Q4 2026 Qantas Airways Ltd Earnings Call

August 27, 2026

Speaker #1: This has been another year of great project progress across all of our metrics, while responding to what has been a materially higher fuel cost environment in Q4.

Vanessa Hudson: This has been another year of great progress across all of our metrics while responding to what has been a materially higher fuel cost environment in Q4. In the backdrop of the Middle East conflict, we came through it with a strong result, which is what allows us to continue to invest in our fleet and deliver more for our customers, people, and for shareholders. The key takeaway from FY26 is that our strategy continues to work. We delivered our highest customer satisfaction in a decade, world-leading operational performance, and demonstrated the strength of our integrated portfolio and dual brand strategy in changing market conditions. In summary, underlying profit before tax for the full year was AUD 2.064 billion, down AUD 330 million on last year, but that includes AUD 420 million of net impact from the Middle East in Q4.

Vanessa Hudson: This has been another year of great progress across all of our metrics while responding to what has been a materially higher fuel cost environment in Q4. In the backdrop of the Middle East conflict, we came through it with a strong result, which is what allows us to continue to invest in our fleet and deliver more for our customers, people, and for shareholders. The key takeaway from FY 2026 is that our strategy continues to work. We delivered our highest customer satisfaction in a decade, world-leading operational performance, and demonstrated the strength of our integrated portfolio and dual brand strategy in changing market conditions. In summary, underlying profit before tax for the full year was AUD 2.064 billion, down AUD 330 million on last year, but that includes AUD 420 million of net impact from the Middle East in Q4.

Speaker #1: In the backdrop of the Middle East conflict, we came through it with a strong result, which is what allows us to continue to invest in our fleet and deliver more for our customers, people, and shareholders.

Speaker #1: The key takeaway from FY26 is that our strategy continues to work. We delivered our highest customer satisfaction in a decade, world-leading operational performance, and demonstrated the strength of our integrated portfolio and dual-brand strategy in changing market conditions.

Speaker #1: So, in summary, underlying profit before tax for the full year was $2.064 billion, down $330 million on last year, but that includes a $420 million net impact from the Middle East in Q4.

Speaker #1: Underlying earnings per share were $0.96, down 13% on last year, and cash flow was strong at $3.9 billion. We are also delighted today to announce that the Board has approved a final dividend of $300 million.

Vanessa Hudson: Underlying earnings per share were AUD 0.96, down 13% on last year, and cash flow was strong at AUD 3.9 billion. We are also delighted today to announce that the board has approved a final dividend of AUD 300 million. This is in addition to the AUD 300 million interim base dividend that was announced in February. The AUD 150 million on-market share buyback announced in the H1 has been paused and will not proceed, and this does reflect our ongoing commitment to prioritize investment in the business while maintaining a sustainable base dividend. This year was defined by two very different operating environments. The H1 and through to the end of February, Qantas and Jetstar were both performing strongly with demand growing across all customer segments on both domestic and international networks.

Speaker #1: This is in addition to the $300 million interim-based dividend that was announced in February. But the $150 million on-market share buyback announced in the first half has been paused and will not proceed.

Speaker #1: And this does reflect our ongoing commitment to prioritize investment in the business, while maintaining a sustainable-based dividend. This year was defined by two very different operating environments.

Speaker #1: The first half, and through to the end of February, Qantas and Jetstar were both performing strongly, with demand growing across all customer segments on both domestic and international networks.

Speaker #1: The final four months of the year saw the impact of the Middle East flow through to higher fuel prices for the industry and impacted local business and consumer confidence.

Vanessa Hudson: The final four months of the year saw the impact of the Middle East flow through to higher fuel prices for the industry and impacted local business and consumer confidence. Prior to the Middle East, the group was on track to deliver earnings growth for the year. The four key factors that supported this and continues to support this, first, was continued strong demand for travel across domestic and international markets, particularly from leisure and premium travelers. Second, the benefits of new fleet. New aircraft continue to improve our customer experience and our experience for our people and support stronger financial returns through lower operating costs and greater flexibility and network growth. Third, disciplined cost focus, driving transformation through both cost and revenue initiatives to offset CPI. Finally, and probably most importantly, the benefit of our integrated portfolio.

Speaker #1: Prior to the Middle East, the group was on track to deliver earnings growth for the year. And the four key factors that supported this, and continue to support this: first, was continued strong demand for travel across domestic and international markets, particularly from leisure and premium travelers.

