The Sum Of Us - Qantas

the qantas Group8CEO’s ReportOur strategy is to create two airlines – Qantas and Jetstar– that are the best in their class, giving us the flexibilityto ride economic cycles, leverage different sectors of themarket, and maintain a robust operating cash flow.It has been a busy and productive yearat the Qantas Group.Our strategy is to create two airlines –Qantas and Jetstar – that are the best intheir class, and which will continue to giveus the flexibility to ride economic cycles,leverage different sectors of the market,and maintain a robust operating cash flow.Our fleet strategy reflects this approach.With Marc Newson’s signature designand a dedicated crew in all cabins, theQantas Airbus 380 has become adestination in its own right. We willhave 10 in service by 2011, and a further10 coming into service over the nextfive years.We have also brought forward our orderfor 50 Boeing 787s, with the first now duein mid-2012. We will be the second largestairline customer for these new-era aircraft– offering improved technologies, loweroperating costs, fuel efficiencies, andgreater passenger comfort.The first 15 B787s will go to JetstarInternational, enabling the transfer ofA330-200s to Qantas and the earlierretirement of eight Qantas B767-300ERs,effectively renewing both airlines’ fleets.

9QantasIt is now 90 years since Qantas started inoutback Queensland, and we remain hardat work to make a journey with Qantas afresh and enjoyable experience for eachnew generation of travellers.In the past year we have introducedmore features to give our customersgreater control and flexibility. This includesexit row seat purchase, additional baggageallowance purchase, advanced seatselection and combined bookings forflights, car hire and travel insurance.We are successfully introducing NextGeneration Check-in, and it willprogressively be rolled out around majordomestic ports. With our new Q CardReaders, Next Generation Check-in willbe as simple as a flick of a card, and we’realso simplifying the bag drop process.Our Qantas ‘refresh’ project is aboutredefining the Qantas signature at homeand in the world – one that is modern,caring, distinctive, contemporary andconsistent.Cabin: We are creating a seamlessBusiness Class offering. We’ll be investingmillions to upgrade the cabin and seatson nine B747s, which will bring them inline with our A380s. Over the coming yearour domestic fleet will be revamped witha new look Business Class product.On-board: New domestic BusinessClass menus will be designed by ourQantas consultant chef Neil Perry to bemore consistent with our internationaloffering. A new inflight entertainmentformat is also being introduced.Lounges: We have one of the world’sbest domestic airline networks and ourinternational lounges designed by MarcNewson set the benchmark for globalexcellence. We will be undertaking asignificant refresh of Qantas Club loungefacilities, with our domestic Businesslounges modelled on our internationalBusiness lounges. Neil Perry will designthe food menus.Our enhanced Qantas Frequent Flyerprogram now has 7.2 million membersand continues to offer major opportunitiesfor the Group to win and reward loyalcustomers.Annual report 2010JetstarWith Jetstar, the goal is to create the bestlow fares airline in the world, which is allabout sustainable growth and being trueto the positive and energetic values of thebrand. For example, this year Jetstar wasthe first airline in the world to trial theiPad as an inflight entertainment system.Jetstar has now carried more than50 million passengers since taking offin 2004, with more than half of themtravelling for under 100. It is now wellplaced in Asia through Jetstar Asia, whichis based in Singapore, and Jetstar Pacificin Vietnam. It has a real opportunity toachieve more.Our peopleThis year our people continued to excel:from exceptional customer care during thevolcanic ash crisis, through to delivering aworld first new check-in system, they havegone above and beyond. On behalf of theleadership team I want to acknowledgeand thank everyone for their efforts.ALAN JOYCE

