1.
ACCOUNTING
ANNOUNCEMENT
ASSIGNMENT
Qantas
Airways
(QAN),
Virgin
Blue
(VBN)
and
Skywest
(SXR)
Laura
Fernandez
(13179100)
and
Stian
Larsen
(13163941)
Submission
Date:
22/07/11
Word
Count:
2026
Subject
Code:
ACCT11-­‐100
Lecture
Times:
(Wednesday
8-­‐10
and
Thursday
2-­‐4)
Lecturer:
Tamara
Zunker
1

2. CONTENTS
1.0
Executive
Summary
.........................................................................................................................................................
3
2.0
Objectives
........................................................................................................................................................................
3
3.0
The
Aviation
Industry
and
Qantas
Airways
......................................................................................................................
4
3.1
The
Aviation
Industry
..................................................................................................................................................
4
3.2
Qantas
Airways
............................................................................................................................................................
4
3.3
Competitors
.................................................................................................................................................................
4
4.0
Qantas
Airways
Profit
Announcement
............................................................................................................................
5
4.1
Expected
Impact
..........................................................................................................................................................
5
5.0
Stock
Market
Results
.......................................................................................................................................................
5
6.0
Returns
and
Residuals
.....................................................................................................................................................
6
6.1
Cumulative
Residuals
....................................................................................................................................................
6
7.0
Analysis
............................................................................................................................................................................
7
7.1
Qantas
Airways
(QAN)
.................................................................................................................................................
7
7.2
Qantas
Airways
Ratio
Analysis
.....................................................................................................................................
8
7.3
Virgin
Blue
Airline
(VBN)
..............................................................................................................................................
8
7.4
Skywest
Airways
(SXR)
.................................................................................................................................................
8
8.0
Conclusion
.......................................................................................................................................................................
9
9.0
Appendices
.......................................................................................................................................................................
i
9.1
Announcement:
“Qantas
Announces
Profit
Result
–
Half
year
ended
31
December
2010”
........................................
i
9.2
“Qantas
Profit
Soars
But
Misses
Mark”
.......................................................................................................................
ii
9.3
“Virgin
Blue
and
Skywest”
..........................................................................................................................................
iii
9.4
“International
Passengers
By
Major
Airlines”
............................................................................................................
iv
9.5
Qantas
Airways
Data
Calculation
.................................................................................................................................
v
9.6
Virgin
Blue
Airways
Data
Calculation
..........................................................................................................................
vi
9.7
Skywest
Airways
Data
Calculation
.............................................................................................................................
vii
10.0
References
...................................................................................................................................................................
viii
2

3. 1.0
Executive
Summary
The
following
business
report
has
been
created
to
identify
the
impact
of
profit
announcements
on
a
particular
company
and
its
share
prices.
This
report
focuses
on
Australia’s
leading
airline,
Qantas
Airlines
(QAN),
as
listed
on
the
ASX.
An
analysis
of
the
relationship
between
Qantas’
residuals,
cumulative
residuals
and
share
prices
is
included,
as
well
as
a
comparison
between
Qantas
and
two
of
its
main
Australian
competitors,
Virgin
Blue
Airways
(VBN)
and
Skywest
Airlines
(SXR).
The
profit
announcement
can
be
found
in
the
appendices
(Appendix
5).
Calculations
and
graphs
are
used
to
analyse
the
change
in
the
share
prices
due
to
the
company’s
profit
announcement.
The
airlines’
financial
positions
are
discussed
and
the
results
of
this
report
indicate
that
the
profit
announcement
reflected
a
decrease
in
Qantas
Airways’
share
price
overall.
Through
analysis
of
the
graph
and
prior
media
coverage,
it
is
evident
that
Qantas’
cumulative
residuals
increased
the
day
before
the
announcement,
as
it
was
predicted
that
the
profit
announcement
would
be
positive.
A
large
decrease
followed,
despite
the
positive
results
of
earnings
about
the
expected
level
and
a
more
than
four-­‐fold
profit.
This
may
be
due
to
rising
fuel
prices
and
their
inability
to
pay
dividends.
However,
the
debt-­‐to-­‐equity
ratio,
return-­‐on-­‐equity
ratio,
current
ratio
and
total-­‐asset-­‐turnover
ratio
all
indicate
that
Qantas
has
improved
its
ability
to
finance
its
assets
through
equity
rather
debt,
generate
increasing
returns
from
shareholders’
investments,
generate
more
current
assets
to
cover
short
term
liabilities
and
increase
its
sales
revenue
faster
than
its
total
assets.
The
competitors
share
prices
varied
throughout
the
analysed
period,
with
Virgin
Blue
showing
similar
results
and
fluctuations
to
Qantas.
This
is
most
likely
because
they
are
more
similar
in
size,
target
market
and
location,
whereas
Skywest
Airways’
cumulative
residuals
were
negative
for
the
duration
of
the
period.
2.0
Objectives
• To
present
the
effects
of
releasing
accounting
information
pertaining
to
profits
on
the
valuation,
financial
position
and
share
prices
of
the
company.
• To
evaluate
the
correlation
between
the
casual
relationship
of
the
investors
and
the
disclosure
of
accounting
information
in
the
market.
• To
identify
the
effect
of
the
use
of
residuals
to
control
the
market
variables.
• To
analyse
the
factors
behind
the
financial
aspects
of
a
company.
The
objectives
within
this
report
will
apply
to
the
aviation
industry,
with
a
focus
on
analysing
Qantas’
current
financial
performance
in
contrast
with
its
competitors,
Virgin
Blue
and
Skywest.
3