Speaker #1: Second, the benefits of a new fleet. New aircraft continue to improve our customer experience and our experience for our people, and support stronger financial returns through lower operating costs, as well as greater flexibility and network growth.

Speaker #1: Third, disciplined cost focus, driving transformation through both cost and revenue initiatives to offset CPI. And finally, and probably most importantly, the benefit of our integrated portfolio.

Speaker #1: The diversity of the group allowed us to respond to evolving market conditions with our dual-brand strategy and flexible fleet, allowing us to redeploy assets to match capacity with demand.

Vanessa Hudson: The diversity of the group allowed us to respond to evolving market conditions with our dual brand strategy and flexible fleet, allowing us to redeploy assets to match capacity with demand. Qantas Loyalty continued to grow strongly and also did freight, which provided a valuable diversifier in the year. The renewal of the Qantas Group fleet is continuing. Jetstar has now almost 50% of narrow-body capacity in the new fleet. The renewal of the Qantas Domestic fleet is also well underway. Qantas International has started its fleet transition, and our first Project Sunrise, A350-1000ULR, will arrive in April, and four new 787-9s are on the horizon. Over this year, we invested AUD 4 billion across the group, and 29 aircraft joined the fleet. More than half were new aircraft, including six A321XLRs for Qantas, five A220s for QantasLink, five A321LRs, and one A320neo for Jetstar.

Speaker #1: And Qantas' Loyalty continued to grow strongly, and so did Freight, which provided a valuable diversifier in the year.

Speaker #2: The renewal of the Qantas Group fleet is continuing. Jetstar now has almost 50% of its narrowbody capacity in the new fleet. The renewal of the Qantas domestic fleet is also well underway.

Speaker #2: Qantas International has started its fleet transition, and our first project, Sunrise, A350-1000 ULR, will arrive in April, and four new 787-9s are on the horizon.

Speaker #2: Over this year, we invested $4 billion across the group, and 29 aircraft joined the fleet. More than half of the new aircraft were, in fact, new, including 6 A321XLRs for Qantas, 5 A220s for QantasLink, 5 A321LRs, and 1 A320neo for Jetstar.

Speaker #2: This investment is a key driver of future earnings through improved fuel efficiency, lower maintenance costs, higher customer satisfaction, and additional network opportunities. Jetstar's new fleet has now reached scale, and it is delivering benefits.

Vanessa Hudson: This investment is a key driver of future earnings through improved fuel efficiency, low maintenance cost, higher customer satisfaction, and additional network opportunities. Jetstar's new fleet has now reached scale, and it is delivering benefits. This gives us the confidence in the benefits that will flow once the Qantas fleet renewal reaches scale. As part of that renewal this morning, we announced that the A380 will start to retire from mid-2028. I want to recognize the importance that the A380 aircraft has played and continues to play for our people and our customers. I will pass to Cam in a minute to speak more about this part of the Qantas International update. If we turn to slide seven, starting with our people, none of this would have been possible without the dedication and the professionalism of all of our team members across the group.

Speaker #2: This gives us the confidence in the benefits that will flow once the Qantas fleet renewal reaches scale. As part of that renewal, this morning we announced that the A380 will start to retire from mid-2028.

Speaker #2: I want to recognize the importance that the A380 aircraft has played, and continues to play, for our people and our customers. I will pass to Cam in a minute to speak more about this part of the Qantas International update.

Speaker #2: If we turn to slide 6, starting with our people, none of this would have been possible without the dedication and professionalism of all our team members across the group.

Speaker #2: Our people have played a critical role in delivering continued improvement in operational performance and customer satisfaction, and employee engagement increased again during the year.

Vanessa Hudson: Our people have played a critical role in delivering continued improvement in operational performance and customer satisfaction. Employee engagement increased again during the year. We invested over AUD 100 million in new training facilities this year, including A350, A220, and A320 flight simulators, and a new state-of-the-art emergency training center in Sydney and Perth, where more than 10,000 Qantas and Jetstar pilots and cabin crew will be trained every year. Under our employee share program, eligible employees will receive another AUD 1,000 in Qantas shares later this year. We always will remain focused on customers, and it is very pleasing to see that this has been reflected in our operational and reputation scores. Customer satisfaction reached its highest level in a decade. Net promoter score lifted by 7 points for Qantas Domestic, and also 5 points for Qantas International.

Speaker #2: We invested over $100 million in new training facilities this year, including A350, A220, and A320 flight simulators, and a new state-of-the-art emergency training center in Sydney and Perth, where more than 10,000 Qantas and Jetstar pilots and cabin crew will be trained every year.