the qantas Group10Board of DirectorsLeigh Clifford, AOAlan JoyceBEng, MEngSciChairmanIndependent Non-Executive DirectorBApplSc(Phy)(Math)(Hon.),MSc(MgtSc), FRAeSChief Executive OfficerLeigh Clifford was appointed to the Qantas Board inAugust 2007 and as Chairman in November 2007.He is Chairman of the Qantas Nominations Committee.Mr Clifford is a Director of Barclays Bank plc andBechtel Group Inc. He is Chairman of Bechtel AustraliaPty Ltd and the Murdoch Childrens Research Institute,a Senior Advisor to Kohlberg Kravis Roberts & Co anda Board Member of the National Gallery of VictoriaFoundation. Mr Clifford was Chief Executive of RioTinto from 2000 to 2007. He retired from the Boardof Rio Tinto in 2007 after serving as a Director ofRio Tinto plc and Rio Tinto Limited for 13 and 12 yearsrespectively. His executive and board career withRio Tinto spanned some 37 years, in Australia andoverseas. Age: 62Alan Joyce was appointed Chief Executive Officer andManaging Director of Qantas in November 2008 andCEO Designate and to the Qantas Board in July 2008.He is a Member of the Safety, Health, Environmentand Security Committee. Mr Joyce is a Director of anumber of controlled and associated entities of theQantas Group, and a former Director of OrangestarInvestment Holdings Pte Limited and Jetstar PacificAirlines Aviation Joint Stock Company. He was theCEO of Jetstar from 2003 to 2008. Before that,Mr Joyce spent over 15 years in leadership positionsfor Qantas, Ansett and Aer Lingus. At both Qantasand Ansett, he led the Network Planning, SchedulesPlanning and Network Strategy functions. Prior tothat, Mr Joyce spent eight years at Aer Lingus, wherehe held roles in Sales, Marketing, IT, Network Planning,Operations Research, Revenue Management and FleetPlanning. Age: 44Garry HounsellPaul RaynerBBus(Acc), FCA, CPA, FAICDIndependent Non-Executive DirectorBEc, MAdmin, FAICDIndependent Non-Executive DirectorGarry Hounsell was appointed to the Qantas Boardin January 2005. He is Chairman of the AuditCommittee and a Member of the NominationsCommittee. Mr Hounsell is Chairman of PanAustLimited and a Director of Orica Limited, DuluxGroupLimited and Nufarm Limited. Mr Hounsell is alsoDeputy Chairman of Mitchell Communication GroupLimited. He is Chairman of Investec Global AircraftFund, a Director of Ingeus Limited and a BoardMember of law firm Freehills. Mr Hounsell is aformer Senior Partner of Ernst & Young andChief Executive Officer and Country ManagingPartner of Arthur Andersen. Age: 55Paul Rayner was appointed to the Qantas Board in July2008. He is a Member of the Audit Committee andSafety, Health, Environment and Security Committee.Mr Rayner is a Director of Boral Limited and Centrica plc.He also serves as Chairman of Boral’s and Centrica’sAudit Committees. From 2002 to 2008, Mr Raynerwas Finance Director of British American Tobacco plc,based in London. Mr Rayner joined RothmansHoldings Limited in 1991 as its Chief Financial Officerand held other senior executive positions within theGroup, including Chief Operating Officer of BritishAmerican Tobacco Australasia Limited from 1999 to2001. Previously Mr Rayner worked for 17 years invarious finance and project roles with General Electric,Rank Industries and the Elders IXL Group. Age: 56

