The Qantas Group consists of four operating segments, which work together as an integrated portfolio:

• Qantas Domestic is the largest carrier in the Australian domestic market measured by capacity. Qantas Domestic has a growing margin advantage over competitors, with a brand, network and product offering targeted at business and premium leisure customers who value the full-service experience. Qantas Domestic continues to invest in customer experience, with on-board Wi-Fi and upgrades to the Domestic lounges. Along with Jetstar Domestic, the Group’s dual brand strategy continues to deliver leading margins in the Australian domestic market.
• Qantas International is the largest carrier into and out of Australia, also targeting business and premium leisure customers who value the full-service experience. With significant transformation achieved to date, Qantas International is leveraging a reshaped cost base and network as well as premier airline partnerships for growth. Along with being a founding member of the oneworld alliance for airlines, cornerstone joint ventures have been formed with Emirates, American Airlines, and China Eastern. Fleet changes, with the introduction of the first 787-9’s in 2018 and evaluation of ultra-long range aircraft for future years, will enable new network opportunities and cost efficiencies. As of 1H18, Qantas International included the Qantas Freight business.
• Jetstar Group has its primary operations in Australia, delivering low fares and a differentiated product offering to the price-sensitive market. At the same time as Jetstar continues to expand on domestic and international routes in Australia, joint ventures in Singapore and Japan are building a pan-Asian network and brand presence.
• Qantas Loyalty is comprised of Australia's leading consumer and SME coalition loyalty programs - Qantas Frequent Flyer and Qantas Business Rewards. Qantas Loyalty continues to expand and diversify its portfolio by developing new revenue streams in health insurance through Qantas Insurance, in credit cards with the launch of the Qantas Premier credit cards, in online retailing, prepaid cash services, data analytics, employee recognition and reward schemes, and other communities that support the core coalition loyalty programs. Qantas Loyalty provides a stable, cash growth vehicle for the Group's earnings profile.

For more information about the performance of the Qantas Group’s operating segments please see the financial results materials in the Results Centre .

Our strategy is to build the Qantas Group’s competitive advantages and create long-term shareholder value by maximising the strength of our integrated portfolio of businesses and brands.

The breadth of the Group model – with Qantas, Jetstar and Qantas Loyalty – allows us to serve the widest range of customers, gives us greater resilience to external volatility, and enables us to pursue growth opportunities in a range of markets. Our dual brand strategy in domestic Australia is designed to segment and grow the market, maximising Group outcomes.

While we continue to focus on growing earnings from our core domestic and international operations, the Group is also pursuing growth through our investments in Jetstar-branded airlines in Asia and by leveraging our deep customer insights and brand strength for disruptive growth at Qantas Loyalty.

We are focused on driving a permanent shift in our cost base and competitive position across the Group through transformation.

The three-year Qantas Transformation program, launched in December 2013, accelerated our existing change agenda. Our goal was not just to navigate tough short-term conditions, but to permanently increase Qantas’ productivity and competitiveness and embed a culture of transformation across the business. The Transformation program delivered $3 billion of benefits across Financial Year 2015 to Financial Year 2019.

Qantas’ 100th year has turned out to be the most challenging in its history. In response to the COVID-19 crisis and its impact on global aviation, we have developed a three year plan to guide the Qantas Group through the COVID-19 crisis and create a stronger platform for future profitability, long-term shareholder value and to preserve as many jobs as possible.

The Recovery plan, announced in June 2020, is focused on three immediate actions:

• Recapitalise through a $1.4 billion equity raising to strengthen our financial resilience.
• Right size our workforce, fleet and other costs according to demand projections, with the ability to scale up as flying returns.
• Restructure to deliver ongoing cost savings and efficiencies across our operations.

The plan targets benefits of $15 billion over three years, in line with reduced flying activity including fuel consumption savings, and delivering $1 billion per annum in ongoing cost savings from FY23 through productivity improvements across the Group.

Ultimately, the three-year recovery plan will create a stronger platform for future profitability, generate long-term shareholder value and preserve as many jobs as possible in the long-term. The recovery plan will ensure the Qantas Group is well-positioned to capitalise on new opportunities and continue its role as the national carrier in supporting tourism, connecting regional communities and safely flying millions of people every year.

The Group’s long-term target is to deliver Return on Invested Capital (ROIC) greater than our cost of capital through the cycle. To ensure this, we target average ROIC through the cycle of greater than 10 per cent.

Safety is always our first priority Image

The Qantas Group has a clear financial framework that guides our thinking on shareholder value creation, our optimal capital structure, and capital allocation.

The three pillars of the financial framework are supported by measureable targets, aligned with those of our shareholders. Our overarching objective is maintainable earnings per share growth over the cycle, to deliver total shareholder returns (TSR) in the top quartile of the ASX100 and a peer group of global listed airlines.

By maintaining an optimal capital structure, consistent with investment grade-level leverage metrics, we seek to continually minimise Qantas’ cost of capital. Delivering ROIC above our cost of capital (WACC) will ensure we can continue to reinvest in our business for sustainable returns.

And by growing the Group’s invested capital over time, and returning surplus capital to shareholders, we will continue to create long-term value for our shareholders.

Maintaining an Optimal Capital Structure, ROIC to WACC through the Cycle and Disciplined allocation of Capital equals Maintanable EPS Growth over the cycle equals TSR in the top Quartile