4. 3.0
The
Aviation
Industry
and
Qantas
Airways
3.1
Industry
The
aviation
industry
is
one
of
the
largest
and
fastest
growing
industries
in
the
world,
increasing
at
“an
average
annual
rate
of
10%
between
1947
(19
billion
Revenue-­‐Passenger-­‐Kilometres)
and
2000
(3038
billion
RPKs)”
(Wiley,
2005,
p.
1).
With
over
890
air
carriers
listed
in
the
Official
Airlines
Guide,
an
increasing
consumer
demand
for
air
travel
and
an
escalation
in
the
ability
for
travellers
to
attain
affordable
tickets,
it
is
no
surprise
that
the
number
of
flights
scheduled
in
May
2011
has
increased
by
4.2%
globally
(OAG
Aviation,
2011),
and
simultaneously,
“industry
revenues
grew
from
US$1.05
billion
to
US$328.5
billion”
(Wiley,
2005,
p.1).
Low
cost
airlines
are
growing,
and
account
for
a
market
share
of
16%
in
2010.
The
amount
of
global
passengers
will
increase
to
more
than
nine
million
by
2025,
putting
pressure
on
the
industry
with
higher
demands
to
security,
price
and
service.
3.2
Qantas
Airways
With
over
87
years
in
service,
Qantas
is
the
longest
operating
airline
in
the
world,
being
the
first
airline
to
introduce
business
class
in
1979.
For
almost
a
decade
Qantas
has
been
voted
in
the
top
airlines
category
by
Skytrax,
and
is
the
safest
airline
in
Australia.
Qantas
is
the
only
airline
within
Australia
with
flights
to
every
capital
city,
with
over
160
destinations
and
approximately
6,000
flights
per
week
(ASX,
2011),
making
them
the
largest
airline
in
Australia.
The
Qantas
fleet
consists
of
140
airplanes,
with
27
new
planes
awaited
in
2013.
In
July
2011,
Qantas
and
its
subsidiaries
operated
a
total
of
279
aircrafts,
giving
them
a
market
share
of
65%
domestically
and
18.7%
internationally
(Qantas
Annual
Review,
2010).
Since
its
inclusion
on
the
Australian
Stock
Exchange
on
31
July
1995,
Qantas
has
reported
increasing
profits
each
year.
Qantas’
annual
net
profits
“had
grown
from
A$180
million
to
A$684
million”
with
an
increase
in
its
activity
by
62%
and
its
revenues
by
59%
between
1995
and
2004
(Wiley,
2005,
p.10).
3.3
Competitors
Virgin
Blue
and
Skywest
make
up
1.22%
and
0.18%
of
the
market
sector
respectively
(Investsmart,
2011.)
Virgin
Blue
is
part
of
the
Virgin
Group,
however
it
is
a
fairly
newly
established
company
(2000),
whereas
Skywest
began
operations
in
1963.
Virgin
Blue,
like
Qantas,
services
both
international
and
domestic
destinations.
In
contrast,
Skywest
is
renowned
for
its
position
as
Western
Australia’s
premier
regional
airline.
Skywest
was
previously
part
of
Ansett,
a
company
which
whose
carrier
fleet
was
bought
out
by
Virgin
and
Qantas
after
their
(Ansett’s)
eventually
insolvency.
4

5. 4.0
Qantas
Airways
Profit
Announcement
Qantas’
half-­‐year
profit
announcement
was
released
on
17
February
2011,
in
the
form
of
a
media
release
and
in
the
newspaper
“Sunshine
Coast
Daily”
(See
appendix
1).
It
declared
a
“profit
before
tax
of
$417
million
(up
56%
on
prior
corresponding
period)”
(Qantas
Group,
2011,
p.
1),
forecasting
growth
in
its
domestic
and
international
capacities.
4.1
Expected
Impact
It
is
expected
that
the
share
prices
of
Qantas
will
decrease
due
to
changes
in
fuel
prices,
foreign
exchange
rates
and
general
trading
conditions.
Despite
the
company
showing
a
steep
increase
in
profit
before
the
release
of
the
announcement,
the
share
prices
are
likely
to
decrease
due
to
the
impact
of
Qantas’
dividend
freeze,
which
shows
shareholders
that
Qantas’
shares
may
become
volatile.
The
dividend
freeze,
however,
may
improve
its
situation,
therefore
bringing
share
prices
back
to
a
relatively
steady
figure
again.
This
can
be
supported
by
the
stabilised
conditions
after
the
resolution
of
issues
with
the
Rolls-­‐Royce
engine
failures
and
Queensland
floods.
Qantas’
announcement
of
a
more
than
four-­‐fold
profit
(Qantas,
2011)
is
likely
to
negatively
impact
its
competitors,
Skywest
and
Virgin
Blue,
due
to
the
high
competitiveness
of
the
industry
in
which
substitutes
are
readily
available.
5.0
Stock
Market
Results
All
Ordinaries
Index
5050
5000
4950
4900
4850
4800
4750
Figure
1:
All
Ordinaries
Index
The
All
Ordinaries
Index
(AOI)
represents
the
closing
prices
of
Australia’s
500
biggest
companies
listed
on
the
ASX.
The
th
AOI
is
a
good
indicator
of
the
stock
market
result.
On
the
17
of
February
(the
day
of
Qantas’
profit
announcement),
the
AOI
is
at
its
peak,
before
experiencing
a
general
trend
of
decline.
5

6. 6.0
Returns
and
Residuals
This
report
displays
the
variations
in
share
prices
and
accompanying
returns
for
the
period
pertaining
to
the
three
weeks
before
and
after
the
profit
announcement.
A
calculation
of
returns
and
residuals
was
necessary
in
order
to
illustrate
the
effects
of
the
release
of
financial
accounting
information
on
the
valuation
of
the
company.
This
is
shown
through
the
effect
of
changing
share
prices
as
a
result
of
the
announcement.
The
residuals
are
a
reflection
of
the
daily
operations
of
a
company,
and
reflect
the
general
performance
of
company
share
prices
in
relation
to
the
stock
market.
Qantas
and
Virgin
have
minimal
residual
fluctuation
for
the
period,
whereas
SkyWest’s
residuals
decrease
to
-­‐12.70%
on
February
22.
This
may
be
due
to
an
estimated
negative
profit
rd
announcement,
the
day
before
its
release.
The
increase
on
the
23
may
be
due
to
the
Virgin-­‐Skywest
alliance.
Qantas
had
the
most
regular
residual
fluctuation
throughout
the
six-­‐week
period,
due
to
its
solid
market
establishment.
Returns
are
a
measurement
of
performance,
calculated
as
the
changes
in
daily
share
price
compared
to
the
previous
day.
Qantas
and
Virgin
had
a
stable
trend
on
their
returns,
with
minimal
fluctuations.
SkyWest
had
high
fluctuations
between
4%
and
-­‐12%.
The
sharp
decrease
on
February
22
may
be
associated
with
the
suspension
of
Rio
Tinto’s
mining
operations
in
Western
Australia
due
to
Cyclone
Carlos.
The
location
of
Skywest’s
operations
is
linked
to
the
resource
industry,
with
some
of
its
major
clients
being
the
mining
operators.
The
rapid
increase
in
share
prices
on
the
February
23
may
be
attributed
to
Skywest’s
positive
profit
announcement,
which
was
released
on
that
day.
Company
Returns
10.00%
5.00%
Daoly
returns
0.00%
Qantas
Virgin
Blue
-­‐5.00%
Skywest
-­‐10.00%
-­‐15.00%
Date
Figure
2:
Company
Returns
6.1
Cumulative
Residuals
The
cumulative
residual
is
the
daily
percentage
change
in
Qantas
share
prices
compared
to
the
AOI
change,
as
listed
in
the
ASX.
It
is
evident
that
the
changes
in
share
prices
are
a
direct
consequence
of
the
company’s
announcement,
as
the
information
contained
in
the
announcement
explains
profits
earned
and
losses
incurred.
The
effect
of
other
factors
in
the
valuation
of
the
company
can
be
understood
through
a
calculation
of
the
cumulative
residual
of
the
share
prices
and
share
price
index.
The
ASX
figures
peaked
at
the
same
rate
as
the
Qantas
cumulative
residuals,
indicating
the
similarity
between
Qantas
and
the
market
overall.
6