11General Peter Cosgrove, AC, MCPatricia CrossAnnual report 2010Richard GoodmansonFAICDIndependent Non-Executive DirectorBSc(Hons), FAICDIndependent Non-Executive DirectorBEng(Civil), BCom, BEc, MBAIndependent Non-Executive DirectorPeter Cosgrove was appointed to the Qantas Boardin July 2005. He is a Member of the Safety, Health,Environment and Security Committee and a Directorof Qantas Superannuation Limited. General Cosgroveis a Director of Cardno Limited, Chairman of the SouthAustralian Defence Industry Advisory Board and theAustralian War Memorial Council. General Cosgroveserved in the Australian Army from 1965 includingcommand of the international forces in East Timorfrom 1999 until the force was withdrawn in February2000. He was the Chief of the Australian DefenceForce from July 2002 until his retirement in July 2005.General Cosgrove was Australian of the Year in 2001.Age: 63Patricia Cross was appointed to the Qantas Boardin January 2004. She is a Member of the Audit andRemuneration Committees. Mrs Cross is a Directorof National Australia Bank Limited, JBWere Pty Limited,the Murdoch Childrens Research Institute, the GrattanInstitute and the Methodist Ladies College. She isa Member of the Government’s Australian FinancialCentre Forum and Melbourne University’s AdvisoryCouncil to the Faculty of Business and Economics.Mrs Cross was previously a director of WesfarmersLimited, Chairman of Qantas Superannuation Limitedand Deputy Chairman of Victoria’s Transport AccidentCommission. She has served on a variety of publiclylisted, government, university and private companyboards. Prior to becoming a professional companydirector in 1996, Mrs Cross held senior executivepositions with Chase Manhattan Bank, BanqueNationale de Paris and National Australia Bank. Age: 51Richard Goodmanson was appointed to the QantasBoard in June 2008. He is a Member of theRemuneration Committee and a Member of theSafety, Health, Environment and Security Committee.Mr Goodmanson is a Director of Rio Tinto plc andRio Tinto Limited. From 1999 to 2009 he wasExecutive Vice President and Chief Operating Officerof E.I du Pont de Nemours and Company. Previous tothis role, he was President and Chief Executive Officerof America West Airlines. Mr Goodmanson was alsopreviously Senior Vice President of Operations forFrito-Lay Inc. and was a principal at McKinsey &Company Inc. He spent 10 years in heavy civilengineering project management, principally in SouthEast Asia. Mr Goodmanson was born in Australia andis a citizen of both Australia and the United States.Age: 63Dr John SchubertJames Strong, AOBarbara WardBE, PhD, FIEAust, CPEng, FTS, FIChemEIndependent Non-Executive DirectorIndependent Non-Executive DirectorBEc, MPolEcIndependent Non-Executive DirectorJohn Schubert was appointed to the Qantas Boardin October 2000. He is Chairman of the Safety, Health,Environment and Security Committee and a Memberof the Nominations Committee. Dr Schubert is aDirector of BHP Billiton Limited and BHP Billiton plc.He is also Chairman of G2 Therapies Limited and theGreat Barrier Reef Foundation. He was most recentlyChairman of the Commonwealth Bank of Australiaand was also previously Chairman of WorleyParsonsLimited and President of the Business Council ofAustralia. Dr Schubert was also Managing Directorand Chief Executive Officer of Pioneer InternationalLimited from 1993 until 2000. Dr Schubert heldvarious positions with Esso in Australia and overseas.In 1983, he was appointed to the Board of EssoAustralia. In 1985, Dr Schubert became Esso’s DeputyManaging Director and in 1988 he became Esso’sChairman and Managing Director. Age: 67James Strong was appointed to the Qantas Boardin July 2006. He is Chairman of the RemunerationCommittee and a Member of the NominationsCommittee. Mr Strong was the Chief ExecutiveOfficer and Managing Director of Qantas between1993 and 2001, following his appointment to theBoard in 1991. He is Chairman of Woolworths Limited,Kathmandu Holdings Limited and the Australia Councilfor the Arts. He is also a member of the NomuraAustralia Advisory Board and a Director of the AustralianGrand Prix Corporation. Mr Strong was formerlythe Chairman of Insurance Australia Group Limited,a Director of IAG Finance (New Zealand) Limited,the Group Chief Executive of the DB Group in NewZealand and National Chairman of Partners of CorrsChambers Westgarth. He was also Chief ExecutiveOfficer of Australian Airlines from 1985 until 1989.He has been admitted as a barrister and/or solicitorin various state jurisdictions in Australia. Age: 66Barbara Ward was appointed to the Qantas Boardin June 2008. She is a Member of the Safety, Health,Environment and Security Committee and the AuditCommittee. Ms Ward is Chairman of Country Energy,a Director of a number of Brookfield Multiplex Groupcompanies and O’Connell Street Associates Pty Ltd,and is on the Advisory Board of LEK Consulting. Shewas formerly a Director of the Commonwealth Bankof Australia, Lion Nathan Limited, Brookfield MultiplexLimited, Allco Finance Group Limited, RecordInvestments Limited, Data Advantage Limited, RailInfrastructure Corporation and Delta Electricity. Shewas Chairman of NorthPower and a Board Memberof Allens Arthur Robinson. Ms Ward was ChiefExecutive Officer of Ansett Worldwide AviationServices from 1993 to 1998. Before that, Ms Wardheld various positions at TNT Limited, includingGeneral Manager Finance, and also served as a SeniorMinisterial Adviser to The Hon PJ Keating. Age: 56

