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

• Qantas Domestic is the largest carrier in the Australian domestic market, with over 40 per cent share 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 rollout underway, along with upgrades to the Domestic lounges at Brisbane and Melbourne.  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 or airlines, cornerstone joint ventures have been formed with Emirates, American Airlines (subject to regulatory approval), and China Eastern. Fleet changes, with the introduction of the first 787-9’s in 2018 and evaluation of ultra-long range aircraft for 2022, 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 and New Zealand, 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 and New Zealand, joint ventures in the fast-growing Asian markets of Singapore, Japan and Vietnam 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 Assure, in credit cards with the launch of the Qantas Premier credit card, 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.

As at 30 June 2017 $2.13 billion of benefits have been realised. Transformation has been the driving force behind our financial turnaround – and it’s the key to our future success and growth.

Whilst the turnaround program is now complete, transformation is ongoing. Our ongoing transformation target is to deliver gross benefits of $400 million per year from Financial Year 2018 to 2020.

In Financial Year 2018 we achieved $463 million of Transformation benefits, and in Financial Year 2019 we are targeting gross benefits of at least $400 million from a combination of initiatives in the areas of technology, supplier, utilisation, continuous improvements, indirect costs and other Group initiatives.

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

For more information on the Qantas Group strategy, please see the 2017 Investor Day presentation and video of the webcast FY15 Operating Segment EBIT Image .Opens in new window

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. Please see the 2018 Annual Report for further information on Qantas' TSR benchmark airline group.

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