7. 7.0
Analysis
Cumulative
Residual
0.15
0.1
0.05
Cumulative
Residual
0
Qantas
-­‐0.05
Virgin
Blue
-­‐0.1
Skywest
-­‐0.15
-­‐0.2
-­‐0.25
Date
Figure
3:
Cumulative
Residuals
7.1
Qantas
Airways
(QAN)
Qantas
announced
a
four-­‐fold
profit
in
the
profit
announcement
released
on
17
February
2011.
Figure
3
is
derived
from
the
market
prices
of
the
company
(see
appendix
5)
As
figure
3
shows,
there
is
a
lot
of
fluctuation
in
the
three
weeks
prior
to
and
post
the
announcement,
however
there
is
th nd
a
sharp
increase
from
-­‐0.02
on
the
16
of
February
2011
to
0.04
on
the
22
February
2011
and
a
consequent
sharp
th
decrease
to
-­‐0.02
on
24
February
2011.
th
Just
before
the
profit
announcement
was
made,
(16
February
2011),
an
article
was
published,
stating
that
Qantas
had
an
expected
profit
increase.
This
explains
the
major
increase
in
the
share
prices
of
Qantas
before
the
announcement.
The
massive
increase
of
the
announcement
may
also
be
attributed
to
the
domestic
Australian
market’s
strong
post-­‐GFC
growth,
as
well
as
Qantas’
announcement
of
the
lease
of
11
new
airlines
(Herald
Sun,
2011).
th
Despite
Qantas
being
profitable
in
the
second
half
of
2010,
on
the
18
of
February
2011,
“Qantas
shares
fell
sharply…after
the
airline
posted
a
72%
fall
in
first-­‐half
net
profit,
did
not
pay
a
dividend
and
warned
of
further
volatility
in
the
aviation
industry”
(The
Australian,
2011,
p.1)
Figure
3
shows
the
Qantas
share
price
falling
by
as
much
as
7%,
which
can
also
be
explained
by
the
increased
fuel
prices
and
exchange
rates.
In
denying
a
payment
of
a
dividend,
Qantas
indicates
that
it
is
lacking
in
liquid
assets.
Fluctuations
are
shown
after
the
major
decrease.
7

8. 7.1
Qantas
Airways
Ratio
Analysis
The
debt-­‐to-­‐equity
ratio
shows
whether
assets
are
financed
mostly
by
debt
or
equity.
The
debt-­‐to-­‐equity
ratios
are
calculated
in
the
December
2009
to
December
2010
reporting
period.
They
show
a
positive
result
with
a
decrease
in
reliance
on
debts
from
2.45
to
2.33.
This
is
a
decrease
of
5.1
%.
This
shows
that
the
assets
of
Qantas
are
increasingly
being
financed
by
equity
rather
than
debts.
The
return-­‐on-­‐equity
ratio
indicates
how
much
return
the
company
is
generating
from
the
historical
accumulated
shareholder’s
investment.
The
analysed
period
shows
an
increase
from
0.01
in
December
2009
to
0.04
in
December
2010.
This
is
an
increase
of
16.69%.
The
current
(working
capital)
ratio
indicates
whether
the
company
has
enough
short-­‐term
assets
to
cover
its
short-­‐term
debts,
and
shows
an
increase
of
1.41%
from
0.89
in
December
2009
to
0.90
in
December
2010.
The
total-­‐asset-­‐turnover
ratio
shows
how
much
of
Qantas’
sales
volume
is
associated
with
a
dollar
of
its
assets.
In
December
2009,
the
total
asset
turnover
ratio
was
0.35,
increasing
by
8.33%
to
0.38
in
December
2010.
The
turnover
ratio
increased
because
Qantas’
sales
revenue
increased
faster
than
its
total
assets
did
in
this
period.
Ie.
Qantas
got
more
sales
out
of
each
dollar
of
its
assets.
7.3
Virgin
Blue
Airline
(VBN)
As
a
recently
established
company
with
a
relatively
small
portion
of
the
market
share
(1.22%),
Virgin
Blue
has
done
well
to
become
the
prime
competitor
to
Qantas
in
Australia.
Virgin
Blue
is
not
listed
on
the
Australian
Government’s
chart
of
2010’s
major
airlines
depicted
in
Appendix
4.
Figure
2
shows
the
cumulative
residuals
of
share
prices
for
Virgin
Blue,
accessed
from
the
company
and
market
share.
In
the
three
weeks
prior
to
Qantas’
profit
announcement,
a
relatively
steady
decrease
occurred
(from
0.11
to
0.
02)
with
minimal
fluctuation.
The
decrease
in
cumulative
residuals
may
be
explained
by
“Air
New
Zealand
(who)
has
continued
its
buy
up
of
shares
in
Virgin
Blue,
lifting
its
stake
through
off-­‐market
purchases
to
14.9%
of
Australia’s
No
2
airline”
(The
Age,
2011,
p.
1).
A
relatively
constant
period
remained
after
the
announcement,
until
February
22,
2011,
where
the
share
price
decreased
rapidly.
The
steady
decrease
from
0.06
to
-­‐0.07
occurred
in
just
over
a
week
(at
the
same
rate
and
in
the
same
period
as
Qantas).
This
could
be
due
to
the
conditions
affecting
the
major
players
in
the
Australian
aviation
industry,
such
as
rising
“fuel
prices,
foreign
exchange
rates,
general
trading
conditions
and
the
impact
of
significant
weather
events”
(Qantas,
2011,
p.1).
It
is
evident
that
the
release
of
the
Qantas
profit
announcement
had
a
significant
impact
on
the
share
prices
of
Virgin
Blue
Airways,
as
shown
in
Figure
2.
8