the qantas Group12

13Annual report 2010Information on Qantas andReview of Operations

THE QANTAS GROUP14Information on Qantasfor the year ended 30 June 2010NINETY YEARS OF EXPERIENCEPortfolio BusinessesFounded in the Queensland outback in 1920, Qantas is Australia’s largestdomestic and international airline and, for nearly 90 years, has been oneof global aviation’s great pioneers and innovators.In addition to its airline brands, the Group operates a number of airlinerelated businesses, including Qantas Frequent Flyer and Qantas Freight,that provide diversified revenue streams.The Qantas Group’s main business is the transportation of passengersusing two complementary airline brands – Qantas and Jetstar.With 7.2 million members and more than 400 partners, Qantas FrequentFlyer is the largest and most popular airline loyalty program in thesouthern hemisphere.The airline brands operate regional, domestic and international services.The Group’s portfolio of subsidiary businesses also includes QantasFreight Enterprises and Qantas Frequent Flyer.The Group employs 35,700 people, 93 per cent of them basedin Australia.ORGANISATIONAL STRUCTUREExecutive CommitteeAlan Joyce, Chief Executive Officer and Managing DirectorBruce Buchanan, Chief Executive Officer JetstarDavid Epstein, Group Executive Government and Corporate AffairsGareth Evans, Chief Financial OfficerLesley Grant, Group Executive Qantas Customer and MarketingRob Gurney, Group Executive Qantas CommercialDavid Hall, Group Executive Corporate Services and TechnologySimon Hickey, Chief Executive Officer Qantas Frequent FlyerBrett Johnson, General CounselRob Kella, Chief Risk OfficerJon Scriven, Group Executive PeopleLyell Strambi, Group Executive Qantas OperationsQantasQantas Airlines is a premium, full-service Australian domestic andinternational airline that offers services across a broad network.Customer benefits include a global network, as many as four travelclasses (depending on aircraft type), a leading loyalty program in QantasFrequent Flyer, inflight meals and entertainment, airport lounges andother services. Qantas is a founding member of the oneworld globalairline alliance.The Qantas brands are:—Qantas—QantasLinkQantas Airlines is divided into three closely related groups:Qantas Freight Enterprises manages the Group’s freight assets, whichinclude Qantas Freight and strategic assets in logistics business such asAustralian air Express and Star Track Express.Corporate GroupsA range of corporate groups provide guidance, shape policy, developstrategic direction and perform a safeguarding role in terms ofcompliance and performance monitoring for the Group. These include:—Business Information Systems—Finance – financial policy, planning and reporting; treasury; tax;insurance; fleet; investor relations and strategy—Government and Corporate Affairs – government and internationalrelations; and employee and external communications—Legal—People – people strategy; industrial relations; remuneration; workforcemanagement initiatives; and the implementation of programs aimedat creating a competitive and motivated workforce—Public Company – including the Company Secretary—Risk and Assurance – risk; safety; security; occupational health andsafety; environment; aviation health; and internal audit, providing anintegrated approach to risk management across the GroupInvestmentsThe Group has investments in other airline and airline related businessesand currently holds:—A 27 per cent stake in Vietnam’s Jetstar Pacific—A 46 per cent interest in Air Pacific—A 58 per cent interest in Jetset Travelworld Limited–This interest will reduce to approximately 29 per cent if theproposed merger transaction with Stella Travel Servicesis completed—Commercial – sales and distribution, QantasLink, alliancesQantas is also a partner with Australia Post in two jointly controlledentities:—Customer and Marketing – customer experience, inflight services,cabin crew, marketing—The domestic air freight operator Australian air Express—Operations – engineering, airports, catering, flight operations,operations planning and control, Qantas Aviation ServicesQantasLink is a full-service regional airline that supports Qantas’domestic network by developing ‘feeder’ markets that connectregional business and leisure travellers with major cities.JetstarJetstar, the Group’s low fares airline, began operating Australiandomestic services in May 2004, international services in November 2006and New Zealand domestic operations in June 2009. Following anownership restructure in April 2009, Jetstar also manages the JetstarAsia operations based in Singapore.The Jetstar brands are:—Jetstar—Jetstar Asia—Jetstar Pacific—The national road freight business Star Track ExpressAirline NetworkQantas Group airlines offer services to 184 destinations in 42 countries– 59 in Australia and 125 in other countries (including those operatedby codeshare partner airlines). They carried 41.4 million passengers in2009/2010.Domestically, Qantas, QantasLink and Jetstar operate around 5,300 flightsa week serving 59 city and regional destinations in all states and mainlandterritories (Qantas – 2,300; QantasLink – 1,900; Jetstar – 1,100).Internationally, Qantas and Jetstar operate more than 900 flights eachweek (Qantas – 600; Jetstar – 320). Jetstar also operates nearly170 domestic flights

Qantas and Jetstar, its two complementary flying brands. Key factors Key factors in the result this year included: — A robust performance by Qantas, which was Australia’s most profitable and punctual domestic airline, and which achieved a significantly improved internatio