Australia) Limited (NT-CTH S C A/C)
Pacific Custodians Pty Limited (QAN Plans Ctrl)
CS Third Nominees Pty Limited (HSBC Cust Nom AU Ltd 13 A/C)
Maxfill Australia Pty Ltd
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECA
BNP Paribas Nominees Pty Ltd Six Sis Ltd (DRP A/C)
Pacific Custodians Pty Limited (Emp Share Plan Tst)
BNP Paribas Nominees Pty Ltd (IB AU Noms Retail Client DRP)
Warbont Nominees Pty Ltd
Alan Joyce Pty Ltd
Mutual Trust Pty Ltd
Total
DISTRIBUTION OF ORDINARY SHARES
Analysis of ordinary shareholders by size of shareholding:
Number of Shares
1–1,0001
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Ordinary Shares Held
% of Issued Shares
593,934,164
286,821,886
160,480,758
125,725,571
47,087,209
35,772,282
27,537,766
24,864,595
10,710,384
9,614,058
9,568,079
8,020,000
7,721,210
7,532,086
7,149,206
3,080,533
3,035,427
2,952,836
2,728,924
2,576,772
31.49
15.21
8.51
6.67
2.50
1.90
1.46
1.32
0.57
0.51
0.51
0.43
0.41
0.40
0.38
0.16
0.16
0.16
0.14
0.14
1,376,913,746
73.03
Ordinary Shares Held
Number of Shareholders
% of Issued Shares
48,426,255
164,876,292
77,310,686
146,838,227
1,448,593,238
1,886,044,698
116,290
69,083
10,795
6,758
245
203,171
57.24
34.00
5.31
3.33
0.12
100.00
1. 9,384 shareholders hold less than a marketable parcel of shares in Qantas, as at 13 August 2021.
SUBSTANTIAL SHAREHOLDERS
The following organisation has disclosed a substantial shareholding notice to ASX. Qantas has received no further update in relation to this
substantial shareholding:
Shareholders
Pendal Group Limited1
1. Substantial shareholding as at 4 November 2019, as per notice dated 6 November 2019.
Ordinary Shares Held
% of Issued Shares
82,037,038
5.22
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Q AN T A S A N NU A L R E POR T 2 0 21
Financial Calendar and Additional Information
2021
2022
25 February
Half year results announcement
24 February
Half year results announcement
30 June
Year end
8 March
Record date for interim dividend*
26 August
Preliminary final results announcement
12 April
Interim dividend payable*
5 November
Annual General Meeting
30 June
Year end
25 August
Preliminary final results announcement
13 September Record date for final dividend*
18 October
Final dividend payable*
4 November
Annual General Meeting
*Subject to a dividend being authorised by the Board.
2021 ANNUAL GENERAL MEETING
ADDITIONAL SHAREHOLDER INFORMATION
The 2021 AGM of Qantas Airways Limited will be held virtually at
11am AEDT (Sydney time) on Friday 5 November 2021.
Further details are available in the Annual General Meeting section on
the Qantas Investor website: investor.qantas.com/home/
Using your Shareholder Reference Number (SRN) or Holder
Identification Number (HIN) and postcode of your registered address,
you are able to view your holding online through Qantas’ share
registry, Link Market Services. Log on at
www.linkmarketservices.com.au, where you will have the option to:
COMPANY PUBLICATIONS
In addition to the Annual Report, the following publications can
be accessed from www.qantas.com/au/en/qantas-group/acting-
responsibly/our-reporting-approach.html
– Code of Conduct and Ethics
– Corporate Governance Statement
– Inclusion and Diversity Policy
– Workplace Gender Equality Reports.
REGISTERED OFFICE
Qantas Airways Limited ABN 16 009 661 901
10 Bourke Road, Mascot NSW 2020 Australia
Telephone +61 2 9691 3636
Facsimile +61 2 9490 1888
www.qantas.com
QANTAS SHARE REGISTRY
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000 Australia, or
Locked Bag A14, Sydney South NSW 1235 Australia
Telephone 1800 177 747 (toll free within Australia)
International +61 2 8280 7390
Facsimile +61 2 9287 0309
Email registry@qantas.com
SECURITIES EXCHANGE
Australian Securities Exchange
Exchange Centre, 20 Bridge Street,
Sydney NSW 2000 Australia
– View your holding balance
– Retrieve holding statements
– Review your dividend payment history
– Access shareholder forms.
The Investor Centre also allows you to update or add details to your
shareholding, including the following:
– Change or amend your address if you are registered with an SRN
– Nominate or amend your direct credit payment instructions
– Set up or amend your DRP instructions
– Sign up for electronic communications
– Add/change TFN/ABN details.
COMPANY SECRETARIES
Andrew Finch
Benjamin Elliott
Benjamin Jones
An electronic copy of this Annual Report is available in the Annual
Report section on the Qantas Investor website:
investor.qantas.com/home/
Further information about the Qantas Group can be found on our
corporate site at www.qantas.com/qantas-group
142
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manufactured from 100% recycled post-consumer waste and is made carbon neutral.
Environment
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QANTAS AIRWAYS LIMITED
ABN 16 009 661 901