#1\QANTAS Spirit of Australia Qantas Investor Day 12 May 2015#2Morning Session A Strong Platform for Sustainable Growth Alan Joyce Group Chief Executive Officer The Financial Framework for a Stronger Qantas Group Tino La Spina - Group Chief Financial Officer Brand as a Competitive Advantage Olivia Wirth - Group Executive Brand, Marketing & Corporate Affairs Q&A Session 1 Morning Tea \QANTAS Spirit of Australia#3Session 2 Leveraging Customer Insights, the Next Wave of Transformation Rob Marcolina - Group Executive Strategy, Transformation & IT Continuing to Win in a Shifting Domestic Market Andrew David - Chief Executive Officer Qantas Domestic John Gissing - Group Executive Associated Airlines & Services Maximising Jetstar's Position in Australia & New Zealand, the Roadmap to Success in Asia Jayne Hrdlicka - Chief Executive Officer Jetstar Group Q&A Session 2 Lunch with Neil Perry \QANTAS Spirit of Australia#4Afternoon Session NPS in Action - Live Panel Olivia Wirth - Group Executive Brand, Marketing & Corporate Affairs A Platform for Innovation-Led Growth Lesley Grant - Chief Executive Officer Qantas Loyalty Transforming Freight to Optimise Group Outcomes Alison Webster - Executive Manager Freight Building a Resilient and Sustainable Qantas International Gareth Evans - Chief Executive Officer Qantas International & Freight Q&A Session 3 CEO Summary Alan Joyce Group Chief Executive Officer \QANTAS Spirit of Australia#5A Strong Platform for Sustainable Growth Alan Joyce SBC Hans \QANTAS Spirit of Australia VH-00G 1000000000000 AIRBUS A380 vetstar.com QG Jetx#6GROUP OVERVIEW The Qantas Group in global context Global industrial output, trade & business confidence improving • Regional divergence persists . 2015 forecast for strongest global passenger growth since 2010¹ Highest passenger growth remains on routes to or within Asia¹ Australia domestic demand growth flat as economy rebalances Resources sector cooling, positive growth in other sectors AUD trading in long-term historical range Fuel prices at five-year lows Airline consolidation continuing through equity and joint ventures 1. Source: International Air Transport Association (IATA) global economic outlook December 2014 6#7GROUP OVERVIEW The Qantas Group in global context North America 2015 profit $13.2b Passenger Growth +3.3% Total Passengers in 2034: 1.4b Latin America 2015 Profit $1.0b Passenger Growth +4.7% Total Passengers in 2034: 605m Global Airline Profit¹ in 2015 & 20-Year Passenger² Forecasts Europe 2015 Profit $4.0b Passenger Growth +2.7% Total Passengers in 2034: 1.4b Africa Middle East 2015 Profit $1.6b Passenger Growth +4.9% Total Passengers in 2034: 383m 2015 Profit $0.2b Passenger Growth +4.7% Total Passengers in 2034: 294m Asia Pacific 2015 Profit $5b Passenger Growth +4.9% Total Passengers in 2034: 2.9b COD 1. Source IATA, 'Airline Profitability Improves with Falling Oil Prices', 10 December 2014. Net post tax profits in USD. 2. Source IATA 'New IATA Passenger Forecast Reveals Fast-Growing Markets of the Future', 7 16 October 2014. Annual forecast growth refers to average annual growth.#8GROUP OVERVIEW The Qantas Group in global context Qantas Group positioned to outperform in international market • Adding dual brand services between Australia and Asia • Increasing intra-Asia presence with Jetstar Group airlines More Qantas International capacity deployed to strong North America routes Premier alliance partners in each region Favourable competitive environment with lower AUD Long-term advantages in stable domestic Australia market • Leading full-service, loyalty and LCC ¹ brands • Loyalty business with unparalleled reach driving customer insights Dual brand strategy delivering profit share above capacity share 1. Low-cost carrier GP 8#9GROUP OVERVIEW Qantas Group strategy Integrated portfolio enables Group resilience through external volatility SAFETY IS ALWAYS OUR FIRST PRIORITY Deliver sustainable returns to shareholders Always First Choice For Customers Build on leading domestic position through dual brands Establish strong international dual brand position Secure QAD¹'s position as best for customers who value the full service experience Reinforce JQD¹'s low price and scale advantage position Strengthen QAI¹ to provide best network with partners Leverage low cost base for JQI¹ to defend and grow P2P² international leisure markets Strengthen and grow loyalty business Maintain QFF¹ as a driver of loyalty across group and as a leading loyalty program Innovate and diversify leveraging advantaged assets and capabilities Build customer loyalty by delivering a great experience in every interaction Transform all businesses to continually drive operational efficiencies Inspire, empower and motivate our people, teaming effectively across the Group Deliver on existing Jetstar opportunities and partnerships in Asia 1. QAD refers to Qantas Domestic, QAI refers to Qantas International, JQD refers to Jetstar Domestic, JQI refers to Jetstar International and QFF refers to Qantas Frequent Flyer. 2. Point to point. 6#10GROUP OVERVIEW Creating long-term shareholder value Delivering ROIC > WACC¹ through the cycle Target: Deliver Return on Invested Capital (ROIC) > 10%² by: Building on the Group's long-term competitive advantages Integrated portfolio with leading market positions - Dual brand strategy - Customer focus driving brand strength Continued delivery of business transformation - $2b in gross benefits by FY17, $1b debt reduction by FY153 Disciplined approach to capital and growth Maintaining an optimal capital structure Engaging our people Driving workplace change and improved culture 1. Return on invested capital > Weighted average cost of capital (pre tax). References to Group and segment ROIC > WACC targets are through the cycle averages. 2. ROIC above 10% ensures Group objective 10 of delivering ROIC>WACC through the cycle. 3.Net debt including operating lease liabilities measured on a constant currency basis#11GROUP OVERVIEW Building on the Group's long-term competitive advantages An integrated portfolio with leading market positions Qantas Domestic Leading position, highest margin carrier in attractive domestic market Qantas International Reshaped cost base and network, sustainably profitable business Freight • Leveraging domestic market share and unique traffic rights Jetstar Group Leading LCC position in domestic and outbound Australia ROIC > WACC IN FY151 Minimal level of capital invested in high-potential Asian ventures Qantas Loyalty Steady earnings growth from non-cyclical, highly cash generative business providing growing diversification in Group earnings profile 1. Based on FY15 forecast performance WIP GROUP ROIC > 10% IN FY151 11 21#12GROUP OVERVIEW Building on the Group's long-term competitive advantages Dual brand strategy at the core of Group success Dual Brand Guiding Principles (Domestic) • • • Hold a superior competitive position Maximise Group profitability Leverage distinct role of brands to target customer segments QANTAS Targeting customer segments who value the full service experience 1H15 Domestic Results¹ • Frequency advantage, especially during peak periods Product service differentiation to maintain yield premium Jetstar 79% 63% • Owning price-sensitive segment, targeting point-to-point leisure Capacity share EBIT share² • Scale and network advantage Qantas Group Rest of market³ • Product service differentiation in the LCC segment Consistent with last 5 years, Qantas Group has ~80% or more of domestic profit pool4 1. 1H15 figures from published company reports, BITRE. 2. Virgin Australia EBIT (Earnings before interest and tax), includes Velocity; Qantas Group Domestic EBIT excludes Loyalty EBIT. 3. Rest of market capacity calculated using BITRE; Rest of market EBIT includes Virgin Australia, Tigerair Australia. 4. Historical data based on Qantas analysis and assumptions. 12 12#13GROUP OVERVIEW Building on the Group's long-term competitive advantages 'Customer First' commitment drives brand strength & yield premiums • Investment in growth, product & innovation • Strong and reinforcing portfolio of brands • Spans breadth of customer needs in core markets QANTAS • Cross-brand loyalty • Deep customer insights drive continual improvement Jetstar 1. House of Brands Brand Tracker: Domestic Business and Leisure Average, International Business and Leisure Average 70% of Australians prefer to fly with Qantas Group brands for domestic travel¹ QANTAS LOYALTY 46% of Australians prefer to fly with Qantas Group brands for international travel¹ 33 13#14GROUP OVERVIEW Continued delivery of business transformation Rapid progress towards our targets $2B BENEFITS REALISED BY FY171 All targets to date met or exceeded - >$875m realised by FY15 • Most challenging initiatives front-loaded 4,000 of 5,000 FTE² reduction by FY15 High visibility of remaining >$1.1b benefits from FY16 - ~$600m already in implementation phase • • >$1B DEBT REDUCTION BY FY153 $1b debt reduction on track Credit profile to reach target two years ahead of initial timeframe E.g. Debt/EBITDA4 <4.0 by FY15 Preserved investment grade terms & conditions ALL FINANCIAL TARGETS MET OR EXCEEDED WHILE DELIVERING RECORD CUSTOMER ADVOCACY5 1.Gross benefits. 2.Full-time equivalent employees. 3. Net debt including operating lease liabilities measured on a constant currency basis. 4. Metric calculated based on Moody's methodology including cash greater than $2b. 5. Based on quarterly average net promotor score (NPS) at Qantas Domestic and Qantas International, from March 2012 quarter. Record occurred in 3Q15. 14#15GROUP OVERVIEW Continued delivery of business transformation Rapid progress towards our targets Transformation Progress in 18 Months Strategic outcomes by FY17: Qantas Domestic¹ cost gap to close to <5%, revenue premium held >15% Development $600m Development >$500m Development $1,200m Development $900m . Qantas International positioned for sustainable growth • Jetstar cost and yield advantage maintained • Consistent product and service offering • A more agile business that can quickly adapt • Embedded culture of transformation for ongoing benefits Implementation $600m Implementation $850m Implementation $900m Implementation $800m Realised $578m Realised >$875m Realised $204m May-14 Jun-14 Dec-14 Jun-15 1. Mainline and Regional operations. Based on company estimates. 15 15#16GROUP OVERVIEW Disciplined approach to capital and growth Shareholder returns, investing in the future • • The Group will remain disciplined with capital allocation, delivering sustainable returns to shareholders alongside investment in growth, by maintaining its optimal capital structure Investment in growth will maximise long-term shareholder value by: Leveraging the Group's competitive advantages Positioning the Group to succeed in future growth markets Improving Group ROIC position Aligning with our brand values and vision 16 16#17GROUP OVERVIEW Engaging our people A leadership team with diverse backgrounds and industry expertise Alan Joyce Group Chief Executive Officer Andrew David Chief Executive Officer Qantas Domestic Gareth Evans Chief Executive Officer Qantas International & Freight Andrew Finch General Counsel & Company Secretary Jayne Hrdlicka Group Chief Executive Officer Jetstar John Gissing Group Executive Associated Airlines & Services Lesley Grant Chief Executive Officer Qantas Loyalty Tino La Spina Chief Financial Officer Rob Marcolina Group Executive Strategy, Transformation & IT Andrew Parker Group Executive Government & International Affairs Jon Scriven Group Executive Human Resources & Office of the CEO Olivia Wirth Group Executive Brand, Marketing & Corporate Affairs 17 11#18GROUP OVERVIEW Engaging our people Collaborative approach to business transformation Working collaboratively between businesses Front-line leadership, open communication Investing in training, empowering our people Fostering a diverse and inclusive workplace 24 • • Employee engagement maintained at 75%¹ Strong outcome amid accelerated business transformation of past two years Positive indicators from across Group: 'Proud to associated with Qantas/Jetstar' 'Believe in goals and objectives of Qantas/Jetstar' Continual emphasis on training, employee communication and shared goals for future improvement 1. 2015 Towers Watson employee engagement survey. 18 18#19GROUP OVERVIEW Engaging our people Supporting sustainable business transformation Stable industrial relations climate • . 36 enterprise agreements negotiated since November 2011 Ensuring workplace agreements do not constrain business or productivity Building a more competitive wages position • - 13 agreements closed with 18-month wages freeze Half of the Group's employees including managers • - Narrowing wages gap to key competitors 4.5% p.a reduction in Group wage costs when fully implemented - Targeting ongoing benefit ~$125m p.a. (not included in $2b Qantas Transformation program) All major unions have agreed to policy in at least one collective agreement 19#20GROUP OVERVIEW Delivering on all strategic priorities for ROIC > WACC through the cycle Financial Performance Sustainable growth in earnings driven by Transformation People Engaged people Deep management talent Customer Record advocacy Leveraging insights 20 20#21\QANTAS Spirit of Australia The Financial Framework for a Stronger Qantas Group Tino La Spina - 245#22Financial Framework QANTAS Spirit of Australia#23FINANCE Qantas' targets aligned with shareholder objectives Maintain total shareholder returns in top quartile of ASX100 & global airlines 1. Maintaining an Optimal Capital Structure Mix of debt and equity that minimises the WACC 2. ROIC WACC Through the Cycle ROIC EBIT² divided by Invested Capital 3. Disciplined Allocation of Capital Focus on ROIC accretive opportunities and delivering returns to shareholders Target: continually minimise WACC¹ Target: ROIC > 10%³ Target: Growing invested capital with disciplined investment Maintainable EPS4 growth over the cycle TSR5 in the top quartile 1. Pre tax.2.Refer to appendix. 3. ROIC above 10% ensures Group objective of delivering ROIC > WACC through the cycle. 4. Earnings per share. 5. Total shareholder return. 23 23#24FINANCE Maintaining an optimal capital structure Maximising shareholder value by minimising cost of capital Optimal Capital Structure • Mix of debt and equity that minimises WACC • • . Consistent with credit metrics between BBB- and BBB With $1b debt reduction¹, and improvement in maintainable earnings, Group expects to be within target range by end FY15 Focus on reducing Group earnings volatility to reduce WACC 1. Net debt including operating lease liabilities measured on a constant currency basis. WACC (pre-tax) Financial Leverage and WACC BBB Target Range BBB- 24 24#25FINANCE Return on invested capital Targeting returns above cost of capital through the cycle MOVING TO ROIC AS THE GROUP'S PRIMARY FINANCIAL RETURN MEASURE FROM FY15 ROIC is the primary financial return measure, used in conjunction with strategic measures as part of a balanced Group scorecard . • • Uniform performance measure across reporting segments Holistic measure treats owned and leased assets equally Targeted returns are through-cycle averages, allowing for cyclical industry Statutory Measure ROIC Measure Statutory EBIT + Rentals - Notional depreciation + Items outside of underlying = ROIC EBIT ROIC EBIT Invested Capital¹ Group ROIC ROIC ABOVE 10% ENSURES GROUP OBJECTIVE OF DELIVERING ROIC > WACC THROUGH THE CYCLE 1. Refer to appendix for definition. 