9. 7.4
Skywest
Airways
(SXR)
Skywest
is
Western
Australia’s
largest
regional
carrier
however
it
is
not
listed
in
the
Australian
Government’s
listing
of
th
top
airlines
(see
appendix
3).
From
the
beginning
of
the
period
(27
January
2011)
to
the
17
of
February,
there
are
small
fluctuations
in
the
cumulative
residuals,
with
peaks
at
-­‐0.08
and
troughs
at
-­‐0.16.
Figure
3
is
derived
from
the
company
and
market
share
of
the
company
(see
appendix
7).
In
this
six-­‐week
period,
it
is
evident
that
there
is
a
relationship
between
the
Qantas
profit
announcement
and
the
share
prices
and
residuals
of
Skywest.
On
the
day
of
the
announcement,
the
share
price
for
Skywest
was
-­‐0.15,
however
there
th
was
a
general
decreasing
trend
until
the
18
February
2011
where
the
cumulative
residuals
reached
a
trough
of
-­‐0.19.
They
then
showed
a
general
decreasing
trend
until
the
end
of
the
period.
Figure
3
shows
that
the
cumulative
residuals
never
exceeded
‘0’,
indicating
that
despite
the
rapidly
rising
share
prices,
Skywest’s
market
share
was
always
considerably
lower
than
their
larger
competitor,
Qantas.
The
noticeable
increase
in
share
prices
may
be
due
to
the
alliance
formed
between
the
Virgin
Blue
Group
and
Skywest
airlines,
which
enabled
code
sharing
and
Skywest’s
operation
of
several
Virgin
Blue
aircraft
(see
appendix
4).
8.0
Conclusion
The
financial
performance
of
a
company
can
be
assessed
through
the
analysis
of
a
company’s
financial
statements,
its
profitability,
activity
and
liquidity.
In
order
to
make
an
accurate
assessment,
it
is
necessary
to
make
comparisons
between
the
company
being
studied,
other
competitors
in
the
industry
and
the
overall
market
occurrences.
The
above
business
report
outlines
Qantas’
financial
position,
as
well
as
that
of
its
competitors;
Virgin
Blue
and
Skywest.
Based
on
recent
market
activity,
it
is
reasonable
to
assume
that
while
the
aviation
industry
would
be
a
profitable
share
investment,
it
is
subject
to
many
external
factors,
as
previously
discussed.
The
AOI
showed
fluctuations
within
the
six-­‐week
period,
and
overall,
the
Qantas
share
prices
showed
regular
fluctuations
and
a
large
and
sudden
increase
and
decrease
around
the
release
of
the
profit
announcement.
Qantas’
profit
announcement
is
for
the
half
year
ended
December
2010,
and
indicates
that
the
release
of
the
profit
announcement
impacts
its
share
prices.
It
is
a
much
more
established
company
compared
to
its
competitors,
with
a
larger
market
share,
being
Australia’s
number
one
airline.
The
ratios
analysed
indicate
that
over
the
year,
Qantas
improved
its
profitability,
retention
of
sales,
and
debt
figures
however
they
did
not
pay
out
dividends
in
the
six-­‐week
period
and
share
prices
decreased
overall.
Qantas’
reputation
and
positive
future
prospects
combined
with
its
announced
new
fleet
of
aircraft
confirm
that
investment
in
Qantas
shares
would
be
beneficial
overall.
9

10. 9.0
Appendix
1
8.1
Announcement:
“Qantas
Announces
Profit
Result
–
Half-­‐year
Ended
31
December
2010”
QANTAS ANNOUNCES PROFIT RESULT–HALF-YEAR ENDED 31 DECEMBER 2010
SOLID RECOVERY FROM GFC AND OTHER EVENTS, STRONG
GROWTH ACROSS ALL OPERATING SEGMENTS
HIGHLIGHTS:
 Underlying Profit Before Tax1 of $417 million – up 56 per cent on prior corresponding period
 Revenue of $7.6 billion – up 10 per cent on prior corresponding period
 Operating cash flow of $743 million – up 54 per cent on prior corresponding period
 Cash balance of $3.3 billion
SYDNEY,
17
February
2011:
Qantas
today
announced
an
Underlying
Profit
Before
Tax
(Underlying
PBT)
of
$417
million
for
the
half-­‐year
ended
31
December
2010.
The
Underlying
PBT
result
was
materially
stronger
than
for
the
half-­‐year
ended
31
December
2009.
Qantas
Chief
Executive
Officer,
Mr
Alan
Joyce,
said
the
result
built
on
the
Qantas
Group’s
FY10
performance
and
showed
it
had
emerged
from
the
Global
Financial
Crisis
in
a
solid
position.
“The
Qantas
Group
has
delivered
a
strong
result
and
is,
again,
one
of
the
few
airlines
to
remain
consistently
profitable
and
continue
to
hold
an
investment
grade
credit
rating,”
Mr
Joyce
said.
”With
half-­‐year
underlying
profit
up
more
than
56
per
cent
year-­‐on-­‐year,
all
parts
of
the
Group
performed
well,
with
Jetstar
and
Qantas
Frequent
Flyer
delivering
record
half-­‐year
profits
and
Qantas
Airlines’
performance
significantly
improving.
“Qantas
and
Jetstar
are
now
the
two
most
profitable
domestic
airlines
in
Australia,
demonstrating
the
strength
of
our
two
brand
strategy
and
capacity
to
service
and
grow
both
the
business
and
leisure
sectors.
“The
Group’s
response
to
events
that
included
the
A380
Rolls-­‐Royce
engine
failure,
and
subsequent
temporary
grounding
of
the
Qantas
A380
fleet
in
November,
also
showed
us
to
be
flexible,
adaptable
and
resilient.”
Mr
Joyce
said
the
Group
was
well
positioned
to
capitalise
on
the
improving
global
aviation
environment
and
opportunities
in
both
the
premium
and
leisure
sectors.
“Domestic
business
travel
continues
to
recover
and
Qantas’
yield
premium
has
been
restored
to
pre-­‐
financial
crisis
levels,”
he
said.
“While
domestic
leisure
market
conditions
continue
to
be
highly
competitive,
Jetstar
remains
well
placed
as
the
low
fare
leader.
“While
demand
on
key
international
routes
continues
to
improve,
the
international
environment
remains
challenging.
We
remain
committed
to
improving
the
performance
of
Qantas’
international
business.”
10
i

