Qantas Airways Limited (QAN)



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General Information
Company Name: Qantas Airways Limited
Stock Code: QAN
Website: www.qantas.com
GICS Sub-Industry: Airlines
Market Cap ($M): 5,095
Equiv. Shares (M): 2,196

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 2.320 $ 2.320 $ 2.330 $ 2.290 $ 2.250 22,255,824 $ 0.070  3.111 %

Current Broker Consensus Recommendation more
Recommendation: Hold (2.5)
Recommendation Date: 18th Dec 2014
Brokers Surveyed: 2

Company Overview

Business Description:
Qantas Airways Limited (QAN) main business is the transportation of passengers using two complementary airline brands - Qantas and Jetstar. QAN also operates other airlines, and businesses in specialist markets such as Q Catering.

Strategy Analysis:
QAN's core strategy is to profitably grow its two flying brands, Qantas and low-cost Jetstar. Qantas will seek to strengthen its leading positions in premium markets. Jetstar will expand locally and into international leisure markets. QAN also has Freight and Frequent Flyer businesses. The longer term strategy for QAN is to restructure its international business in an attempt to eliminate mounting losses. The strategy laid out by the company is to reduce the capital intensity of the business by forging partnerships with carriers in certain sectors that are uneconomical. The proposed code sharing arrangement with British Airways on the European sector is one such example. The expansion of Jetstar in Asia will continue as that has been a big success story. Plans to introduce a premium service in Asia and l a new service in Japan are intriguing. QAN is also looking to take significant cost out of this business. Qantas Airways reported NPAT of $111m for the half-year ended 31 December 2012. Revenues from ordinary activities were $8.24bn, up 2.4% from the same period last year. Qantas Loyalty delivered continued growth in members and member engagement. Jetstar further improved its industry leading ancillary revenues per passenger, on top of 12% growth in passenger numbers. Diluted EPS was 4.9 cents compared to 1.9 cents last year. Net operating cash flow was $780m compared to $823m last year. No dividend was declared.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2016  F 489.1 21.8 45.4 10.3 0.0 0.0 0.0
2015  F 336.4 15.0 -166.4 15.0 0.0 0.0 0.0
2014  A -512.0 -22.6 -514.6 -5.5 0.0 0.0 0.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F
Qantas Airways (QAN) $4,942 M 1.2622 -0.4461 1.1840 10.1488 18.3225 8.3893 0.00 NaN 1.11

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
QAN 1.93 13.3 1.78 1.31 0.33
Market 0.90 15.0 1.19 1.94 1.48
Sector 1.01 15.1 1.58 1.55 0.80

Directors
Name Position Start Date
Mr Alan Joseph Joyce Managing Director,Chief Executive Officer 28 July 2008
Mr Richard Leigh Clifford Non-Executive Chairman,Non-Executive Director 09 August 2007
Mr William Leo Meaney Non-Executive Director 15 February 2012
Ms Barbara Kay Ward Non-Executive Director 19 June 2008
Mr Garry Arthur Hounsell Non-Executive Director 01 January 2005
Mr Richard Roy Goodmanson Non-Executive Director 19 June 2008
Mr Paul Ashley Rayner Non-Executive Director 16 July 2008
Ms Jacqueline Cherie Hey Non-Executive Director 29 August 2013
Ms Maxine Nicole Brenner Non-Executive Director 29 August 2013

Management
Name Position
Jayne Hrdlicka Chief Executive Officer Jetstar Group
Simon Hickey Chief Executive Officer Qantas International
Lesley Grant Chief Executive Officer Qantas Loyalty
Gareth Evans Chief Financial Officer
Andrew Finch Company Secretary,General Counsel
Lyell Strambi Group Executive Qantas Airlines Domestic
Sarah Jane Udy Joint Company Secretary
John David Francis Morris Joint Company Secretary

Substantial Shareholders
Holding Name
259,184,530 (11.44%) Capital Group Companies Inc
225,886,843 (9.97%) Commonwealth Bank Group
112,201,803 (5.01%) National Australia Bank Limited
244,595,616 (10.91%) Franklin Resources, Inc and its affiliates

Calendar of Events
Date Event
03 September 2015 Report (Annual)
27 August 2015 Report (Prelim)
26 February 2015 Report (Interim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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