25 25#26FINANCE Disciplined allocation of capital Capital allocation framework maximises shareholder value Maintaining optimal capital structure determines: Capital allocation Strengthen balance sheet Returns to shareholders - Reinvestment Liquidity settings • Credit rating over time BB Metrics Debt reduction Capital Allocation Priorities BBB- Metrics Capital Management BBB Metrics BBB+ Metrics Greater returns to shareholders Consider growth Constrain capex Reinvestment investment Higher Liquidity Lower Disciplined focus on operating costs at all times 26#27FINANCE Disciplined allocation of capital Capital Allocation Framework in Practice MAINTAINING OPTIMAL CAPITAL STRUCTURE PROVIDES FOR SHAREHOLDER RETURNS & REINVESTMENT • • Strengthen Balance Sheet Required if capital structure too leveraged Demonstrated discipline in constraining capex where necessary for debt reduction Funding plan premised on achieving optimal capital structure • • Returns To Shareholders Base plans when in optimal capital structure incorporate shareholder returns . Reinvestment High hurdles applied to growth investment Maintain competitive advantages, grow invested capital over time Investment Committee ranks business cases on financial & strategic metrics: - ROIC accretive Group strategic objectives Portfolio approach to reinvestment • Ongoing review of outlook & investment plans 27 27#28Financial Outlook QANTAS Spirit of Australia#29FINANCE Finance outlook A highly cash generative business Sustainable Free Cash Flow¹ Generation $M 3,500 Sustainable returns to 3,000 shareholders in stable operating environment Operating cash flows depressed post- GFC at same time as major re-fleeting 2,500 2,000 1,500 1,000 Accelerated business transformation, Capex constrained to prioritise debt reduction Average Fleet Age² 14 More resilient Group, leveraged to favourable operating environment, with strong free cash flow 13 12 11 10 10 9 500 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Fleet age -Investing activites (lease adjusted) 8 1H15 record young fleet age: 7.2 yrs³ 7 FY14 FY154 FY16 Operating activities (lease adjusted) 1. Free cash flow equals operating cash flows (lease adjusted) less investing cash flows (lease adjusted). Operating cash flows have been adjusted for off balance sheet capital, similar to rating agency methodologies which replace aircraft rental payments with an interest charge. Investing cash flows have been adjusted to remove differentials between purchased and leased aircraft. New leases are treated as a 'cash outflow' equal to the aircraft market value at lease commencement. Lease returns are treated as a 'cash inflow' equal to the notional written down value of the leased asset at time of disposal. 2. Average fleet age of the Group's scheduled passenger fleet based on manufacturing date at the 30 June of each financial year, as previously reported. 3. Youngest fleet age since privatisation. 4. 29 FY15 net cash from operating activities (lease adjusted) is indicative only.#30FINANCE Finance outlook Momentum of earnings being driven by controllable levers Maintainable earnings growth led by delivery of $2b Qantas Transformation program Group well positioned to capitalise on return to more favourable operating environment CONTROLLABLE LEVERS DRIVING MOMENTUM Delivery of all Transformation targets Long-term advantages of integrated portfolio Focus on customer experience, brand strength ☑ Capacity management Optimal capital structure Disciplined investment Hedging program providing protection against spikes & significant participation • EXTERNAL FACTORS FAVOURABLE Fuel ~$550m fuel cost reduction in FY151 $AUD - Lower AUD positive for competitive position of Qantas International Competitor Capacity Domestic and International market growth moderating after prolonged period of above-average growth 1. Underlying fuel costs compared to FY14, based on current market prices. 30#31FINANCE Finance outlook Preserving diverse debt book Retained access to diverse funding sources while achieving significant debt reduction Diverse Debt Book Structure at end of FY151 Funding sources Operating Leases² Unsecured Bank Markets • Capital markets • Secured & unsecured bank loan market • Export credit • Finance leases Certainty over funding availability Optimisation of cost and tenor Flexibility for future funding requirements Asset Finance & Other Amortising Debt 1. FY15 forecast. 2. Based on Standard & Poors (S&P) calculation methodology. Unsecured Capital Markets 31#32FINANCE Finance outlook Minimal refinancing risk Debt Maturity Profile as at 30 June 2015¹ ($m) Prepayments • Across funding markets 281 250² 400 300 250 Weighted Avg Debt Maturity ~5yrs Refinancing Extending tenor 432 428 425 433 445 460 490 414 399 Scheduled Repayments Debt retirement FY16 FY17 111 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25+ Asset finance and other amortising debt ■Syndicated Loan Facility - drawn ■Bonds 1. Forecast debt maturity profile, excluding operating leases. 2. Up to $300m of $550m syndicated loan facility (drawn) maturing in FY17 expected to be prepaid prior to 30 June 2015, retaining flexibility to 32 refinance remaining maturity to FY19.#33FINANCE Finance outlook Robust liquidity Significant pool of unencumbered aircraft • Additional source of liquidity • Allows active portfolio optimisation Managing liquidity more efficiently • Flexibility to manage mix of cash and undrawn lines Composition of Unencumbered Fleet¹ ~40% of total group fleet is unencumbered (up from ~30% since FY12) Market value² of unencumbered fleet has doubled since FY12 • Opportunity to buy out operating leases with existing cash resources Case Study: Refinancing Revolving Credit Facilities Average age of narrowbody unencumbered fleet is <7yrs³ (down from ~8.5yrs since FY12) • Increased face value to >$1b • Increased tenor; Reduced average cost • Preserved Investment Grade T&Cs platform No financial covenants Turbo Prop 24% Narrowbody 59% Widebody 17% >$1b Revolving Credit Facilities ($m) 425 425 90 1004 FY15 FY16 FY17 FY18 FY19 FY20 FY21 1. Chart is based on the forecast number of aircraft, as at 30 June 2015. 2. Based on Avitas market values. 3. Based on Group's scheduled passenger fleet, excluding Freighter aircraft and Network Aviation. 4. Execution expected prior to 30 June 2015. 33#34FINANCE Finance outlook Fuel hedging update • • Protect against unfavourable movements in Fuel and FX, while not locking in a competitive disadvantage Rolling two-year horizon considered the optimal term for these financial risk management strategies $4.50b Hedging & Fuel Cost Outlook ¹ ($b) Inclusive of Option Premium • Enable sufficient time for operational adjustments to be made (capacity, pricing, network) $3.95b2 $3.92b worst case total fuel cost $3.95b³ $3.87b4 current forward market price total fuel cost FY16 worst case total fuel cost in line with FY15, 74% participation to lower fuel prices4 74% participation to lower fuel prices • All fuel hedging effective at current market prices¹ FY14 (Act) FY15 (Fcst) FY16 (Fcst) 1. As at 11 May 2015. 2. Worst case total fuel cost based on a 2-standard deviation move in Brent forward market prices to A$95/bbl, for the remainder of FY15. 3. Worst case total fuel cost based on constant 34 FY15 consumption and a 2-standard deviation move in Brent forward market prices to A$122/bbl, for FY16. 4. Using constant FY15 consumption and a Brent forward market price of A$87/bbl for FY16.#35FINANCE • Finance outlook Capital allocation considerations beyond FY15 Expecting return to optimum capital structure by 30 June 2015 • Sustainably Free Cash Flow positive • Well placed for Board to consider shareholder returns • Extent and timing of shareholder returns dependent on prevailing operating conditions and outlook In FY16, assessing potential to bring forward modest levels of ROIC accretive investment in Qantas Transformation initiatives. Assessing opportunities to use existing cash resources to buy out operating leases to reduce WACC • Update to be provided at FY15 results in August 35#36Brand as a Competitive Advantage Olivia Wirth \QANTAS Spirit of Australia#37BRAND AND CUSTOMER Group multi-brand structure Targeted to diverse customer segments and marketplace Australia & New Zealand Singapore Vietnam Jetstar \QANTAS Japan Hong Kong1 QANTASLINK QANTAS FREIGHT Price sensitive segment 1. Jetstar Hong Kong operations subject to regulatory approval Premium business and leisure travel segment QANTAS LOYALTY FREQUENT FLYER 10.7 million Members 37#38BRAND AND CUSTOMER Placing the customer at the centre of our thinking Investing and focusing on our customers ICONIC BRAND PUTTING THE C CUSTOMER RETAIL LOYALTY DATA UTILISATION R STRATEGY AT THE CENTRE OF OUR S ■ılı SPONSORHIP PRODUCT DIGITAL CHANNELS EXPERIENCE 38#39BRAND AND CUSTOMER Net Promoter Score global benchmarking Methodology What is NPS? • • NPS or Net Promoter Score is a global brand benchmarking model of customer advocacy It is embedded into the customer service operations of Qantas and Jetstar Enables continuous feedback from customers to improve our service strategy and delivery Used to measure our progress DETRACTORS PASSIVES PROMOTERS ii ii 6 10 0 1 2 3 4 5 6 7 8 Net Promoter Score = % Promoters % Detractors 39#40BRAND AND CUSTOMER Voice of the customer Utilisation of NPS benchmarking and methodology Strategic • . Understand market view and relative market share Competitive benchmarking • Drivers of strategic NPS • Share of Wallet . PURPOSE: For investment and strategic decision-making Operational Regular surveys of a customer's end-to-end experience per flight Measurement of journey advocacy Measure total end-to-end customer journey PURPOSE: Track journey competitiveness and determine focus for customer improvements QUARTERLY MONTHLY • • DAILY • Touchpoint Airport, Lounge & Inflight Panel of ~25k Frequent Flyers On the day performance at specific touch points Customer feedback enables conversations directly between customers and frontline managers Real time results reporting PURPOSE: Immediate response to customer feedback. Lead indicator for Operational NPS 40#41BRAND AND CUSTOMER Investment has led to market recognition and customer advocacy 'Qantas did, not just said' Investment in product and people Extend leadership position with award- winning lounges • Enhance Qantas on-board product through A330 and B737 refurbishments STATUS GATE 5 AUCK 18:3 TIME 9 A Jet Jetstar • • and improved inflight entertainment Jetstar first Asia-Pacific LCC to fly B787 Dreamliner Ongoing Customer Service Training programs completed by more than 10,000 frontline and corporate domestic employees¹ Focus on superior service and dining experience (in air and on ground) Innovation focused on speed and ease of travel 1. As at April 2015 for Qantas Domestic, Qantas International and Corporate segment. 2015 TRAVELLERS' CHOICE 2015 ONBOARD HOSPITALITY AWARDS tripadvisor WINNER Traveller Cellars IN THE sky 2014- WORLD RLINE WINNER SKYTRAX AWARDS 2014 THE TF ESR DESIGN AIR 41#42BRAND AND CUSTOMER New brand campaign Reconnecting with Australians . • • Successfully rebuilding an emotional connection New 'Feels like Home' brand campaign launched in November 2014 Customer insights led proposition to re-connect emotionally with Australians 2 minute TVC¹ has had over 1.5m views on YouTube to date Strong performance and outperforming industry benchmarks 66% of Australians who saw the TVC felt more positive about Qantas² . 54% of Australians who saw the TVC felt it made them want to fly with Qantas² Welcome home QANTAS Spirit of Australia qantas feels like home. 40014/200 Feels Like Home Qantas ca Subscribe 21.550 +... Published on Nov 6, 2014 Category License Travel & Events Standard YouTube License Up Next 1,679,759 1,061 179 Autoplay Qantas 787 on 60 minutes by Canta Recommanded for you Runway to Runway- Qantas sets trends in fashion by Qantas 18.035 views 1. Television Commercial. 2. Source: House of Brand Advertising Tracking. Feels like Home advertisement was recognised by 67% of Australians based on highest net recall score in Jan 2015 which includes 2min TVC and Charlotte TVC. "Felt more positive" and "Felt it made them want to fly" diagnostics based on average of all TVCs included in advertising tracking (2min, Alice, Charlotte and Melinda TVC). Based 42 on recognisers of each TVC (2min, Alice, Charlotte and Melinda).#43BRAND AND CUSTOMER New brand campaign: Welcome home Welcome home 43#44BRAND AND CUSTOMER Jetstar brand consistency Maintaining our leadership LCC position • . 140 million passengers in a decade An Australian brand leading the way across Asia-Pacific The market leader on price competitiveness Brand strength across all markets served in Asia Pacific - 70 destinations, 16 countries/territories F-WWBF AMBUS A320 5738 Jet Hop Away Sale FlyMelbourne) 18: Hobart $39 Adelaide $49 Gold Coast $69 Townsville $85 Cairns $99 Phuket $259 woohoo jetstar.com Sache-way Checked baggage calcu ser an additional tee. On sale until 2859EST) say 7 A 2015 uness depot Samabad Sen Strandspybi For more sain tares and travel dass er lo beck, visit jetstar.com Jetstar VH-VOI 0000 AIRBUS A320 44#45BRAND AND CUSTOMER Digital Transformation - over a million fans and followers New direct channels to market • . Qantas.com - Australia's No. 1 travel website¹ 630,000 Fans on Facebook • 270,000 Followers on Twitter • 80,000 Followers on Instagram • 20,000 Subscribers on YouTube ⚫90,000 Followers on LinkedIn • 20,000 Followers on Google+ • In 2015 there have been 70,000 queries from passengers online² • Jetstar.com - 15.5 million visits per month • 1,150,000 Fans on Facebook • 230,000 Followers on Twitter . • 18,000 Followers on Instagram QANTAS + Jetstar Fights Packages Hotels Cars & extr Plan your trip Friday Fare Frenzy Fiji (Nad $225 Deporting Melbourne So Gold Coats Find Flights > Sale wat op (AED)&May 20 VIEW ALL SALE FARES Book FN FrFlyer stgeorge Hamilton Island Sale Fly dront from Sydney, Fishing and Mitrous Reasons to book online Price Pramice fee-free Payment Optics Points Plus Pay 24/7 Phone Scent About Frequent Flyer Manage Your Booking Hobart | Sculpture on the Waterfront 1. Source: Hitwise Australia. Most Popular Websites in Travel (Airlines and Transport category), April 2015. 