11.
“In
Asia,
to
which
Australia’s
future
is
clearly
tied,
the
Group
is
looking
for
growth
opportunities
via
Jetstar’s
aggressive
pan-­‐Asian
growth
as
well
as
options
for
Qantas
to
capitalise
on
the
growing
demand
for
premium
travel
in
the
region.
A380
Rolls-­‐Royce
Engine
Incident
and
Fleet
Grounding
Mr
Joyce
said
the
grounding
of
the
A380
fleet
in
November
was
a
setback
for
Qantas.
“Qantas’
response
to
this
unprecedented
event
was
swift
and
appropriate.
In
very
challenging
circumstances,
and
with
the
commitment
and
hard
work
of
our
people,
we
managed
to
maintain
98
per
cent
of
our
international
operations.
While
disruptions
were
minimised,
we
regret
any
inconvenience
customers
may
have
experienced
at
the
time,”
Mr
Joyce
said.
Qantas
has
estimated
the
full-­‐year
economic
impact
to
the
business
at
$80
million,
with
$55
million
in
the
first
half
and
$25
million
forecast
in
the
second
half.
The
figure
does
not
include
the
cost
of
repair
of
the
damaged
aircraft
and
engines,
estimated
to
be
at
least
$100
million,
which
are
all
covered
by
insurance
or
by
existing
contractual
arrangements
with
Rolls-­‐Royce.
Qantas
remains
in
discussions
with
Rolls-­‐Royce
in
relation
to
a
commercial
settlement
to
compensate
the
airline
for
the
economic
loss
incurred.
While
discussions
continue,
no
agreement
has
yet
been
reached.
Segment
Performance
Mr
Joyce
said
all
operating
segments
of
the
Qantas
Group
were
profitable
for
the
half-­‐year
ended
31
December
2010,
delivering
significant
EBIT
growth.
“Qantas
Airlines
produced
a
strong
revenue
performance
across
both
its
international
and
domestic
operations,
with
Underlying
EBIT
of
$165
million
up
175
per
cent
on
prior
year
first
half,”
Mr
Joyce
said.
“Qantas
remains
the
best
domestic
airline
for
the
business
market
in
terms
of
frequency,
product,
service,
large
wide
and
narrow
body
fleets,
industry-­‐leading
punctuality
and
an
unsurpassed
loyalty
program.
“Domestic
market
share
was
maintained,
as
was
yield
premium
in
the
corporate
market.
The
international
business
remains
challenging
but
with
demand
expected
to
strengthen
in
coming
months.
“QantasLink
also
delivered
a
strong
contribution
to
the
Qantas
Airlines
result
and
is
set
to
grow
with
the
addition
of
a
further
seven
new
Q400
aircraft,
the
first
of
which
has
just
entered
service.
The
regional
airline
operation
will
also
oversee
the
Group’s
move
into
the
Western
Australian
fly-­‐in-­‐fly-­‐out
resources
air
charter
market
through
the
purchase
of
Network
Aviation.
“Qantas’
three-­‐year
transformation
program,
QFuture,
continued
to
deliver
sustainable
margin
improvements
alongside
an
expanded
suite
of
full
service
customer
product
and
service
offerings.
The
program
delivered
$173
million
in
benefits
across
a
range
of
business
areas
in
the
half-­‐year
and
is
on
track
to
achieve
the
FY11
target
of
$500
million,
and
$1.5
billion
in
benefits
over
three
years.”
Mr
Joyce
said
Jetstar
delivered
another
record
profit
(Underlying
EBIT
of
$143
million,
up
18
per
cent)
and,
after
Qantas,
was
Australia’s
second
most
profitable
domestic
airline.
“Jetstar
continued
to
grow
and
maintain
its
low
fares
market
leadership
position
in
Australia
and
Asia
–
the
world’s
fastest
growing
aviation
market
–
and
grew
capacity
by
19
per
cent
across
its
operations
compared
to
1H10,”
he
said.
“Jetstar
has
been
profitable
every
year
since
its
launch
in
2004
and,
in
keeping
with
this
history,
continued
to
expand
its
international
and
domestic
networks,
attracting
significant
growth
in
passenger
numbers,
while
still
reducing
its
unit
costs.
“Jetstar
Asia
contributed
a
record
profit
(Underlying
EBIT
of
S$17
million)
to
Jetstar’s
result.
It
has
embedded
the
Jetstar
brand
in
Asia
across
a
range
of
key
markets
and,
as
the
largest
low
cost
carrier
operating
from
2