2. January 2015 - April 2015. Qantas ~45% of Group marketing spend now through digital channels 4:38 pm 13% C QANTAS 565 posts 79.4k follower 692 ✓ Following Share your Qantas experience by tagging photos #Qantas, #Qantas Airways or @Qantas to give us sto permission to repost your image. Terms and Conditions at: www.facebook.com/Qantas/info Ο A 45#46BRAND AND CUSTOMER Qantas Airways: brand & image Flyer attitudes and perceptions in 2015 YTD¹ Premium Domestic Airline SERVICE IMAGE 2015 +8% since 2008² Iconic Australian CORE BRAND VALUES 2015 +2% since 2008² Committed to Delivering Best Service & Products Perceptions at the highest level ever seen regarding the quality of the Qantas Domestic experience +15% since 2008² Perceptions at the highest level ever seen regarding Qantas' service & product focus 2015: CONSISTENTLY IN 90th PERCENTILE Perceptions remain extraordinarily strong of Qantas' iconic Australian status Safety Reputation +12% since 2008² 2015: CONSISTENTLY IN 90th PERCENTILE Safety continues as a core attribute. Australian flyers feel even more secure flying with Qantas than ever before 1. Year-to-date. 2. Average of calender year 2008 versus average between January to April 2015. Source: Qantas Domestic Key Indicators Studies. 46 46#47BRAND AND CUSTOMER Strong improvement across domestic and international DOMESTIC 2015 YTD¹ 60% point LEAD over VA4 2015 YTD1 51% point LEAD over VA4 Perceived Best Domestic Airline For Business Travel Qantas Domestic continues to own this domestic market brand position First Choice Next Domestic Business Flight Qantas Domestic continues as the predominant first preference for Australian domestic business travel INTERNATIONAL 2015 YTD +14% pts On 2008² 2015 YTD +12% On 2008³ 2015 YTD +6% On 2010³ Provides Exceptional Customer Service Customer perceptions of Qantas International providing exceptional customer service are significantly up and at record levels Provides a Competitive Product Customer perceptions of Qantas International providing a competitive product are significantly up and at record levels Is a Premium Full Service Airline Customer perceptions of Qantas International being a premium full service airline are significantly up and at record levels 1. January 2015- April 2015 versus Virgin Australia. Source: Qantas Domestic Key Indicators Studies. 2. April to June 2008 quarter versus January to March 2015 quarter. Source: Qantas International Customer Satisfaction, Qantas. 3. Average between April to December 2008 versus January to March 2015 quarter. Source: Qantas International Customer Satisfaction, Qantas. 4. Virgin Australia. 47#48BRAND AND CUSTOMER Jetstar customer satisfaction and advocacy Relevant and measurable for low-cost as well Jetstar leads on "has low-priced fares" perceptions Jetstar the clear leader in Strategic NPS for LCCs 44 Jetstar Jetstar January to March 2015¹ 32 32 Competitor Average 1. Source: House of Brands, January to March 2015. 2. Source: Ergo Strategic NPS, May 2013 to February 2015. +23pts Lead Jetstar -Tiger May 2013 to February 2015² 48 48#49Leveraging Customer Insights The Next Wave of Transformation OG Rob Marcolina QANTAS Spirit of Australia VH-OQG#50STRATEGY & TRANSFORMATION The basis of airline competition has expanded over time + Operations • Aircraft Airports Safety Changing Nature of Airline Competition From physical to virtual assets • Seats • + Partnerships Customer Insights Product • Global alliances . Technology enabled ⚫ Joint ventures • Loyalty Lounges Entertainment Virtual airlines • Personalisation More replicable Less replicable While originally focused on physical assets, airlines today compete on a range of dimensions, including operations, product, partnerships and increasingly customer capabilities 50#51STRATEGY & TRANSFORMATION We have a rich and deep source of customer insights OUR CUSTOMER INSIGHTS ARE A KEY COMPETITIVE ADVANTAGE Flying behaviour of our customers Frequent Flyer profiles and behaviour Customer NPS¹ & feedback 50m+ passengers annually across Group 10.7m members Panel of ~25k Frequent Flyers can record NPS each time they fly Customer segmentation Web, mobile & social media interactions Rich history of data sol of QANTAS Discover Los Angeles MacBook San Francisco Market-wide segmentation insights 2.5m+ visits to qantas.com / week 3.7m+ visits to Jetstar websites / week 27 years of historical data 51#52STRATEGY & TRANSFORMATION Customer insights are key in making dual brand network decisions • Optimising our dual brand network requires consideration across multiple dimensions: market demand and capacity financial implications competitive positioning utilisation and network effects customer targeting and brand positioning • Our market-wide customer segmentation provides a detailed understanding of Australian flyer market needs and attitudes, enabling: strategic positioning of our dual brands targeting of strategic customer segments • Dual Brand: Route Decisions Informed by Customer Insights Darwin,hulunbuy) Weins Horn Island Kununurr Broome ■Port Hedland Karrath Exmouth (Lexmonth) Paraburdoo Newman Alice Springs Uluru (Ayers Rock) Cairns Cloncurry Mount Isa Townsville Proserpine Hamilton Island Mackay Longreach Barcalda. Emerald Blacka Charleville Rockhampton Gladstone Biloela undaberg Roma foowoomba Naser Coast Sunshine Coast Brisbane Gold Coast Auckland Geraldton Ompic Don Kalgoorlie Moree Coffs Harbour Tamwo Dubbo Port Macquarie Newcastle Queenstown Mildura Port Lincol Adelaide Sydney Canberra Perth- Key: Qantas/QantasLink Jetstar ⭑ These insights are critical when making co-ordinated dual brand network decisions Melbourne Launceston Devonport Hobart Wellington Christchurch Clanodin 62 52#53STRATEGY & TRANSFORMATION Customer data facilitates seamless disruption management Managing disrupted flights operationally Minimising disruptions for more valuable customers is key to decision-making when managing flight disruptions • Assessing customer value considers: - Qantas Frequent Flyer tier - Whether managed corporate / SME¹ flyer Recent customer revenue to Group - Prior disruption history < People Disruption Management: Insights Aid Operations and the Customer Journey Booking #ZEMBQK Baggage < Seats Select new flight out Operated by: Qantaslink - National Jet Systems Your flight booking has changed Flights OLD FLIGHT 09:40 11:40 (2h 00m) Non-stop RECOMMENDED SELECT MANAGE AQF1570 Managing disrupted customer journey • . Once operational disruption occurs, affected customers are notified via e-mail or SMS, and directed to qantas.com (desktop and mobile) Customers have the option to: accept a proposed new flight, change to an alternative flight, or cancel and request refund / voucher The initial new flight proposed depends on customer value NEW FLIGHT JUN Melbourne to Coffs Harbour 27 11:40 13:35 1h 55m 08:30 12:35 (4h 05m) Stops in Sydney QF416 QF2108 JUN 27 Melbourne to Coffs Harbour 09:40 11:40 2h 00m 08:30 17:20 (8h 50m) Stops in Sydney SELECT 14:25 2h 05m AQF416 QF2116 JUL 04 Coffs Harbour to Melbourne 712:20 Accept changes Change flights FLIGHT OUT Selected Flight Out Cancel this booking Sat, 27 Jun 2015 Check out 08:30 12:35 1 stop (4h 05m) 1. SME: Small and medium-sized enterprises. 53#54STRATEGY & TRANSFORMATION Customer insights enable Group innovation and service excellence • • • . Auto check-in on mobile: industry-leading; drives customer advocacy; reduces footprint at major airports RedApp: provides customer history and information directly to cabin crew and ground staff on iPads Webchat: Australian industry-leading; proactively tracks and assists customers through online booking process Mobile travel companion: app provides personalised assistance on day of travel Cross sell through digital channels: utilise customers data for personal offerings New targeted marketing technology: enabling more tailored, personalised and effective marketing for Jetstar Loyalty-led innovation: across Qantas Frequent Flyer and adjacent business From breakfast meeting to boarding in just three clicks. Check-in now comes to you. Melbourne Need help? QF11 10:09 Jetstar SYD LAX Now boarding at Gate 8 Departs Arrives 11:45 06:30 We're online and available to answer any questions. Chat now AUSTRALIA DAY SALE Explore your own backyard for less Anthony, based on your last trip to the Whitsundays here are some Australia Day Sale fares you might like: $109 $59 54 54#55STRATEGY & TRANSFORMATION Ultimately supporting key strategic objectives for the Group SAFETY IS ALWAYS OUR FIRST PRIORITY Deliver sustainable returns to shareholders Always First Choice For Customers Build on leading domestic position through dual brands Establish strong international dual Secure QAD¹'s position as best for customers who value the full service experience Reinforce JQD¹'s low price and scale advantage position brand position Strengthen and grow loyalty business Leverage low Strengthen QAI¹ to provide cost base for JQI¹ to defend best network with partners and grow P2P² Maintain QFF¹ as a driver of loyalty across group and as a international leisure markets leading loyalty program Innovate and diversify leveraging advantaged assets and capabilities Build customer loyalty by delivering a great experience in every interaction Transform all businesses to continually drive operational efficiencies Inspire, empower and motivate our people, teaming effectively across the Group Deliver on existing Jetstar opportunities and partnerships in Asia Customer Transformation People 1. QAD refers to Qantas Domestic, QAI refers to Qantas International, JQD refers to Jetstar Domestic, JQI refers to Jetstar International and QFF refers to Qantas Frequent Flyer. 2. Point to point. 55#56Transformation QANTAS Spirit of Australia#57STRATEGY & TRANSFORMATION Qantas Group Transformation principles Set the bar high (targets and timeline) Focus on the 'how' versus the 'what' Link to the bottom line Centralise program management Embed a cost-conscious culture Bring our people along the journey Improve customer proposition ********** 001 ****** arcom OG Jetx 57#58STRATEGY & TRANSFORMATION Transformation targets and results thus far Target by FY17 $2 billion gross benefits 5,000 FTEs $500-600 million of $2 billion Result over 18 months to end FY15 target of $875 million¹ 2,200 Will exceed 4,000³ (~$350m)³ 1,800 5,000 ($500m+) benefits 1,000 by FY15 Exited Actioned² FY15 FTE reduction FY16-FY17 reduction FY17 FTE reduction FY14 FY15 target TRANSFORMATION EMBEDDED IN BUSINESS, WITH FURTHER BENEFITS POST FY17 1. Made up of $200m benefits realised in FY14 and target of $675m for FY15. 2. 1,400 FTEs have exited and remaining 400 FTEs have been actioned. 3. By June 2015. Consists of 1,500 Non- operational FTEs and 2,500 Operational FTEs. 4. Achieved by June 2015 (further benefits from the 4,000 will track into FY16). 58#59STRATEGY & TRANSFORMATION The Transformation journey Right sizing Productivity Consolidation Technology Supplier First 18 months of transformation Benefits realised by FY15 Next wave of transformation Benefits realised from FY16 onwards • Consolidation: non-operational staff reduction; B747 base closure; new line maintenance model; centralised office campus Productivity: Jetstar's 'Lowest seat cost' program; fuel optimisation Right Sizing: B767/ B734 accelerated retirement; Qantas International and Domestic utilisation • • • • Consolidation: contact centres Productivity: catering centres; Jetstar's 'Lowest seat cost' program; fuel optimisation Right Sizing: Qantas International and Domestic utilisation (Phase II) Technology / Supplier: 'Spend Aware' supplier spend program; revenue management; application simplification 59#60STRATEGY & TRANSFORMATION Case example: Transforming Engineering Right-sizing organisation - Executive redundancy program - Support services redundancy program - - Engineering services rationalised B747 base closure Engineering: Consolidating Processes Base Maintenance Consolidation Component Maintenance consolidated Integrated Planning/Maintenance Operations Centre Key for future cost reductions is matching supply and demand of labour to increase productivity Engines, Planning, Support & Component Calibration & Component ~900 FTE reduction by FY15¹ $120m Benefits realised by FY15² 1. As part of the Transformation Program from January 2014 to June 2015. 2. Since January 2014. 60 60#61STRATEGY & TRANSFORMATION Case example: Transforming Q Catering • Before Transformation, Q Catering had a >10% unit cost gap to on-shore competitors • Significant changes are being made to close the cost gap - - Matching labour supply to demand, increasing productivity Focus on improving process efficiency (waste reduction) Redesigned meals, removing trays and extracting cost • There has also been a shift in culture and behaviours - De-layering management Increased collaboration and co-ordination 0% Unit cost gap by end FY151 ↑2.5% Customer satisfaction scores² Q Catering: Increasing Customer Satisfaction While Reducing Cost Up to 50% more food ✓ Improved customer feedback ✓ Simplified (production, logistics, delivery) Net transformation benefits 1.To on-shore competitor. 2. Average increase in customer satisfaction with Domestic meals (Food Quality/Taste; Freshness; Presentation/Appearance) between January 2014 and March 2015 61#62STRATEGY & TRANSFORMATION Case example: Transforming procurement and spend • Spend Aware program will drive sustainable procurement cost reductions across the Group, with ~$2bn spend in-scope • Key objective is to transform our supplier approach Improve forecasting to control spend - Strengthen enforcement of supplier charges Enforce spend decisions up front, not after the fact • - Manage suppliers across Group, to leverage scale Key enablers Improve business processes and technology - Implement behavioural and cultural change ~$30m Reduction of Benefits realised by FY171 number of suppliers 1. Since January 2014. Spend Aware Program: Sustainable Cost Reductions Empowering Leaders to do their job Engagement & Support Simplified Procurement Portal A spend-aware business with simple buying and supplier management, delivering spend control, transparency and value for money across Qantas. Easy to use Transactional Procurement Service (Hub) Automation 62 62#63STRATEGY & TRANSFORMATION Customer focused approach during Transformation Unique and market-leading outcome: Improving customer benefits through Transformation Conscious choice Deliberate decision-making Commitment to customer as a key principle of Transformation Decision-making ensures impacts are weighted to a net customer benefit HOW? Product investment Continued investment in customer products Service focus Commitment and training of our people to improve customer service QANT Smarter approach Prioritise what customers really value 63#64STRATEGY & TRANSFORMATION Transformation summary 1. We've been bold in setting targets and we are on track to achieve 2. Our initiatives are driving sustainable change 3. Our customer experience has improved and we expect this to continue going forward QANTAS QANTAS LOYALTY Jetstar 64 64#65Continuing to Win in a Shifting. Domestic Market Andrew David T EJ \QANTAS Spirit of Australia QD EG FR 0000000 VH-DEG#66QANTAS DOMESTIC Established competitive advantages in highly attractive domestic Australian market • • • Largest carrier with 42% market share¹ - - - Full-service, regional, charter Frequency and network advantage Corporate account outperformance Iconic brand relevant to premium segment Leading customer experience² • Reputation for operational excellence • Dual brand coordination with Jetstar • Sales and distribution strength 1. Source BITRE - BY ASK February 2014 February 2015. 2. Measured by NPS. QANTAS 99 66#67QANTAS DOMESTIC Rapid and strategic response to competitive shifts in market Domestic market pressures: FY12-FY14 20% - Competitor reposition into Qantas core segment 15% - Capacity growth ahead of demand 10% - Corporate yields under pressure 5% - Resources sector cooling 0% -5% Qantas Domestic Response -10% CLOSE COST -15% RETAIN REVENUE PREMIUM >15%³ DISADVANTAGE TO -20% <5% BY FY173 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Market Revenue Recovery with Capacity Moderation M Market Capacity Growth¹ Market RASK Growth² 1. Domestic market capacity growth (based on ASKS) compared to prior corresponding period. Source: BITRE. 2. Market RASK (passenger revenue per ASKS) growth compared to the prior corresponding period. Source: BITRE, published company accounts and internal estimates. 3. Qantas mainline and regional operations compared to Virgin Australia mainline and regional operations. Revenue premium based on passenger revenue per ASK. Cost gap based on unit cost and calculated as underlying EBIT less passenger revenue per ASK. Based on published company accounts and internal estimates. 67 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15#68QANTAS DOMESTIC Return to stable domestic market Qantas Domestic expanding margin advantage in a stable market • Stable market conditions FY15 market capacity growth down¹ Demand and supply more balanced Improved passenger loads² Resources downturn mitigated by Qantas capacity response Expanding Margin Advantage: Unit Revenue and Unit Cost Profile QF RASK³ QF CASK4 VA CASK4 VA RASK³ Healthier demand from other sectors, East-West, East Coast, leisure FY12 FY13 FY14 1H15 FY15 est. 1. Based on ASKs. Source: BITRE, published schedules and company estimates. 2. Source BITRE. FY14 vs FY15 YTD (year to date). 3. Passenger revenue per ASK. Based on published company accounts and Qantas' estimates of the contribution of Velocity earnings at Virgin Australia. Dotted line indicates forecast. 4. Cost per ASK. Calculated as Underlying EBIT less passenger revenue per ASK. Based on published 68 company accounts and Qantas' estimates. Dotted line indicates forecast.#69QANTAS DOMESTIC How Qantas Domestic will continue to win Clear strategic priorities aligned with dual brand strategy TARGETING BUSINESS AND PREMIUM LEISURE CUSTOMERS WHO VALUE THE FULL SERVICE EXPERIENCE STRATEGIC PRIORITIES Delivering customer experiences that earn a revenue premium Recognised for our operational excellence Delivering at the right cost through Qantas Transformation Our people and culture make the difference Leading dual brand market position maintaining at least ~80% of domestic profit pool 69 69#70QANTAS DOMESTIC Customer experiences that earn a revenue premium Targeted investment, innovation driving customer advocacy Service Leadership and Training • Reach across all frontline people • Driver of advocacy and airline choice Airport Transformation • • New technology auto check in Labour costs reduced by 13% Airport & Lounge Experience ARRIVAL • New Darwin, Brisbane lounges • Terminal investments: Perth and regional WA¹ Accor lounge service provider Fleet Record Operational NPS Result in FY153 >60% lift FY11 FY12 FY13 FY14 • Domestic A330 reconfiguration; 3 complete² • B737 reconfiguration from mid-2015 Food, Beverage and Service • More lounge and in-flight menu choices • In-flight meal service window increased +18pts Lead Qantas Domestic Virgin Domestic FY15 Operational NPS measures end-to-end of a customer's journey and determines areas of focus for service improvements 1. Western Australia. 2. As at 12 May 2015. 3. Record occurred in 3QFY15. Source: Qantas Domestic Operational NPS, Virgin Australia NPS Benchmarking. 70 70#71QANTAS DOMESTIC Customer experiences that earn a revenue premium Partnering with the high value corporate segment Improving management of customer relationships • • Becoming the 'trusted advisor' for our corporates Clearly articulating the value we provide beyond price Investment in people and capability . . Consolidated sales support and streamlined deal approval Rollout of new customer relationship management tools Retaining leadership in corporate account segment¹ 10% 5% 0% -5% -10% -15% Dec-12 Feb-13 Apr-13 Jun-13 Corporate Segment Recovering with Qantas Domestic Holding Steady Share² Aug-13 Domestic Corporate Segment Yield Growth Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 . Highest yielding, most valuable market segment • Corporate yields recovering despite resources weakness FY15 Corporate Accounts³ Renewed 148 New 64 (won back 25) Lost 5 1. Based on revenue. 2. Based on published data and company estimates. Represents year on year percentage change. 3. Accounts over $0.5m only. FY15 YTD (July 2014 March 2015). Aug-14 Oct-14 71 74 Dec-14#72QANTAS DOMESTIC Corporate customer feedback Value beyond price "Qantas' pricing was not the cheapest, however, the superior network, strength of Qantas Loyalty proposition (including Chairman's Lounge) and Qantas technology were key." Australian pharmaceuticals company "Network proposition, with particular focus on the East Coast, the strength of loyalty offering (Platinum and Chairman's Lounge important to Senior Executive team), and frequency premium on Sydney-Melbourne as well as on-time performance critical to our decision." International financial services firm "Qantas are able to offer a total solution covering both Charter and RPT services. The strength of the intra-WA schedule, security of supply, on time arrival and reliability were key factors in our decision." Major Australian mining company "We chose Qantas due to the strength of the international network and the product to Japan and North America." Multinational consumer goods company "Negotiation focused on Qantas value-adds such as Valet and significant lounge advantage, domestic schedules, strength of the Qantas/ Emirates network proposition and the significant penetration of Qantas Loyalty program within our organisation." International financial services firm 72 2#73QANTAS DOMESTIC Structural advantages in customer reach Insights and loyalty offering underpin revenue premium and share of wallet Unrivalled Customer Reach in Australian Market • Customer insights through advanced segmentation model linked to Frequent Flyer member behaviour Unparalleled ability to deliver targeted customer offers Proprietary channels: Frequent Flyer, Aquire & Red Email Digital and social media: leveraging Red Planet LQANTAS QANDAS DRANTS ANTAS ADANTAS qantas.com 10.7 million QFF members¹ Australia's #1 travel website² Aquire SME loyalty program launched March 2014, extending ->150m visits expected this year reach in previously under-penetrated market QANTAS QantasLink Winter Seat Sale • Qantas.com re-platform to deliver increased personalisation - ~$300m revenue per month³ \QANTAS RED EMAIL 3.8 million Red email subscribers4 Data-driven personalisation RED PLANET. 73 1.As at 30 April 2015. 2. Source: Hitwise Australia. Most Popular Websites in Travel (Airlines and Transport category), April 2015. 3. Average revenue April 2014-March 2015. Includes taxes. 4. As at 28 April 2015.#74QANTAS DOMESTIC Recognised for operational excellence Premium on-time performance, reducing customer disruption OTP¹(%) Focus on Premium Level Punctuality +7% 87 85 81 82 81 FY11 FY12 FY13 FY14 FY15 YTD Increasing OTP Delivering premium OTP via improved efficiency Improved customer recovery leading to better NPS Disruption Customer Reducing Consistent premium level on-time performance Balanced approach delivering against customer, operational and efficiency targets Increase in OTP¹ alongside utilisation gains Leading customer recovery capability New disrupt management system in FY16 Shift focus from 'managing the metal' to prioritising people to reduce journey disruptions Cost reduction in aircraft re-positioning from fewer consequent flight cancellations 1. OTP (On-time performance)Qantas Domestic and QantasLink on-time departures. Source: BITRE July 2010 to March 2015. 74#75QANTAS DOMESTIC Delivering at the right cost through Qantas Transformation Visible pipeline to continue reducing costs, increasing utilisation FY14 FY15 Fleet Renewal & Simplification • Exit of B737-400 • • Utilisation • Departmental Transformation • People Focus • Benefits 5 x additional 2-class B717 B737-800 deliveries Lean schedule planning Corporate restructure Base maintenance changes Headcount reduction ~$50m • Exit of B767 • • Induction of A330s A330 reconfiguration program • 40 minute turns Line maintenance changes Ground services efficiency Wages freeze progress, engagement maintained >$200m FY16-17 . B737-800 reconfigurations • Ongoing fuel efficiencies • • • 35 minute turns Revenue management system Contact centre consolidation Capability & productivity improvements >$400m 75 15#76QANTAS DOMESTIC Delivering at the right cost through Qantas Transformation Case study: delivering 35 minute turns Increased utilisation through reduced turn times • Dual door boarding • Improved cabin baggage management Operating and capital efficiency benefits Introduction of 35 minute turns in FY16 . . • . Building on learnings from 40 minute turns Drive further operational and schedule efficiencies Increased fleet utilisation lowering unit cost further Creating increased domestic fleet flexibility ~30% Proportion of 40 minute turns in March 2015 1. Forecast 2H15 versus 1H15. 15% >$80m benefits realised B737 utilisation in 2H151 by end FY16 FY14 >45mins FY15 40mins Lower CASK FY16 35mins Higher ROIC Utilisation & Fleet Flexibility 76 176#77QANTAS DOMESTIC Delivering at the right cost through Qantas Transformation Case study: direct distribution Booking F04830 CHANGE FLIGHTS Sydney to London Petro SA 2014 London Heathrow) to Sydney CLOSE When in London CONTINUE Sales and customer management is changing Customers moving to and preferring online and mobile interactions for bookings Contact centres still essential as touchpoint for premium customer service Qantas Direct is transforming and restructuring Investment in online and mobile platforms delivering improved customer experience Right-sizing operations, flexible labour structure ↓10% Contact centre demand¹ 1. July 2014-March 2015 versus July 2013-March 2014. 15% Qantas Direct revenue¹ 77#78QANTAS DOMESTIC Our people and culture make the difference Investment in capability to provide great leadership Communicate genuinely and frequently Commitment to the development of our people Ensure everyone steps up and takes responsibility Focus unwaveringly on the safety of our people Unlock passion for the brand 78#79QANTAS DOMESTIC Scorecard Strategic priorities are being delivered DELIVERING CUSTOMER EXPERIENCES THAT EARN A REVENUE PREMIUM RECOGNISED FOR OUR OPERATIONAL EXCELLENCE DELIVERING AT THE RIGHT COST THROUGH TRANSFORMATION PROGRESS TO DATE FY15 RASK advantage to competitor maintained above 15%¹ NPS at record levels with > 15 point average margin to competitor² Corporate revenue share outperformance maintained³ FY15 year to date OTP above 87%4 Deeply embedded culture of safety Unit cost gap to competitor reduced to below 15% in 1H15 On track to reduce to <5% by FY17 OUR PEOPLE AND CULTURE MAKE THE DIFFERENCE B737 aircraft utilisation increase of 5% in 2H15 Engagement maintained through major business transformation 1. Passenger revenue per ASK. Source: BITRE, published company accounts and Qantas' internal estimates FY15 forecast. 2. From July 2014 to March 2015 year to date average. Source: Qantas Domestic Operational NPS, Virgin Australia NPS Benchmarking. 3. Based on revenue. 4. OTP based on number of on-time departures for Qantas Mainline and QantasLink. Source: BITRE, July 2014 to March 2015 year to date average. 5. Unit cost calculated as Underlying EBIT less passenger revenue per ASK. Based on published company accounts and Qantas' internal estimates. 6. Aircraft utilisation calculated as block hours 79 per aircraft per day. Compared to 1H15.#80Responding to a Shifting Demand Profile John Gissing \QANTAS Spirit of Australia Lewra RUSG CANTISLINK#81REGIONAL & CHARTER Australia's most extensive regional & charter network • Largest regional footprint & frequency advantage • Only regional network in all states and territories • Increased share of charter market • Seamless connectivity to Domestic and International network Spread of gauges to increase and decrease capacity across markets as demand changes Operational excellence gives flexibility to operate any aircraft in RPT¹ or charter environment Port Hedland Karratha Broome Exmouth (Learmonth) Paraburdoo⚫ • Newman Geraldton ● Kununurra e WESTERN AUSTRALIA Kalgoorlie Perth Darwin PAPUA Horn Island Port Moresby NEW GUINEA Weipa Cairns NORTHERN TERRITORY Townsville Cloncurry Hamilton Island Mount Isa Moranbah - Mackay QUEENSLAND Alice Springs Barcaldine Emerald Longreach Rockhampton Gladstone Biloela Ayers Rocke (Uluru) Blacka Charleville Roma Toowoomba ●Bundaberg Hervey Bay - Fraser Coast Brisbane Gold Coast SOUTH AUSTRALIA Olympic Dam Moree⚫ Coffs Harbour NEW SOUTH Tamworth Armidale, WALES Whyalla Dubbo Port Macquarie Newcastle Lord Howe Island Port Lincoln Mildura Wagga Wagga Sydney Adelaide Canberra ACT Albury QANTASLINK W NETWORK AVIATION A Qantas Group Airline VICTORIA Melbourne Q200 36 seats 50 seats Q300 Q400 74 seats F100 1. Regular public transport. 100 seats -88.............. Devonport. Launceston TASMANIA Hobart B717 110/125 seats ANTASLINK 81#82REGIONAL & CHARTER Fleet flexibility enabled rapid response to shifting demand profile As resources boom took off... Intra WA Flying Mix including Charters¹ ASKS • Up-gauged B717 to B737 on RPT 4,500 · Acquired Network Aviation for charter 12% 15% JQ A320 4,000 • Expanded network to Pilbara & WA coast 12% 3,500 6% 27% Q400 26% • Qantas B737 and Jetstar A320 to charter 3,000 32% 33% 2,500 F100 2,000 45% • • As resources sector cooled... Built RPT capability with F100s Down-gauged B737 to B717 and F100 on RPT Targeted select charter contract growth Maintained WA footprint & frequency with reduced invested capital 49% B717 1,500 58% 55% 1,000 60% 52% 55% B737 500 51% 0 FY10 FY11 FY12 FY13 FY14 FY15 Intra-WA Underlying EBIT 2 ↑ 1. FY15 includes actuals and published schedules. 2. Qantas Domestic WA resource operations results FY15 YTD versus prior corresponding period. 