12.
Singapore,
achieved
capacity
growth
of
46
per
cent
compared
to
1H10.
The
airline
also
launched
A330
services
out
of
Singapore
during
the
half,
and
is
well
positioned
for
future
growth.
“Qantas
Frequent
Flyer
(Underlying
EBIT
of
$189
million)
once
again
delivered
a
record
result,
this
time
a
20
per
cent
improvement
on
the
comparable
half-­‐year.
“Program
membership
continued
to
grow
–
now
at
7.5
million,
up
12
per
cent
over
the
last
12
months.
It
also
added
new
partners,
including
Caltex,
as
part
of
the
Woolworths
Group
alliance,
and
OnePath
life
insurance,
and
launched
multiple
market
leading
credit
card
products.”
The
result
of
Qantas
Freight
(Underlying
EBIT
of
$41
million,
up
141
per
cent),
confirmed
the
strong
recovery
of
the
international
air
freight
market.
Investment
in
Fleet
and
Customer
Initiatives
Mr
Joyce
said
the
Group
remained
committed
to
cost
effective
investment
in
customer
product,
service,
innovation
and
fleet.
“Investment
–
$1
billion
in
the
half-­‐year
–
in
our
customer
offering
and
the
best,
modern,
next
generation
fuel
efficient
fleet
remain
integral
to
our
strategy
of
making
Qantas
the
best
premium
airline,
and
maintaining
Jetstar’s
position
as
the
low
fare
leader
in
Australia
and
across
Asia,”
he
said.
“Qantas’
international
transformation
continued,
with
the
arrival
of
more
A380s
and
the
commencement
later
this
year
of
the
fleet
reconfiguration
will
bring
the
B747
product
to
the
ultra-­‐premium
A380
standard
and
better
match
travel
class
options
to
demand.
“The
B787
also
remains
central
to
the
Group’s
international
strategy
and
our
multi-­‐billion
dollar
fleet
and
growth
plan,
and
the
first
aircraft
is
now
expected
at
the
end
of
2012.
“Another
key
development
has
been
the
successful
launch
of
Qantas’
faster,
smarter
Next
Generation
Check-­‐
in
offering
in
Perth,
Sydney,
and
Melbourne.”
Outlook
The
general
operating
environment
continues
to
improve.
Forward
bookings
indicate
yields
in
the
second
half
of
FY11
will
be
higher
than
the
same
period
in
FY10,
noting
that
the
first
half
is
typically
a
stronger
revenue
period
due
to
seasonal
factors.
The
Group
expects
to
increase
capacity
in
the
second
half
of
FY11
by
11
per
cent
compared
to
the
same
period
in
FY10,
while
maintaining
flexibility.
As
at
14
February
2011,
underlying
fuel
costs
for
the
second
half
of
FY11
are
estimated
to
increase
to
around
$2.0
billion
due
to
higher
forward
market
jet
fuel
prices
and
increased
flying.
Fuel
surcharges,
fare
increases
and
hedging
are
being
used
to
mitigate
the
impact
of
fuel
price
rises.
However,
a
number
of
significant
weather
events
are
impacting
current
trading
conditions,
including
the
Queensland
floods
(estimated
to
impact
second
half
FY11
Underlying
PBT
by
up
to
$55
million)
and
Cyclone
Yasi
in
North
Queensland
(estimated
to
impact
second
half
FY11
Underlying
PBT
by
up
to
$15
million).
The
Qantas
Group
estimates
the
A380
disruptions
will
have
an
impact
of
$25
million
in
the
second
half
of
FY11,
in
addition
to
the
$55
million
in
the
first
half
of
FY11.
Qantas
remains
in
discussions
with
Rolls-­‐Royce
in
relation
to
compensation
for
the
economic
loss
incurred.
No
agreement
has
been
reached
at
this
stage.
Any
compensation
will
be
recognised
in
the
Group’s
Underlying
PBT
in
the
relevant
period.
Given
the
first
half
result,
Underlying
PBT
for
FY11
is
expected
to
be
materially
stronger
than
FY10.
However,
changes
in
fuel
prices,
foreign
exchange
rates,
general
trading
conditions
and
the
impact
of
significant
weather
events
could
rapidly
impact
earnings.
It
is
therefore
not
possible
to
provide
a
more
specific
forecast
at
this
time
given
the
volatility
and
uncertainty
of
the
aviation
market.
3

13.
Dividend
The
Board
remains
committed
to
the
resumption
of
dividend
payments.
As
previously
disclosed
to
the
market,
the
quantum
and
timing
of
this
will
depend
on
actual
and
forecast
trading
results,
market
conditions,
the
maintenance
of
an
investment
grade
credit
rating
and
the
level
of
capital
expenditure
commitments.
In
the
first
half
of
financial
year
2011,
the
operating
performance
of
all
Qantas
businesses
improved
significantly
and
the
Board
is
confident
in
the
outlook
for
the
company.
However,
significant
capital
investment
is
being
undertaken,
reflecting
a
fleet
renewal
to
bolster
the
foundations
for
future
growth.
Considering
this
investment
program
alongside
the
preference
to
rely
on
internally
generated
capital
and
debt
funding
for
this
investment,
the
Board
believes
it
is
prudent
not
to
pay
a
dividend
at
this
time.
Future
dividend
payments
will
be
assessed
against
ongoing
earnings
performance
and
capital
requirements.
4

14.
APPENDIX
Review
of
Operations
(Extracted
from
Appendix
4D)
Highlights
of
the
half-­‐year
result
include:
Underlying
Profit
Before
Tax
up
56
per
cent
and
operating
cash
flows
up
by
54
per
cent
Strong
growth
across
all
operating
segments
Record
results
for
Jetstar
and
Qantas
Frequent
Flyer
Result
achieved
despite
financial
impact
of
A380
disruptions
Strong
revenue
growth
of
10
per
cent
achieved
through
expansion
of
capacity
and
continued
improvement
in
yield
Underlying
PBT
Result
Up
56
Per
Cent
The
Qantas
Group
reported
an
Underlying
PBT
of
$417
million
for
the
half-­‐year
ended
31
December
2010,
an
increase
of
56
per
cent
on
the
prior
corresponding
period
of
$267
million.
This
result
was
achieved
while
overcoming
significant
operational
challenges
during
the
period
including
disruptions
to
the
A380
network
from
November.
No
financial
settlement
from
Rolls-­‐Royce
has
been
reflected
in
the
results.
Segment
Performance
Summary
$M
December
December
$
Change
%
Change
2010
2009
Qantas
165
60
105
175
Jetstar
143
121
22
18
Qantas
Frequent
Flyer
189
157
32
20
Qantas
Freight
41
17
24
141
Jetset
Travelworld
Group
3
5
(2)
(40)
Corporate/Unallocated
(94)
(67)
(27)
40
Eliminations
5
14
(9)
(64)
Underlying
EBIT
452
307
145
47
Underlying
net
finance
costs
(35)
(40)
5
(13)
Underlying
PBT
417
267
150
56
Strong
Growth
in
all
Operating
Segments
All
operating
segments
have
improved
contributions
to
Underlying
PBT,
delivering
strong
growth
compared
to
the
prior
corresponding
period.
Qantas
and
Qantas
Freight
achieved
growth
in
excess
of
100
percent.
Both
Jetstar
and
Qantas
Frequent
Flyer
delivered
record
half-­‐year
results.
Capacity
and
Yield
Recovery
Despite
the
challenges
presented
during
the
period,
the
Group
achieved
strong
revenue
growth.
Total
revenue
for
the
half-­‐year
increased
10
per
cent
from
$6,909
million
to
$7,591
million.
Average
yields,
excluding
foreign
exchange
(FX)
movements,
increased
by
7
per
cent
reflecting
the
continued
improvement
in
premium
business
following
the
Global
Financial
Crisis.
Capacity
increased
7
per
cent
following
the
addition
of
22
aircraft
to
the
Group
fleet
between
31
December
2009
and
31
December
2010.
The
Group’s
revenue
performance
has
been
supported
by
maintaining
the
Group’s
target
of
65
per
cent
share
of
the
domestic
Australian
market,
industry
leading
on
time
performance,
and
continued
efforts
to
improve
and
ensure
customer
safety
and
satisfaction.
Qantas
Frequent
Flyer’s
record
result
has
been
built
on
continuing
robust
growth
in
members
and
program
affiliates.
5