82#83REGIONAL & CHARTER Qantas Transformation Case study: Consolidating turboprop operations • • • Consolidation of bases - Cairns now all Q400 with greater flexibility; Adelaide all Q300 with increased scale; subscale Perth base closed Increasing utilisation to free up four Q300 aircraft for sale or alternate deployment, growth from Adelaide Q400 up-gauge to key markets enabling improved product and increased peak capacity to regional ports Centralisation of yield management and network functions, deployment of new best-in-class systems Maintained high levels of NPS for turboprop fleet through change period 13% Utilisation1 ↓2% Unit cost² 1.Turboprop operations only. Aircraft utilisation calculated as block hours per aircraft per day. Adjusted for Lord Howe Island seasonality 2H15 forecast versus 1H15. 2. Unit cost improvement by end of FY16 83 calculated as Underlying EBIT less passenger revenue (excluding fuel) by RPT ASKS.#84REGIONAL & CHARTER Qantas Transformation Case study: Transforming profitability of thin domestic routes Canberra and Hobart markets loss-making Removed B737: 'right aircraft, right route' Replaced with lower capital value B717 aircraft with lower trip cost Maintained frequency and improved RASK through new two class configuration: New business and economy interiors Transform Thin Domestic Route Profitability¹ (EBIT/ASK) Canberra Hobart Bring your own device wireless in-flight entertainment (first deployment in Group) Pre B717 Post B717 1. Graph shows July 2014- March 2015 versus July 2013-March 2014, EBIT/ASK. 84#85Maximising Jetstar's Position in Australia & NZ The Roadmap to Success in Asia Jayne Hrdlicka Jet Jetstar VH-VKA 1111 Jetstar All day, every day, low fares#86JETSTAR GROUP The Jetstar Group model Cost discipline Ancillary innovation Network strength Jetstar Group Pan-Asia footprint Customer advocacy Exceptional relationships Robust, proprietary Jetstar LCC model Delivers both customer service and low cost Over ten years of experience delivering safe operations built on 90+ years of Qantas safety practices Dual brand 'know-how' embedded in the Jetstar Group strategy Pan-Asia Pacific network supported by market-leading brand and innovation 86#87JETSTAR GROUP Strong, independent Jetstar-branded airlines Jetstar Australia Jetstar Japan Jetstar International¹ Jetstar Group Jetstar Asia Jetstar Hong Kong2 Jetstar Pacific Commercial and operational decisions driven by local CEO and board The right local, strategic shareholders for each market Combination of Jetstar and local partners' scale improving unit cost and revenue³ Regular experience sharing between airlines Consistent customer experience in all markets 1. Includes New Zealand and Trans-Tasman. 2. Subject to regulatory approval. 3. Controllable unit cost and RASK. 87#88JETSTAR GROUP ~80% of invested capital is in Australia and NZ Investments in Asian businesses Jetstar International Jetstar Australia Share of Total Invested Capital Portfolio of growth opportunities with the potential for higher risk adjusted returns over time Selective, strategic investments in the right markets with the right partners Strong Underlying EBIT performance in FY151 Leading LCC performance in/out of Australia, serving strong customer franchise Profitable operations in New Zealand domestic and Trans-Tasman¹ • ROIC > WACC and continued focus on aligning network to customer demand • Excellent returns driven by the lowest cost base in the Australian market • ROIC > WACC with continued strength anticipated from introduction of A320 NEOs and advantaged domestic network position 1. Based on current FY15 Underlying EBIT forecast 88#89JETSTAR GROUP Cost discipline: Jetstar in Australia Lowest cost airline in Australia 4x larger domestic scale versus competitor LCC¹, driving narrowbody unit cost advantage Relentless, multi-year focus on cost leadership Lowest Seat Cost program contributes to Qantas Transformation What is coming up next: Introduction of A320 NEOs from FY17 with a 15% reduction in fuel consumption² Greater self-service and automation to drive efficiencies and customer experience Transformation initiatives including airport charges, supplier reviews, fuel efficiencies and back office efficiencies Controllable Unit Cost Reduction³ CAGR -2.1% FY08 FY09 FY10 FY11 FY12 FY13 FY14 1. Based on domestic fleet size compared to Tigerair Australia. 2. Airbus publication 'A320 Family, the market leader'. 3. Controllable Unit Cost is calculated as total underlying expenses excluding fuel, carbon 89 tax and share of net loss of investment accounted for using the equity method, adjusted for change in FX rates and movements in average sector length per ASK. Reflects previously published company figures.#90JETSTAR GROUP Network strength: Jetstar in Australia Jetstar Australia has built a substantial network advantage over other domestic LCC - Frequency advantage in every Australian domestic port we serve¹ Three times more flights from the top five Australian domestic leisure ports² Darwin Uluru (Ayers Rock) - Disciplined focus on maintaining network advantage into FY16 Perth Domestic RASK premium of 15%³ Enhanced dual brand coordination has unlocked significant value for Qantas Group Adelaide Cairns Townsville Whitsunday Coast Melbourne (Avalon) Hamilton Island Mackay Sunshine Coast Brisbane Gold Coast Ballina Byron Newcastle Sydney Melbourne (Tullamarine) Flights operated by Jetstar Airways (JQ). Flights between Melbourne (Tullamarine) and Whitsunday Coast commence 25 June 2015. Flights between Melbourne (Tullamarine) and Hamilton Island will cease opperations on 26 June 2015. Launceston Hobart 1. Jetstar Australia versus Tigerair Australia. 2. Ports include Sydney, Melbourne, Brisbane, Coolangatta, and Cairns. Jetstar Australia versus Tigerair Australia. 3. RASK adjusted for the impact of differences in 90 average sector length. Source: BITRE, published company accounts and Jetstar's internal estimates.#91JETSTAR GROUP Jetstar in Australia Jetstar benefits from competitor reposition to full service model Flexible customer offering with fully unbundled fares Strong off-peak RASK growth Differentiated customer proposition Network relevance and frequency in key domestic Australia ports Domestic Australia Market (Illustrative) Full service demand Qantas Virgin Low cost demand Jetstar • Strong operational performance with OTP >80%¹ Tigerair • Market-leading LCC customer advocacy scores² Market-leading LCC brand supported by customer experience and product innovation 1. Source: BITRE, July 2014 to April 2015. 2. Jetstar Australia versus Tigerair Australia, Forethought Customer Advocacy Research for 2014. Opportunity in the more price sensitive segment as Virgin continues to move up-market 91#92JETSTAR GROUP Network strength: Jetstar International Strong performance of Jetstar International in FY15 • • Fleet transition from A330s to B787s Strengthening distribution inbound-AU¹ (e.g. Japan) New routes launched (e.g. OOL-ZQN/WLG/NAN²) Market has grown into prior year capacity additions We will continue to build scale around major leisure destinations in Asia-Pacific Port-leadership economics (e.g. Bali) Leverage brand 'both ways' (e.g. AU/Japan) Nol Sol Jetstar Pacific Bài Thương h Bangkok) Phu QUỐC T Phu Be Macau Da Nang The Buon Ma Thuot Hồ Chí Minh CH Hangzhou) Sapporo Nagoya (Chubu) Tokyo (Narita) Fukuoka Osaka (Kansal) Kumamoto Matsuyama Takamatsu Olfa Kagoshima Okinawa Yangon Bangkok Penang Medan Shantou Talpel Hong Kong Haikou Siem Reap Phnom Penh Ho Chí Minh Gly Kuala Lumpur Singapore Manila Phuket Jakarta Surabaya Ball (Denpasar) Darwin Caims Townsville Whitsunday Coast Hamilton Island Mackay Uluru (Ayers Rock) Perth Adelaide Melbourne (Avalon) Launceston Sunshine Coast Brisbane Gold Coast Ballina Byron Newcastle Sydney Melbourne (Tullamarine) 1. Australia. 2. Coolangatta -Queenstown/Wellington (launched on 12 December 2014) and Nadi (launched 31 March 2015). Flights operated by Jetstar Airways (JQ) Flights operated by Jotstar Asia (3K) or Valuair (VF) Flights operated by Jetstar Japan (GK) Flights operated by Jetstar Pacific (BL) Flights between Perth and Gold Coast commence 29 March 2015 Flights from Melbourne to Wellington commence 30 March 2015 Hawail (Honolulu) Auckland Fiji (Nadi) Wellington Christchurch Hobartueenstown Dunedin 92#93JETSTAR GROUP Customer advocacy: Jetstar in New Zealand Jetstar pioneered low fares and built a strong brand in the New Zealand aviation market LCC competition has changed the way New Zealanders travel Educating customers on how we keep fares low has built trust and loyalty Profitable operations in domestic New Zealand¹ New Zealand's most punctual domestic airline for 2014² Record New Zealand NPS results in FY153 Check you in. Then check you on. It's the smart way to keep costs down and fares low. When you're a low fares airline you're always looking for new and smarter ways to keep tares low. So next time you choose to fly Jetstar you'll notice that our check-in closes 30 minutes prior to departure. That's because the person that checks you in is often the same person who checks you on That reduces costs and lower costs means lower fares for you. We like that For more details or to book, visit jetstar.com jetstar.com Low fares are just part of the story Jetstar 1. Underlying FY15 EBIT forecast. 2. Based on on-time departures compared to Air New Zealand's published statistics from January 2014 to December 2014. 3. Forethought Customer Advocacy Research. FY15 93 YTD (July 2014 - April 2015)#94JETSTAR GROUP Pan-Asia footprint: Jetstar in Asia Asia-Pacific Aviation Market² GDP per capita (USD) 0 25,000 50,000 75,000 0% JAPAN Taiwan China HK ° ● NEW ZEALAND Cambodia Myanmar S.Korea AUSTRALIA VIETNAM 33% Strong, independent airlines in key Asia Pacific markets High GDP per capita and/or GDP per capita growth Low to medium LCC penetration Collaborative partnerships with local shareholders Leverages the proven strengths of Jetstar's model Ten years experience delivering safe operations "under-penetrated" LCC market penetration Thailand Malaysia Indonesia 67% • Jetstar Group scale to drive down cost base • Dual brand strategy with full service airlines Multi-lingual, multi-airline sales and distribution "saturated" Connectivity with >140 routes across network 100% Philippines ⚫SINGAPORE Country population 1,000m 1. Gross Domestic Product. 2. LCC market share is based on domestic and intra-Asia Pacific ASKS; Source: Diio Mi 2014. GDP per capita. Source: World Economic Outlook, IMF October 2014 500m 100m 94 94#95JETSTAR GROUP Jetstar in Japan Jetstar Japan has consolidated its position as the leading Japanese LCC with 20 aircraft¹ Strengthening Jetstar Japan performance ~60% domestic LCC market share² - Fourth largest Japanese airline by PAX³ - Narita and Osaka to Hong Kong launched with strong revenue performance 34% increase in capacity4 8% improvement in RASK5 Smooth transition to new Jetstar Japan Chairman, Masaru Kataoka and new CEO, Gerry Turner While business metrics have strengthened, intense LCC competition, JPY depreciation and slower than forecast utilisation ramp-up have impacted earnings performance 11% improvement in yield 14% improvement in ancillary revenue/passenger 3% improvement in CASK? 1. Operating aircraft, as at 31 December 2014. 2. Based on available seat kilometres. Source: MLIT Report, March 2014 to September 2014 reporting period. 3. PAX refers to passengers carried. Source: MLIT Report, March 2014 to September 2014 reporting period. 4. Based on available seat kilometres, 1H15 versus 1H14. 5. RASK calculated as revenue per available seat kilometre, 1H15 vs 1H14. 6. Yield calculated as passenger revenue per revenue seat kilometre, 1H15 vs 1H14. 7. CASK calculated as total underlying expenses per available seat kilometre, 1H15 v 1H14. 95#96JETSTAR GROUP Jetstar Group: Ancillary innovation Total ancillary revenue continues to grow Ancillary revenue up 6%; ancillary EBIT margin up 5%¹ Ancillary Revenue Performance³ Versus Other LCCs • Ancillary revenue/passenger is flat due to changing consumer behaviour New, advanced retailing capabilities will drive next wave of growth Data-led customer targeting through personalised offers and bundles Jetstar digital suite² redesign to create an improved travel shopping experience Next-Gen booking engine to simplify flight purchase First phase deployed in market from 2QFY16 24.1 22.3 20.8 19.0 17.8 15.5 15.8 31.7 31.8 30.6 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 easyJet $26.03/PAX4 AirAsia Group $16.1/PAX5 1. 1H15 versus 1H14. 2. Jetstar.com (web and mobile) and Jetstar app suite. 3. Calculation of Ancillary Revenue per Passenger was changed in FY14 to treat catering revenue as a net margin (previously presented as gross revenue). This accounting change resulted in a restatement of FY10-FY13 Ancillary Revenue per PAX. 4. September 2012- September 2013, Ideaworks 2014 Yearbook. converted to AUD using closing 30 September 13 rates. 5. December 2013 to December 2014 based on company announcements, converted to AUD using closing 31 December 14 rates. 96#97JETSTAR GROUP Areas of focus across each business Safety & compliance Cost discipline Customer advocacy Grow profitability off strong foundations • Leverage dual brand with QAD Jetstar Australia . Share IP¹ and expertise across Jetstar Jetstar Japan People engagement • Drive utilisation Grow revenue as new routes mature Execute on dual brand with JAL² • Maintain network advantage on core routes Jetstar International Jetstar Group Jetstar Asia . Strengthen brand in key markets . Building partnership strength • Supporting regulatory process Grow interline and codeshare partners Continue to leverage strong brand Launch additional international routes Jetstar Jetstar Hong Kong5 Pacific • Execute on dual brand with VNA³ 1. Intellectual Property. 2. Japan Airlines. 3. Vietnam Airlines. 4. Includes New Zealand and Trans-Tasman. 5. Subject to regulatory approval. 97#98QANTAS Spirit of Australia QANTAS LOYALTY A Platform for Innovation-Led Growth Lesley Grant#99QANTAS LOYALTY Qantas Loyalty: A platform for innovation led growth Qantas Loyalty will continue to innovate and diversify for stable, non-cyclical earnings growth We will leverage our market leading coalition loyalty programs and deep customer insights to achieve this objective QANTAS QANTAS LOYALTY Jetstar 99#100QANTAS LOYALTY Continuous innovation since launching Qantas Frequent Flyer 2.6 10.71 10.1 9.4 8.6 7.9 7.1 5.8 5.3 4.9 3.9 1987 2001 2004 Frequent flyer Revised tiers 108 1. As at April 2015. MEMBERS (M) 2015 2007 2008 2009 2010 2011 2012 2013 2014 IT'S TIME TO CHOOSE QANTAS I Frequent flyer Store Improved segmentation Jet⭑ Points Plus Pay everyday and OnePath Platinum epiQure One Q Cash 鼠 EID QANTAS Wishlist QANTAS accumulate. RED PLANET. Taylor Fry HOTELS Q AQUIRE QQANTAS STORE: QANTAS GOLF CLUB. Q ONLINE MALL 100#101QANTAS LOYALTY Built mutually reinforcing businesses and communities CORE INNOVATIONS Adjacent businesses and communities to diversify revenue and reinforce member engagement QQANTAS GOLF CLUB QQANTAS CASH: accumulate. QANTAS LOYALTY business FREQUENT FLYER AQUIRE Qantas epiQure Taylor Fry COALITION LOYALTY Australia's leading consumer and SME coalition loyalty programs - multi-partner, common currency RED PLANET. BREAK-OUT GROWTH Disruption led innovation to diversify and provide step change growth 101#102QANTAS LOYALTY Track record of growth and consistent cash flow contribution Loyalty Underlying EBIT¹ ($m) 286 260 14% CAGR 231 202 163 167 128 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY152 ■ Consistently delivered growth and targeted continued double digit Underlying EBIT growth ■ Underpinned by QFF billings, underlying system growth and program enhancements ■ No EBIT generated from Qantas airline billings - 66% of billings externally generated, contribute 100% of QFF EBIT³ ■ Core innovations delivering important contribution, and growing Highly cash generative business 1. Underlying EBIT results compared to prior periods normalised for changes in accounting estimates of the fair value of points and breakage expectations effective 1 January 2009. 2. FY15 forecast. 3. FY14, 102 remaining 34% represents airline billings, predominantly to Qantas Group airlines.#103INNOVATION QANTAS LOYALTY Market leading assets and capabilities QFF PROGRAM ■ Award winning ■ Product innovation e.g., Qantas Cash Reinforcing communities e.g., Qantas epiQure, Qantas Golf DATA ANALYTICS ■ 27 years of demographic and behavioural data ■ Analytics capability, strengthened by Taylor Fry BRAND ■ Iconic Australian brand 10.7 m members ~50% of Australian households 1 Only program to include 1.3b 7.8m valid email addresses billings with 33% Open rate average open rate 66% external 2 all major credit card issuers & a primary supermarket chain Exclusive access to Classic Flight Rewards Underpinned by an innovation capability and culture in Australia & New Zealand 1.5b customer 100+ 52% of members transactions 15 segmentation models earn partners interact with program each month Source: Qantas Loyalty analysis. Note: All figures are as at April 2015 unless otherwise stated. 1. ~50% as at February 2014. Source: Experian. 2. FY14 103#104QANTAS LOYALTY Delivers significant value for the airline QANTAS pint of Australie AIRLINE REVENUE PREMIUM ■ Increased share of wallet and market share ■ Yield premium MARKETING EFFICIENCIES Improved targeting, segmentation ■ Differentiated incentives Insight driven campaigns OPERATIONAL EFFICIENCIES ■ QFF represents largest single buyer for the airline ■ Promotes online booking activity CUSTOMER PROPOSITION ■ Data analytics function supports airline decisions (e.g. network, fleet, brand) 104#105QANTAS LOYALTY Continuous innovation and disruption led growth Qantas Q QANTAS GOLF CLUB: QQANTAS CASH: AQUIRE accumulate. QANTAS ATT RED PLANET. Taylor Fry epiQure DELIVERED ■ Core innovations ◉ Reinforcing communities ■ Created unmatched assets and capabilities - program, data, brand NOW ■ Continued core innovation, together with innovation led growth ■ Red Planet, first disruptive break-out growth play ■ Actively developing a pipeline of break-out growth opportunities Extending our innovation capability, including new processes NEXT ■ Disruptive innovation - Entering new verticals with innovative, digitally led, customer centric solutions Disrupting existing industry dynamics Tapping global trends, new technology, investments ■ Portfolio of growth plays 105#106QANTAS LOYALTY Red Planet: New digital marketing business Delivering media, analytics and research services RED PLANET. " ■ Integrated media, analytics and research services ■ Directly and individually targets customers leveraging the unique strengths of Qantas Loyalty Unparalleled reach in market - Rich proprietary data from 27 years Sophisticated customer-led capability Expected to deliver profit in first year 106#107QANTAS LOYALTY Today's standard practice Identification of target market Research Selection of target market Defined preferred audience 3rd party inferred data 3rd party inferred data 3rd party inferred data Display Publisher Mobile publisher Social publisher Data & Analytics Media Planning Shortcomings ■ Significant inaccuracy in reaching target audience ■ No ability to run true multi-channel coordinated messaging ■ No ability to employ robust measurement techniques to measure campaign effectiveness 107#108QANTAS LOYALTY Red Planet: a new approach RED PLANET. Research Display Publisher Mobile publisher Social publisher Data & Analytics Target Audience Media Planning Non-target Benefits ■ Efficient: ability to reach target audience and supress advertising to non-target ■ Effective: ability to run true multi-channel coordinated messaging ■ Measureable: ability to employ robust measurement techniques 108#109QANTAS LOYALTY Red Planet: The consumer difference Consumer A ■ Upcoming travel in Australia Be the ones with a story four times bigger. Hilton BOOK NOW Speffer 155 Macquarie Street, Sydney, NSW 2000 M 2/219 Kent Street, Sydney, NSW 2000 P Ray White Project Sales AM LUXURYS Blue chip serviced apartner Fimorphaco Vide | Red Planet targeted advertising based on direct knowledge of consumer attributes - EXPERIENCE EXTRAORDINARY WESTERN AUSTRALIA DISCOVER ARDI 155 Macquarie Street, Sydney, NSW 2000 221 Met, Sy NSW 2 Ray White Project Sales DIAMOND CO M Consumer B ■ Searched for flights to WA and are from the East Coast; or ☐ In the top 3 deciles of our WA travel prediction model and are from the East Coast Other advertising - identical promotion even though consumer A versus Consumer B had vastly different attributes 109#110QANTAS LOYALTY Red Planet: Delivering value for both Qantas and external clients DYMOCKS 50%* Open rate as high as 50% on individual targeted campaign 30% L Lift in sales Achieved year on year sales growth Improvement in click through 418% rate for individualised eDM (compared to non-targeted) QANTAS Spirit of Australia ✓ 28% Total baseline sales uplift 70% Increase in average spend per booking, generated per click 19.3X ROI 51% Improvement on cost per acquisition per booking, generated per click ~4x more effective than other typically used social media targeting methods Source: Qantas Loyalty analysis Source: Qantas Loyalty analysis *Sales life for high value targeted campaign based on individual campaign results. ^Individual campaign results. Individual campaign results. eDM (electronic direct marketing). ROI (return on investment). 110#111QANTAS LOYALTY Next: Accelerating disruption led innovation Qantas accumulate. QANTAS ATT Q QANTAS GOLF CLUB: AQUIRE QQANTAS CASH: RED PLANET. Taylor Fry epiQure DELIVERED ■ Core innovations ■ Reinforcing communities ■ Unmatched assets and capabilities NOW ■ Innovation led growth: core and break-out ■ Red Planet ■ Developing break-out growth pipeline ■ New innovation processes NEXT ■ Disruptive innovation Entering new verticals with innovative, digitally led, customer centric solutions Disrupting existing industry dynamics Tapping global trends, new technology, investments ■ Portfolio of growth plays 111#112QANTAS LOYALTY Qantas Loyalty Scorecard CONSISTENT AND DIVERSIFIED EARNINGS GROWTH INNOVATE TO GROW AND REINFORCE CORE DISRUPTION LED BREAK-OUT GROWTH ATTRACT AND RETAIN PEOPLE OBJECTIVE Achieve double digit Underlying EBIT growth Diversify earnings Grow QFF member base Grow external billings Maintain QFF Primary Loyalty program % Support QFF via Core Innovations Launch new break out growth businesses Maintain employee engagement PROGRESS TO DATE 1H15 EBIT $160m, 10% increase year on year Aquire, Red Planet, Qantas Golf launched; Taylor Fry acquired 6% increase in QFF members FY15 YTD 7% partner billings growth in year to 1H15 QFF primary loyalty program for 61% of members¹ Aquire, Qantas Golf launched; Taylor Fry acquired Red Planet launched Additional break-out plays identified Top quartile engagement levels 1. Qantas Loyalty March 2015 NPS survey of QFF members. 112#113FR Transforming Freight to Optimise Group Outcomes Alison Webster \QANTAS Spirit of Australia VH-EFR BOEING 767-300F QANTAS FREIGHT#114QANTAS FREIGHT Qantas Freight Transforming to optimise profit outcomes for Qantas Group QANTAS QANTAS FREIGHT Q-GO Priority Unrivalled network and service frequency to, from and around Australia Directly service 50 international and 80 domestic destinations Market belly space of the Qantas Group and operate 13 freighter aircraft Q-GO product range offers 10 time and service assured options QANTAS FREIGHT AKE 23671 QF QANTAS QANTAS Network of 86 freight terminals, including 21 Qantas operated terminals JETS TRANSPORT EXPRESS EXPRESS FREIGHTERS Australia Wholly-owned trucking and freighter subsidiaries iCargo Cargo industry's leading core operating system 1,400 employees across Australia and the world 114#115QANTAS FREIGHT Providing a convenient and seamless customer experience Belly QANTAS Freighters QANTAS FREIGHT Terminals AKE 23671 OF QANTAS GANTAS JETS TRANSPORT MESS Trucks • Sale of belly capacity on behalf of the Qantas Group • Network decisions controlled by Group passenger airlines Generates incremental revenue for Group passenger airlines through payment of belly access fees Stand alone Domestic and International freighter operations • Combination of leased and owned freighter aircraft On-airport handling facilities at Qantas-operated terminals Generates external revenue by servicing 30 customer airlines Wholly-owned interstate trucking business transhipping inbound international freight Low cost trucking operation with 25 prime movers Profitable returns through servicing primarily 3rd party customers QANTAS FREIGHT CONSISTENTLY DELIVERS RESULTS AHEAD OF GROUP ROIC TARGETS 115#116QANTAS INTERNATIONAL Strategic priorities Continuing to transform to optimise EBIT outcomes for Qantas Group Addressing our competitive challenges Australia is not an international Freight hub Competing in a commoditised market Forging strategic partnerships Leveraging our competitive advantages Broadest domestic network reach Unit cost reductions Access to belly across all of Qantas Group Seamless customer offering across four businesses World leading technology platform Hub-busting AU- China-USA triangle Customer-centric product and service offering Largest domestic freighter operation Integrated ground to air operations 116#117QANTAS FREIGHT Transformation at Qantas Freight Case study: supply chain automation Simplifying the End-to-End Air Linehaul Experience for Customers 9:41 AM Freight Login Last updates to My Favourites 081-10936779 N16:12 Home Qantas Freight Login LAX 1027 17 Jun 12 1P190 Add to My Favourites $55m¹ Transformation benefits realised by FY16 1. Forecast benefits to be delivered between 1 January 2014 and 30 June 2016. Multi-year supply chain improvement program to improve the customer experience • . Express check self-service kiosks • Tracking technology rollout, including smart phone applications • Domestic pricing simplification . New online booking tool • Conversion to electronic air waybills ⚫ Technology-driven productivity enhancements • Improved customer experience at a lower unit cost 117#118QANTAS FREIGHT Sustainable performance in changing landscape Outstanding 1H15 financial performance • Competitive headwinds in FY16 Aggressive competitor activity in flat domestic market Strategy in place to maintain profit performance Holistic review of domestic business, to ensure best placed to deliver on rapidly changing customer needs Improve resilience of international business through strategic supplier and customer relationships Underpinned by aggressive cost transformation program Freight EBIT $m 80 88 60 60 40 40 20 Qantas Freight Underlying EBIT H2 H1 0 FY10 FY11 FY12 FY13 FY14 FY15 H1 118#119Building a Resilient and Sustainable Qantas International Gareth Evans \QANTAS Spirit of Australia#120QANTAS INTERNATIONAL Building a resilient and sustainable business Positioned for future growth 1 Unwavering commitment to meeting our customers' needs 2 A fit and competitive business through Transformation 3 Build a sustainable long-term competitive advantage from our home market 2 4 Generating ROIC > WACC through the cycle 120#121QANTAS INTERNATIONAL International operating environment Impacted by GFC fallout and high AUD, now benefiting from Transformation 14 1.3 1.2 • 2005-2008: Strong Australian economic growth and lower AUD Strong demand growth High yields masking underlying cost problem Continued growth of hub carriers in Asia, Middle East 1.1 Delays in A380 constrain capacity growth for Qantas and competitors • 1 2009-2014: GFC fallout, rising fuel prices and surging AUD GFC triggers negative demand, yield collapse in core international markets Strong AUD, Australian economy strength leads to influx of competitor capacity • FY15: Transformation-led recovery Accelerated Transformation Transformation to address cost issues begins • Cooling resources sector results in AUD back to long-run average Competitor yields, already impacted by over-capacity, decline further with AUD Market capacity growth reduces from 9%² in FY14 to 1% in FY15² • Brent oil peaks at US$125/bbl AUD Brent oil at 5-year low 0.9 AUD/USD 0.8 0.7 0.6 Competitor Capacity CAGR: +1%¹ Competitor Capacity CAGR: +7%¹ Competitor Capacity: ~+1%² 0.5 1. Based on number of seats. Source: BITRE January 2005 to December 2014. 2.BITRE(excl Qantas Group) vs FY13. 2. Based on BITRE & OAG published schedules as at April 2015 (excluding Qantas Group). 121#122QANTAS INTERNATIONAL Building a fit and competitive Qantas International Significant transformation achieved to date FY11 HISTORIC STRUCTURAL CHALLENGES ADDRESSED FOR LONG TERM SUSTAINABILITY Transformation to deliver competitive unit cost position comparable to direct competitors • Network restructure around global gateways • • Asian operations rebuilt: capacity and timing Four-engine aircraft focused on long-haul • Schedules optimised Premium partners providing global coverage FY12 FY13 FY14 - • Exit loss making routes BKK¹ and HKG² to LHR3 • Launch to American Airways Hub - I DFW4 • Launch to LAN Hub - SCL5 ⚫9X B747 reconfiguration program • • • • 'Mary Gober' Phase I service training 12 X A380 reconfiguration program Heavy maintenance consolidation (Tullamarine closed) Emirates partnership launch/Asian network restructure Business Sleeper Service, Select on Q and Chauffeur Drive •New SINб premium lounge • • Asian partnerships - China Eastern & China Southern codeshare Begin retirement of non-reconfigured B747 fleet New HKG2 and LAX? Lounges Heavy maintenance consolidation (Avalon closed) • 'Creating Great' Phase II service training 'Right Sizing' of SIN6 flying • 'Fleet and Network' opportunities - significant utilisation uplift Dynamic scheduling initiatives • Partner connectivity (Westjet, Bangkok, China Airlines) • A330 reconfiguration with Business Suite begins 1. Bangkok 2. Hong Kong. 3. London Heathrow. 4. Dallas Fort Worth. 5. Santiago. 6. Singapore. 