15.
Expenses
for
the
half-­‐year
were
$7,227
million,
an
increase
of
7
per
cent
from
the
prior
corresponding
period
of
$6,766
million.
Cost
increases
were
in
line
with
the
Group’s
capacity
growth
of
7
per
cent.
However
fuel
costs
increased
by
10
per
cent,
impacted
by
higher
average
fuel
prices
in
the
current
period
compared
to
the
prior
corresponding
period.
The
Rolls-­‐Royce
A380
engine
disruptions
and
associated
loss
of
capacity
unfavourably
affected
unit
cost
in
the
first
half.
After
allowing
for
the
effects
of
A380
disruptions
and
reduced
average
sector
length
the
Comparable
Net
Underlying
Unit
Cost
performance
is
favourable
by
1
per
cent.
Operating
Statistics
%
Available Seat Kilometres
Revenue Passenger Kilometres
Passenger
Seat
Yield (Excluding
Net Underlying Unit
Comparable Net Underlying Unit
1
ASK
–
total
number
of
seats
available
for
passengers,
multiplied
by
the
number
of
kilometres
flown
2
RPK
–
total
number
of
paying
passengers
carried,
multiplied
by
the
number
of
kilometres
flown
3
Net
Underlying
Unit
Cost
–
Underlying
PBT
less
Passenger
Revenue,
fuel
and
Frequent
Flyer
change
in
accounting
estimate
per
ASK
4
Comparable
Net
Underlying
Unit
Cost–
Net
Underlying
Unit
Cost
adjusted
for
the
impact
of
A380
disruptions
and
reduced
average
sector
length
Capital
Expenditure
Supported
by
Strong
Balance
Sheet
and
Operating
Cash
Flows
Operating
cash
flows
grew
to
$743
million,
an
increase
of
54
per
cent
on
the
prior
corresponding
period
result
of
$483
million,
in
line
with
the
growth
in
earnings.
Qantas
Group
cash
was
$3,337
million
at
31
December
2010,
a
decrease
of
$367
million
from
30
June
2010
resulting
from
aircraft
purchases
partially
funded
from
cash
reserves
and
the
deconsolidation
of
cash
held
in
Jetset
Travelworld
Group.
$M
December
December
$
Change
%
Change
2010
2009
Cash
at
Beginning
3,704
3,617
87
2
Operating
Cash
Flow
743
483
260
54
Investing
Cash
Flow
(1,076)
(947)
(129)
14
Financing
Cash
Flow
(20)
345
(365)
(106)
Effect
of
Foreign
Exchange
on
Cash
(14)
-­‐
(14)
-­‐
Cash
at
Half-­‐Year
End
3,337
3,498
(161)
(5)
Qantas
has
retained
a
strong
balance
sheet
and
a
secure
capital
position
while
supporting
substantial
ongoing
investment
in
the
Group’s
portfolio
of
businesses.
The
Group
invested
$1
billion
in
additional
property,
plant
and
equipment
during
the
period.
This
includes
the
purchase
of
six
aircraft,
progress
payments
on
a
significant
pipeline
of
future
deliveries,
and
the
introduction
of
Next
Generation
Check-­‐In
and
other
product
investments.
A
conservative
approach
to
capital
management
and
significant
growth
in
Operating
Cash
Flows
provide
ongoing
flexibility
to
manage
medium
term
capital
expenditure
and
funding
requirements
while
preserving
an
investment
grade
credit
rating.
As
at
31
December
2010,
the
Group’s
gearing
ratio
is
52
per
cent.
6

16.
$M
December
June
$
Change
%
Change
2010
2010
Net
Debt1
2,558
2,209
349
16
Net
Debt
Including
Off
Balance
Sheet
Debt2
6,605
6,170
435
7
Equity
(Excluding
Hedge
Reserves)
6,041
5,896
145
2
Gearing
Ratio3
52:48
51:49
1
Includes
fair
value
of
hedges
related
to
debt
and
aircraft
security
deposits
2
Includes
non-­‐cancellable
operating
leases,
excluding
hedge
reserves.
Non-­‐cancellable
operating
leases
are
a
representation
assuming
assets
are
owned
and
debt
funded
and
is
not
consistent
with
the
disclosure
requirements
of
AASB117:
Leases
3
Gearing
Ratio
is
Net
Debt
to
Net
Debt
and
Equity
(including
off
balance
sheet
debt
from
operating
leases
excluding
hedge
reserves)
Fleet
The
Group
remains
committed
to
a
fleet
strategy
designed
to
provide
for
long
term
fleet
renewal,
simplification
and
growth.
Qantas
continues
to
have
one
of
the
world’s
largest
aircraft
order
books,
with
173
new
aircraft
to
be
delivered
by
FY18.
These
include
13
more
A380
flagship
aircraft
for
Qantas,
and
50
B787
Dreamliners,
with
the
first
to
be
delivered
to
Jetstar
in
last
quarter
2012.
At
31
December
2010,
the
Qantas
Group
fleet
comprised
266
aircraft.
During
the
half
year,
the
Group
entered
13
new
aircraft
(6
purchased
and
7
leased)
into
service:
Qantas
–
1
A380,
1
A330-­‐200
Jetstar,
including
Jetstar
Asia
–
10
A320-­‐200s,
1
A330-­‐200
The
Group
retired
no
aircraft
during
the
half
year
but
did
return
one
leased
B747-­‐400.
Three
aircraft
are
scheduled
for
retirement
during
the
second
half
of
the
year.
Product
and
Service
Across
the
Group,
investment
in
customer
product,
service,
training
and
innovation
remains
a
core
focus.
Key
developments
in
the
half-­‐year
for
Qantas
included
the
progressive
roll-­‐out
of
the
faster,
smarter
domestic
Next
Generation
Check-­‐in
–
now
available
in
Perth,
Sydney
and
Melbourne.
Planning
also
continues
for
the
international
fleet
reconfiguration
program
that
will
commence
later
this
year.
It
will
see
nine
B747-­‐400s
upgraded
to
A380
product
standards
and
the
A380
fleet
reconfigured
over
time
to
meet
forecast
changes
in
market
demand.
While
focused
on
its
low
fare
leadership,
Jetstar
also
continued
its
investment
in
innovation,
including
in
the
area
of
airport
self-­‐service
and
the
introduction
of
iPads
for
inflight
entertainment
use.
Qantas
December
December
$
Change
%
Change
2010
2009
Total
Revenue
$M
5,706
5,295
411
8
Underlying
EBIT
$M
165
60
105
175
Seat
Factor
%
82.4
83.1
(0.7)pts
Qantas
achieved
an
Underlying
EBIT
of
$165
million
for
the
half-­‐year.
The
result
is
175
per
cent
above
the
prior
corresponding
period,
driven
by
a
$411
million,
or
8
per
cent,
increase
in
total
revenue.
Qantas
improved
yield
by
9
per
cent,
and
increased
capacity
by
3.3
per
cent
demonstrating
a
strong
revenue
recovery
across
both
international
and
domestic
business.
The
result
was
achieved
despite
the
significant
operational
and
financial
challenges
of
the
A380
disruptions
and
northern
hemisphere
snow
storms
during
the
period.
QantasLink
continued
to
deliver
a
strong
contribution
to
the
Qantas
Airlines
result
with
capacity
growing
10.6
per
cent.
QantasLink
has
also
added
fly-­‐in-­‐fly-­‐out
charter
capability
with
the
acquisition
of
Network
Aviation.
7