7. Los Angeles. FY15 122#123QANTAS INTERNATIONAL Strategic priorities Delivering a fit and competitive business to leverage growth opportunities Addressing our competitive challenges Reshaping our cost base through Qantas Transformation Overcoming network gaps Unit cost reductions Optimisation of network Leveraging our competitive advantages Owning the high-yield customer base in Australia Providing connections to the world World-renowned customer experience Most convenient & direct Increasing asset utilisation Continued focus on partnerships Building on revenue fundamentals Premier partners for each region 123#124QANTAS INTERNATIONAL Reshaping our cost base through Qantas Transformation Non-fuel unit cost improved by 15%¹ since FY12 • Legacy cost base issues largely addressed • Reconfigurations delivering improved economics Non-Fuel • Cost base becoming more competitive versus peers in key Qantas International markets Unit Cost Improvement 15%¹ FY12 FY15 Aircraft utilisation increased by 16% since FY12² • • Four-engine aircraft focused on longer sectors 'Natural ground time' used for maintenance Engineering and ground handling efficiency gains LAX³ hangar investment, operational late FY16 Fuel FY12 10%4 FY15 QANTAS INTERNATIONAL TRANSFORMATION ON TRACK TO DELIVER >$800M OF $2B GROUP BENEFITS BY FY17 1. Non fuel unit cost calculated as Underlying EBIT less total revenue and fuel, adjusted for changes in foreign exchange rates per ASK. 2. Based on average block hours per aircraft versus FY15 forecast. 3. Los Angeles. 4. Fuel unit cost is calculated as total fuel per ASK and includes price and efficiencies achieved through fleet mix. FY12 versus FY15 forecast. 124#125QANTAS INTERNATIONAL Reshaping our cost base through Qantas Transformation Case study: Utilisation INCREASED UTILISATION HAS CREATED ADDITIONAL FLYING OPPORTUNITIES – ADDITIONAL REVENUE AT REDUCED UNIT COST FY15 Utilisation¹ 1. Improved network efficiency Avg. Hours/Day % Change to FY122 QANTAS 13.9 14% Retimed MEL-DXB-LHR service - improved Europe connectivity Released one A380 to up-gauge non-stop DFW-SYD5 A380 QANTAS B747-400/400ER 12.7 19% 2. Launch of new services - Additional MEL and BNE6 to LAX7, retimed SYD-LAX7 on B747 Additional SCL8 services on B747 QANTAS 15.0 12% A330-3/2 Upgrade HNL to A330 and increased to 4 per week Launch SYD-HND and BNE-NRT10 service in August 2015 3. Seasonal flying 12.6 7% B737-800 SYD-YVR11 to cater for peak winter and summer demand PER-AKL¹² services during peak summer season SYD-HKG13 and SYD-PVG 14 up-gauge to support Chinese New Year demand Network³ 13.6 16% 1. Based on FY15 forecast block hours per aircraft per day. 2. FY15 forecast compared to FY12. 3. Includes B767. 4. Melbourne-Dubai-London Heathrow. 5. Dallas Fort Worth-Sydney. 6. Melbourne and Brisbane. 7. Los Angeles - Sydney. 8. Santiago. 9. Honolulu. 10. Sydney-Haneda and Brisbane-Narita. 11. Sydney-Vancouver. 12. Perth-Auckland. 13. Sydney-Hong Kong. 14. Sydney-Shanghai. 125#126QANTAS INTERNATIONAL Overcoming network gaps Case study: Emirates partnership Premier one-stop customer proposition to Europe, Middle East & Africa 98 weekly Qantas and Emirates flights from Australia • More than 70 Qantas codeshare destinations Replaced multi-partner, 5 codeshare destination offering Emirates Delivering significant Group-wide financial benefits • RASK improvement as partnership matures¹ • Redeployment of capital from continental Europe $1.7b Flown on Partnership Code² • Qantas Frequent Flyer benefit from joint network 4 x in Qantas codeshare bookings³ • Connecting passengers to Qantas Domestic, Jetstar Group airlines across Asia Pacific ~40% 8 ppts Loyalty participation on EK flights4 Customer advocacy5 Spirit of Australia QANTAS 1. Qantas International RASK improvement in FY15F versus FY14. 2. AUD, since commencement of partnership on both QF and EK code. 3. Qantas customer bookings on partner/codeshare metal in 2014 vers 26 2012. 4. Percentage increase of QFF and Skywards members on EK(Emirates) metal versus pre launch of partnership. 5. Net promoter score on Australia to UK routes compared to pre -Emirates partnership.#127QANTAS INTERNATIONAL Overcoming network gaps Case study: rebuilding a profitable Asia network offering SIGNIFICANT IMPROVEMENT IN ASIA REGION EBIT: $300m TURNAROUND SINCE FY121 Emirates partnership facilitated increased focus on Asia • Dedicated capacity increase of 45% to SIN² • • Flights re-timed to maximise intra-Asia connectivity A330s deployed on South East Asia and Shanghai B747 limited to routes with highest premium demand Improved Qantas product offering Direct flights to 9 destinations across Asia³ More than 60 codeshare city pairs • A330 reconfigurations to leapfrog competitor offerings Award-winning Singapore and Hong Kong lounges 11 codeshare destinations via Shanghai, 4 via Guangzhou and 22 interline destinations via Hong Kong to Greater China 15 codeshare connections via Singapore including Delhi, Mumbai, Colombo, Phuket, Kuala Lumpur, Bali, Ho Chi Minh and more Guangzhou (4) Taipei Hong Kong Bangkok (8) Manila Singapore (15) Seoul Tokyo (9) Shanghai (11) Port Moresby Jakarta (1) Qantas Codeshare (x) Asia Codeshare Destinations 127 1. Based on internal management reports on a fully allocated basis. 2. Singapore 3. Includes Haneda from 31 July 2015 (subject to regulatory approval).#128QANTAS INTERNATIONAL Strategic priorities Delivering a fit and competitive business to leverage growth opportunities Addressing our competitive challenges Reshaping our cost base through Qantas Transformation Overcoming network gaps Unit cost reductions Optimisation of network Leveraging our competitive advantages Owning the high-yield customer base in Australia Providing connections to the world World-renowned customer experience Most convenient & direct Increasing asset utilisation Continued focus on partnerships Building on revenue fundamentals Premier partners for each region 128#129QANTAS INTERNATIONAL Owning the high-yield customer A world-renowned customer experience . Continual investment in the customer experience alongside business transformation - World's best lounges (Sydney, Singapore, Hong Kong, Los Angeles) A330 Business Class Suite with state of the art IFE1 'New Economy' meal service Ongoing investment in our people and a personalised service experience Recognition for our investment² 2015 TRAVELLERS' CHOICE™ 2015 ONBOARD HOSPITALITY AWARDS Traveller Cellars tripadvisor Airline Sky 2014- THE DESIGN AIR WINNER GOLD FIRST CLASS SPARKLING TOP AIRPORT LOUNGES 2015 Food Drinks Lounge Operational NPS Improvement +11% pts 39% 35% 28% FY12 FY13 FY14 1. In-flight entertainment. 2. Australia's favourite Domestic and International airline in TripAdvisor's 2015 Travellers' Choice Awards. Awarded best First/Business amenities, Best Economy Dining in Onboard Hospitality Awards 2014. Best First, Business and Overall Cellar, Best Presented First and Business Class Wine List, and the Best First Class White and Sparkling Wines at the 2013 Cellars in the Sky Awards. Sydney International First Lounge, awarded Best Airport Lounge in TheDesignAir Top 10 Airport Lounges 2015. 129#130QANTAS INTERNATIONAL Owning the high-yield customer Our people are core to delivering a memorable and outstanding experience Our 'One Service Team' Culture Supported and Recognised by Our Investment in Training Creating GREAT The Art of· Human Connection customerfirst On the Ground In the Air In the Lounge LEARNX IMPACT AWARDS 2015 Platinum Winner 130#131QANTAS INTERNATIONAL Owning the high-yield customer Investment in revenue management Forecast RASK improvement greater than 5% in FY15¹ · • • Fare families incentivise trade-up, align with partners Improved pricing to respond to customer demand Better capacity management through dynamic scheduling, flexing up in peaks and down in troughs FY15 Unit Revenue Above FY12 Levels¹ >5% Implementing PROS Revenue Management System August 2015 Managing the Qantas network how customers want to . • book (origin/destination), not how aircraft fly (by leg) Investment in people and processes to extract full value • Anticipated yield uplift once fully implemented 1. FY15 forecast ticketed passenger revenue per ASK inclusive of Transformation benefits and FX movements. FY12 FY13 FY14 FY151 131#132QANTAS INTERNATIONAL Providing connections to the world Most convenient and direct Network and schedule are paramount for premium international flyers Particularly important to corporate customers Demand for direct services over connections where possible Network design centred on key business markets Qantas and Partners Serve the Top 10 Australian Corporate Destinations¹ Served by Qantas Served by Qantas Partner Qantas and partners serve >90% of top 30 Australian corporate destinations¹ LHR SIN HKG LAX JFK NRT SFO PVG AKL IAH 2 1. Top 30 destinations based on net pax revenue from Qantas corporate accounts. Source: PRISM. 2. London Heathrow, Singapore, Hong Kong, Los Angeles, New York (JFK), Narita, San Francisco, Shanghai, 132 Auckland and Houston.#133QANTAS INTERNATIONAL Continuing partnership strength A truly global customer proposition Partnership reach brings participation in large and growing traffic flows >1,200 destinations with partner airlines Partners complement Qantas' network ~200 Qantas and codeshare destinations around the globe from key gateways Synergies from deep commercial partnerships Seamless customer experience • London Flying Direct to Key Gateways, Providing Global Connectivity With Codeshare Partners 中國東方航空 CHINA EASTERN Emirates CHINA SOUTHERN Dubai Hong Kong Singapore. Los Angeles Shanghai American Airlines Dallas LAN Johannesburg • Schedules tailored to maximise connections • Expanding Frequent Flyer opportunities airberlin American Airlines BRITISH AIRWAYS CATHAY PACIFIC FINNAIR IBERIA LAN TAM malaysia QATAR وانیت ندارد نیست ROYAL JORDANIAN adines JAPAN AIRLINES S7 AIRLINES Srilankan Airlines Emirates TAM Santiago oneworld 中國東方航空 CHINA EASTERN 133#134QANTAS INTERNATIONAL Marco environment enhances competitive position AUD/USD return to long-run range AUD CLOSER TO PARITY • Competitor yield from POS AU¹ enhanced • Capacity expansion above demand • Declining air fares in market • Qantas International cost base disadvantage heightened Competitor growth into Australia of 44% FY09 - FY14, versus global growth of 29%2 • AUD IN LONG-RUN HISTORICAL RANGE Competitor yield from POS AU contracts Capacity growth moderate Qantas International yields from outside Australia POS enhanced Qantas International cost base more competitive Competitor revenue in POS AU is ~$1.5b3 less with AUD/USD move from parity to ~75c 1. Point of Sale - Australia. 2 Based on BITRE and IATA Carrier Tracker data for industry ASK growth (excluding Qantas Group). 3. Internal analysis based on overseas carrier capacity share of 67% (BITRE) and 134 a Qantas yield proxy.#135QANTAS INTERNATIONAL Looking to the Future Earn the right to grow and invest STRICT PARAMETERS FOR REINVESTMENT BASED ON SUSTAINABLE RETURNS • $1b debt pay down by end FY15 Group Financial Priorities • Capital management objectives Sustainable and Resilient Business • • Competitive Business Case All Transformation targets met Increasing revenue Business case requires a certain cost base to deliver sustainable ROIC > WACC target • Includes productivity outcomes 135#136QANTAS INTERNATIONAL Building a resilient and sustainable business Positioned for future growth 1 Unwavering commitment to meeting our customers' needs 2 A fit and competitive business through Transformation 3 Build a sustainable long-term competitive advantage from our home market 4 Generating ROIC > WACC through the cycle 136#137CEO Summary Alan Joyce SBC Hans \QANTAS Spirit of Australia 1000000000000 AIRBUS A380 VH-00G vetstar.com QG Jetx#138CEO SUMMARY Looking to the Future A more resilient Qantas Group, positioned to outperform Delivering all Qantas Transformation targets Building on long-term competitive advantages Lessening volatility and cyclicality in portfolio Disciplined approach to capital and growth ROIC embedded as primary financial return measure Stable operating environment in core markets Domestic market capacity outlook stable International market capacity outlook for low growth with AUD in long-term historical range Benefit from favourable fuel prices protected in FY16 A380 vetstar.com Jetx QG 138#139со CEO SUMMARY A strong foundation for sustainable growth Ingrained safety culture from 94 years of experience Investing in our customers and engaging our people to remain first choice in every market we serve Unrivalled dual brand strength and leading market position in domestic Australia Innovative Loyalty business continuing to diversify for stable, non-cyclical earnings growth Reshaped Qantas International leveraging growth opportunities Targeted investment in Asia's growth Increasing Return on Invested Capital, strengthening capital structure through delivery of Qantas Transformation QANTAS Jetstar QANTAS LOYALTY An integrated Group portfolio with long-term competitive advantages, generating sustainable returns through the cycle 139#140Appendix QANTAS Spirit of Australia#141GROUP OVERVIEW Group Scorecard Strategic priorities are being delivered LEADING DOMESTIC DUAL BRAND POSITION STRONG INTERNATIONAL DUAL BRAND POSITION STRENGTHEN AND GROW LOYALTY BUSINESS JETSTAR IN ASIA BUILD CUSTOMER ADVOCACY TRANSFORM ALL BUSINESSES INSPIRE OUR PEOPLE OBJECTIVE Profit share > market share Most profitable full service / LCC airlines Close Qantas unit cost gap to competitor Grow number of partnerships Largest LCC in AU international market Grow QFF member base & partner billings Grow and innovate adjacent businesses Established airlines profitable by FY16 Broadening reach and connections Consistently great customer experiences $2b gross benefits by end FY17 5,000 FTE reduction by end FY17 >80% of total workforce 'engaged' PROGRESS TO DATE 1H15 Group profitability share ~80% or more versus market share ~63%1 Both airlines more profitable2 than competitors in 1H15 4.1% unit cost improvement³ Expanded partnerships with American Airlines, WestJet, Bangkok Airways, China Eastern and China Airlines 48% of 1H15 LCC ASKS into AU - largest LCC4 8% member growth, 7% partner billings growth5 Aquire, Red Planet, Qantas Golf launched; Taylor Fry acquired $13m reduction in losses in 1H15; Jetstar Asia profitable 2H15F8 Introduction of new routes, including Narita-Hong Kong⁹ Customer advocacy at record levels 10 Over $875m benefits realised by end FY15 4,000 FTE reduction by end FY15 Towers Watson 2015 result: 75% 'engaged' 1. Source: 1H15 published company reports, BITRE. 2. Underlying EBIT. 3. Qantas Domestic comparable unit cost calculated as Underlying EBIT less passenger revenue and fuel adjusted for the fleet restructuring announced in February 2014, changes in bond rates, changes in foreign exchange rates and movements in average sector length per Available Seat Kilometre (ASK). 4. Source: Diio 1H15. 5. 1H14 versus 1H15. 6. Taylor Fry acquired in February 2015 (51% controlling interest). 7. Includes Jetstar Asia, Jetstar Japan, Jetstar Hong Kong & Jetstar Pacific 8. Underlying EBIT forecast for 2H15. 9. Launch on 1 141 June 2015. 10. Based on quarterly average NPS at Qantas Domestic and Qantas International, from March 2012 quarter. Record occurred in 3Q15.#142FINANCE ROIC framework Invested Capital Balance sheet: Reported balances for: • Receivables • Payables . Inventories • Other assets • ROIC EBIT Income Statement: Underlying EBIT Revenue received in advance Off balance sheet adjustments: Add back: non-cancellable aircraft operating lease rentals Less: notional depreciation on leased aircraft • Provisions • . Investments Property, plant & equipment • Intangible assets Hurdle rate Weighted Average Cost of Capital (WACC): Components: • Cost of debt (long term view based on projected credit metrics) multiplied by proportion of debt to capital (debt + equity); plus Cost of equity determined by traditional Capital Asset Pricing Model multiplied by proportion of equity to capital (debt + equity) Off balance sheet adjustment: Operating lease aircraft capitalised at market value at lease commencement (in AUD) and depreciated on same basis as an equivalent owned aircraft ROIC = ROIC EBIT / Average Invested Capital WACC pre-tax 142#143JETSTAR GROUP Scorecard: Jetstar priorities being delivered SAFETY & COMPLIANCE LEADERSHIP SUSTAINED PROFITABILITY LEADING CUSTOMER ADVOCACY & BRAND EXCEPTIONAL RELATIONSHIPS ACROSS OUR BUSINESSES REALISE ASIA-PACIFIC GROWTH POTENTIAL PROGRESS TO DATE Developed best practice Safety & Operational standards Solid relationship with all national regulators Ongoing, year-on-year reduction in controllable unit cost reduction¹ Continued growth of ancillary revenue/passenger² #1 LCC NPS scores in each market³ Yield premium in established markets Jetstar Australian and NZ pilot and ASU5 EBAs voted up Additional training and development tools being deployed Ongoing support and commitment to Jetstar Group model $13m reduction in losses for Jetstar Airlines in Asia in 1H157 Jetstar Asia profitable in 2H158 Group scale driving RASK and CASK position in each market #2 LCC in the world for interline partnerships and #1 LCC in Asia Pacific (>40 interline partners)⁹ 1. Controllable Unit Cost is calculated as total underlying expenses excluding fuel, carbon tax and share of net loss of investment accounted for using the equity method, adjusted for change in FX rates and movements in average sector length per ASK. It reflects previously published company figures. 2. FY05-FY14. 3. Net promotor score. Source: Forethought Research, November 2014 to April 2015. 4. The Australian Federation of Air Pilots. 5. Australian Services Union. 6. Enterprise Bargaining Agreement. 7. Based on Underlying EBIT when compared to 1H14. Includes Jetstar Asia, Jetstar Japan, Jetstar Hong Kong and Jetstar Pacific. 8. Based on current forecast Underlying EBIT. 9. Based on internal company analysis. 143#144QANTAS LOYALTY Australia's leading loyalty program Analytics 15+ segmentation models • 34,000 market research online posts 1.5 billion customer transactions Exclusive access to Classic Flight Rewards and Points Plus Pay - Flights to 1000+ destinations Qantas Store with over 3,000 products Marketing 7.8 million valid email addresses 7.2 million members receive eDMs ☐ Over 335 million email communications with 33% open rate ☐ Qantas and Jetstar ■ ☐ 35+ airline partners including Emirates and oneworld affiliates All major credit card issuers Primary supermarket $1.3B billings > 66% external Earn partners may become reward suppliers, increasing range of valuable rewards Large, quality member base attracts new earn partners Valuable rewards attract members and enhance engagement Large, quality earn partner network increases opportunities to earn, increasing engagement 10.7m members, 50% of Australian households¹, primary program for 61% of members² Highly affluent skew: We have 79% penetration of Australia's most affluent households¹ ■ Ability to reach members (e.g. 7.8m valid email address, 33% open rate) ■ Record satisfaction (NPS)³ Breakage at industry lows Source: Qantas Loyalty analysis. Note: All figures are as at April 2015 unless otherwise stated. 1. 50% as at February 2014. Source: Experian. 2. As at March 2015. 3. For March 15 quarter. 4. FY14 billings. 144#145QANTAS LOYALTY Highly attractive business model Business model is based on two key activities: 1 Issuing Qantas Points (cash in) 2 AMERICAN EXPRESS $$ Attractive financial features of business model Highly cash generative FREQUENT FLYER ☐ Member uses Qantas Premium Card to pay for American Express hire car from Avis AVIS American Express and Avis pay QFF QFF issues Qantas Points to member Providing Awards (cash out) THH Member uses Qantas Points to book Classic Flight Reward $$ FREQUENT FLYER QANTAS QFF purchases flight from Qantas Qantas issues flight to member - Cash received upfront when Qantas Points issued ☐ Earn interest on negative working capital position Favourable correlation with inflation - As prices increase, the number of Qantas Points purchased increases Exposure to input price increases can be mitigated Multiplier effect for a single transaction Card Partners create opportunity to earn from multiple earn partners with a single transaction Potential to earn both Qantas Points and Aquire Points on single transaction ■ Low capital intensity Highly scalable, transaction based model 145#146QANTAS LOYALTY Multiplier effect and favourable correlation with inflation Number of members Level of members' expenditure Number of loyalty participants (e.g. Earn partners) Use of loyalty affiliated payment methods More people participating ✓ " " ... and spending more and engaging with loyalty programs in more ways and with more payment methods to earn points ...each supported by macroeconomic and industry specific factors " Population growth Loyalty program participation Affluence of members Level of expenditure Discretion about where to spend Competition and concentration in industries Quality of earn partners (e.g. market share, profit margin) Technological development Recognition of the value of loyalty marketing Availability of credit cards linked to loyalty programs Merchant acceptance of different payment methods Level of credit card spend 146#147QANTAS LOYALTY Overview of cash flow and accounting treatment Points Earned Points Flow by Spending Gross Billings Cash Flow Life of a Point ~2 years Points Redeemed for Award; or Points Expire (Breakage)¹ Redemption Cost Cash Interest Breakage Income Statement Marketing Services Revenue Marketing Revenue Redemption Revenue Redemption Cost Interest Revenue Redemption Margin Fair Value Deferred Balance Sheet Opening Revenue Received in Advance Closing Revenue Received in Advance n/a Opening Revenue Received in Advance Redemption Revenue Closing Revenue Received in Advance 1 Marketing Revenue Sources of Value 2 Working Capital benefit (interest income) 3 ③ Redemption Margin Note: above diagram highlights unique QFF accounting items only. Diagram excludes other revenue (e.g. membership revenue) and operating costs below gross margin. 1. Breakage is recognised at the time of points earn / issuance based on an estimated breakage rate. There is no further recognition of breakage at the time of points expiry. However, the actual rate of breakage is used to inform the estimated 147 breakage rate for initial recognition.#148QANTAS LOYALTY Description of key accounting items Marketing Revenue Marketing Services Revenue Breakage Revenue Received in Advance Redemption Revenue Comprised of two components, Marketing Services Revenue and Breakage (see below), and is recognised at the time Qantas Points are issued to Earn Partners Measured as the difference between Gross Billings received and the Fair Value of Qantas Points deferred (see below) Marketing Services Revenue is revenue earned for the service Qantas Loyalty provides its Earn Partners, which drives consumer behaviour to purchase products offered by those Earn Partners. It is the premium paid above the Fair Value of Qantas Points for Earn Partners to be part of the Program, and includes payment for use of the Qantas and related brands Breakage is an estimate of the rate of Point expiry, and refers to the expectation that not all Qantas Points issued will ultimately be redeemed. Point expiry follows a period of inactivity on a member's account for 18 months Breakage Rate is estimated by the Directors, in conjunction with an independent actuary Changes in Breakage expectations are accounted for prospectively as a change in accounting estimate When Gross Billings are received from Earn Partners, an amount equal to the Fair Value of Qantas Points is deferred, creating a liability on the Balance Sheet for Revenue Received in Advance The Fair Value of Qantas Points deferred is equal to the retail value of Awards associated with Qantas Points expected to be redeemed in the future Revenue Received in Advance is classified as current or non-current based on the estimated redemption pattern of Qantas Points Revenue Received in Advance is only recognised as earned revenue for accounting purposes at the time Qantas Points are redeemed for Awards Redemption Revenue is recognised in the Income Statement when a member redeems their Qantas Points for Awards Revenue Received in Advance (Balance Sheet) is simultaneously reduced by the amount of Redemption Revenue recognised. The amount of Redemption Revenue recognised is equal to the weighted average value of Qantas Points in the Qantas Points Pool multiplied by the number of Qantas Points redeemed 148#149QANTAS LOYALTY Contributes high value to Qantas Group Primary airline affiliation Global alliance affiliation FREQUENT FLYER QANTAS ΛΙΜΙΛ aeroplan multiplus 1 (Canada segment only) AIR CANADA TAM AIRLINES Smiles GOL Linhas aéreas inteligentes oneworld® Alliance Star Alliance oneworld® Alliance None Current membership base 10.7m² >5m 13.8m 10.3m Implied population 45.4% 14% penetration 6.8%3 5.1%3 FY14A Breakage rate <10% 12%4 17.8% 16.5% FY14A billings (A$m)5 1,306 1,3576 1,003 543 Source: Company Annual Reports, Bloomberg (share prices). 1. Data relates to Canada Segment only, which derives its revenues primarily from the Aeroplan program. Excludes Europe Middle East and Africa segment (which derives revenue primarily from Nectar and Nectar Italia programs, proprietary loyalty services, analytics and insights services) and US and Asia Pacific segment (which derives revenue primarily from proprietary loyalty services). 2. As at 1H15 3. Calculated based on population of Brazil. 4. Weighted average breakage rate of AIMIA. 5. Using average exchange rate for relevant financial year149 6. Billings relating to the sale of Loyalty Units.#150QANTAS LOYALTY Other Information Qantas Cash Qantas Online Mall On track to have $1bn loaded by 30 June 2015 29 partners as at 28 April 2015 Qantas Store Qantas epiQure Qantas Golf Red Planet 3000+ products in the Qantas Store 70% year on year order growth in March 2015 ~40% member growth in the 12 months to March 2015 33k members signed up to program 100 courses in program On track to be profitable in the first year of operations 150#151QANTAS INTERNATIONAL Scorecard Strategic priorities are being delivered PROGRESS TO DATE OPERATIONAL EXCELLENCE WORLD RENOWNED CUSTOMER EXPERIENCE FLYING DIRECT TO INTERNATIONAL DESTINATIONS OUR PARTNERS PROVIDE CONNECTIONS TO THE WORLD OUR PEOPLE AND CULTURE Qantas International Transformation on track to deliver >$800m in benefits by FY17 Non-fuel unit cost improved by 15%¹ since FY12 Aircraft utilisation increase of 5% in FY15 ²- further growth in FY16 PROS implementation to deliver new 'O&D'³ opportunities Deeply embedded culture of safety Year on year improvement in NPS New economy meal, investment in lounge footprint (SIN, HKG, LAX)4, new A330 business suite investment on Asian routes Service and culture training across all customer touchpoints Japan network enhancement, right size PER/SIN5 operations Optimise increased flying to North America, seasonal flying during peaks (e.g. ski seasons and Chinese New Year) Expanded partnerships with American Airlines, WestJet, Bangkok Airways, China Eastern and China Airlines MAKE THE DIFFERENCE Effective communication and engagement through major business transformation 1. Non fuel unit cost calculated as Underlying EBIT less total revenue and fuel, adjusted for changes in foreign exchange rates per ASK 2.Based on average block hours per aircraft. FY15 forecast versus FY14. 3. Origin and Destination. 4. Singapore, Hong Kong and Los Angeles. 5. Perth/Singapore. 151#152Disclaimer & ASIC Guidance This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). Summary information This Presentation contains summary information about Qantas and its subsidiaries (Qantas Group) and their activities current as at 12 May 2015. The information in this Presentation does not purport to be complete. It should be read in conjunction with the Qantas Group's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. Not financial product advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Qantas shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Qantas is not licensed to provide financial product advice in respect of Qantas shares. Cooling off rights do not apply to the acquisition of Qantas shares. Financial data All dollar values are in Australian dollars (A$) and financial data is presented within the six months ended 31 December 2014 unless otherwise stated. Future performance Forward looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. An investment in Qantas shares is subject to investment and other known and unknown risks, some of which are beyond the control of the Qantas Group, including possible delays in repayment and loss of income and principal invested. Qantas does not guarantee any particular rate of return or the performance of the Qantas Group nor does it guarantee the repayment of capital from Qantas or any particular tax treatment. Persons should have regard to the risks outlined in this Presentation. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation. To the maximum extent permitted by law, none of Qantas, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this Presentation. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this Presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Not an offer This Presentation is not, and should not be considered, an offer or an invitation to acquire Qantas shares or any other financial products. ASIC GUIDANCE In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Qantas is required to make a clear statement about whether information disclosed in documents other than the financial report has been audited or reviewed in accordance with Australian Auditing Standards. In line with previous years, this Presentation is unaudited. 152