17.
Looking
ahead,
Qantas
is
expecting
to
grow
its
domestic
and
international
capacity,
adding
4.5
per
cent
for
domestic
(including
QantasLink),
and
4.3
per
cent
in
international
capacity
during
the
second
half.
This
includes
the
return
of
the
A380
fleet
to
full
program
by
March
2011.
QFuture
QFuture
is
the
key
business
change
program
within
Qantas,
designed
to
position
the
airline
for
profitable
growth.
It
involves
transformational
change
across
the
airline,
with
total
benefits
of
$1.5
billion
targeted
over
the
3
years
FY10
to
FY12
to
underpin
unit
cost
reduction
and
margin
improvement.
For
the
half-­‐year,
benefits
of
$173
million
have
been
achieved
(including
IT).
The
majority
of
the
benefits
were
contributed
by
the
Commercial,
Customer
&
Marketing
and
Engineering
divisions
of
the
Qantas
segment.
Qantas
is
also
on
track
to
achieve
the
FY11
target
of
$500
million
and
the
$1.5
billion
in
benefits
over
three
years.
Jetstar
December
December
$
Change
%
Change
2010
2009
Total
Revenue
$M
1,346
1,131
215
19
Underlying
EBIT
$M
143
121
22
18
Seat
Factor
%
79.6
80.2
(0.6)pts
Jetstar
achieved
a
record
result
for
the
period,
with
an
Underlying
EBIT
of
$143
million,
an
18
per
cent
increase
on
the
prior
corresponding
period.
Jetstar
increased
domestic
capacity
by
20
per
cent
and
international
capacity
by
18
per
cent,
resulting
in
a
net
capacity
increase
of
19
per
cent
versus
the
prior
corresponding
period.
Yield
improvements
and
a
15
per
cent
increase
in
passenger
numbers
versus
the
prior
corresponding
period
have
resulted
in
an
increase
in
Jetstar’s
revenue
of
$215
million
(19
per
cent).
Jetstar
has
also
achieved
continuing
improvements
in
unit
cost.
Unit
cost
(excluding
fuel)
has
fallen
2
per
cent
compared
to
the
previous
corresponding
period.
Jetstar’s
record
result
reflects
its
status
as
one
of
the
fastest
growing
airlines
in
Asia,
the
world’s
largest
aviation
market.
Operations
now
span
two
continents
and
four
countries,
with
379
flights
per
day
and
growing.
This
growth
will
continue
with
the
delivery
of
15
B787s
from
late
2012.
Qantas
Frequent
Flyer
$ %
Total
Underlying
Normalisation
Normalised
1
Normalised
EBIT
is
a
non-­‐statutory
measure
which
restates
redemption
revenue
to
the
fair
value
of
awards
redeemed
(removing
the
impact
of
the
change
in
accounting
estimate)
and
recognises
the
marketing
revenue
when
a
point
is
sold.
This
creates
a
comparable
basis
for
the
presentation
of
results.
Qantas
Frequent
Flyer
achieved
an
Underlying
EBIT
of
$189
million,
which
was
$32
million
higher
than
the
prior
corresponding
period
and
Normalised
EBIT
growth
of
36
per
cent.
Qantas
Frequent
Flyer’s
result
reflects
positive
growth
in
new
members
driven
by
the
development
of
products
and
services
with
key
business
partners.
Membership
has
increased
12
percent
on
the
prior
corresponding
period
to
7.5
million
members.
Billings
increased
by
9
per
cent
compared
to
the
prior
corresponding
period,
driven
by
capacity
increases
across
the
flying
businesses
and
additional
revenue
from
new
members.
The
development
of
the
Woolworths
partnership
in
particular
has
contributed
incremental
airline
revenue
as
well
as
growth
in
Woolworths’
billings
as
the
program
matures.
These
outcomes
highlight
the
value
of
Qantas’
portfolio
of
businesses,
and
especially
Qantas
Frequent
Flyer,
in
maximising
the
returns
generated
from
the
core
flying
brands.
8

18.
Qantas
Freight
December
December
$
Change
%
Change
2010
2009
Total
Revenue
$M
545
494
51
10
Underlying
EBIT
$M
41
17
24
141
Load
Factor
%
60.3
59.9
0.4pts
Qantas
Freight’s
Underlying
EBIT
of
$41
million
is
more
than
double
the
$17
million
from
the
prior
corresponding
period.
Qantas
Freight’s
result
reflects
a
recovery
in
economic
activity
from
Global
Financial
Crisis
lows
as
well
as
stronger
volumes
and
yields,
principally
on
key
China/US
routes.
Yield
has
improved
by
12
per
cent
(excluding
foreign
exchange)
due
to
market
recovery
and
higher
fuel
surcharges.
The
domestic
express
freight
market
has
also
improved,
resulting
in
higher
earnings
from
the
joint
venture
businesses
Australian
air
Express
and
Star
Track
Express.
Statutory
Result
$M
December
2010
December
2009
$Change
Non-­‐Recurring
Items
417
267
150
Ineffectiveness
and
Non-­‐designated
Derivatives
relating
to
other
reporting
(50)
(48)
(2)
periods
(45)
(129)
84
Statutory
PBT
322
90
232
Statutory
PBT
has
improved
to
$322
million
from
$90
million.
Statutory
PBT
includes
ineffectiveness
and
non-­‐designated
derivative
losses
relating
to
other
reporting
periods.
Non-­‐recurring
items
included
in
the
half-­‐year
statutory
result
are:
loss
on
disposal
and
other
transaction
costs
relating
to
the
Jetset
Travelworld
Group
merger
of
$29
million
profit
on
the
sale
of
the
DPEX
Group
of
$5
million
provisions
for
freight
regulatory
fines
and
third
party
actions
of
$26
million
9