Speaker #2: Under our employee share program, eligible employees will receive another $1,000 in Qantas shares later this year. We will always remain focused on customers, and it is very pleasing to see that this has been reflected in our operational and reputation scores.

Speaker #2: Customer satisfaction reaches its highest level in a decade. Net Promoter Score was lifted by 7 points for Qantas Domestic, and also 5 points for Qantas International.

Speaker #2: Jetstar domestic MPS remains stable, and Jetstar international MPS increased by 6 points compared to the prior year. Operational performance continued to improve, including Qantas achieving 85% on-time departures in June, making it the best-performing major global airline for that month.

Vanessa Hudson: Jetstar Domestic NPS remained stable, and Jetstar International NPS increased 6 points compared to the prior year. Operational performance continued to improve, including Qantas achieving 85% on-time departures in June, making it the best-performing major global airline for that month. Our customers have more to look forward to over the next 12 months, with up to 31 new aircraft deliveries, including our first Project Sunrise aircraft, significant cabin refresh programs on our Qantas A330s and Jetstar 787s, opening of the Qantas Sydney International Business Class Lounge and rollout of Wi-Fi across the international fleet, and progressive rollout and expanded Qantas Frequent Flyer benefits, including Jetstar upgrades, status credit rollover, and enhanced reward seat access. Finally, on sustainability, we remain focused on our long-term targets and have made further progress this year.

Speaker #2: Our customers have more to look forward to over the next 12 months. With up to 31 new aircraft deliveries, including our first Project Sunrise aircraft, significant cabin refresh programs on our Qantas A330s and Jetstar 787s, opening of the Qantas Sydney International Business Class Lounge, and rollout of Wi-Fi across the international fleet, and progressive rollout and expanded Qantas Frequent Flyer benefits, including Jetstar upgrades, status credit rollover, and enhanced reward seat access.

Speaker #2: Finally, on sustainability, we remain focused on our long-term targets and have made further progress this year. In FY26, our SAF procurement increased to 1.1% of total fuel.

Vanessa Hudson: In FY 2026, our SAF procurement increased to 1.1% of total fuel, and we have also committed AUD 30 million towards carbon removal projects, working with our partners to target native species planting. Today, we are also releasing our next sustainability report, which for the first time encompasses climate reporting, providing more detail on climate impact analysis and transition plan. Excuse me. I'd like to pause on slide seven to briefly reflect on the ongoing conflict in the Middle East. The group continues to actively manage the impact of higher fuel prices. In response, we took decisive actions, both adjusting fares and capacity. We also redeployed aircraft across our network to support customers and captured demand to Europe as Middle Eastern hubs effectively closed. These actions, along with other mitigations, limited the net impact on earnings to AUD 420 million for the period.

Speaker #2: And we have also committed $13 million towards carbon removal projects, working with our partners to target native species planting. Today, we are also releasing our next sustainability report, which for the first time encompasses climate reporting, providing more detail on climate impact analysis and our transition plan.

Speaker #2: Excuse me. I'd like to pause on slide 7 to briefly reflect on the ongoing conflict in the Middle East. The Group continues to actively manage the impact of higher fuel prices.

Speaker #2: In response, we took decisive actions, both adjusting fares and capacity. We also redeployed aircraft across our network to support customers and captured demand to Europe as Middle East hubs effectively closed.

Speaker #2: These actions, along with other mitigations, limited the net impact on earnings to $420 million for the period. Heading into FY27, we have also increased our liquidity to secure much of our funding task for the coming year.

Vanessa Hudson: Heading into FY 2027, we have also increased our liquidity to secure much of our funding tasks for the coming year. Shocks like these are not new to aviation, and it is why we prioritize our balance sheet strength. The group will continue to monitor developments and to adapt to conditions as needed. Turning to slide 17. The strength of today's result reflects the deeply integrated value across the group. I will now provide an overview of business performance, and the CEOs of each segment will also give their perspective during the Q&A. Group Domestic delivered a strong EBIT result of AUD 1.44 billion, with an EBIT margin of 13%. Overall, domestic brand demand, excuse me, remained resilient, with strong leisure travel across both Qantas and Jetstar as customers continued to prioritize travel spending.

Speaker #2: Shocks like this are not new to aviation, and it's why we prioritize our balance sheet strength. The Group will continue to monitor developments and adapt to conditions as needed.

Speaker #2: Turning to slide 17, the strength of today's result reflects the deeply integrated value across the Group. I'll now provide an overview of business performance.

Speaker #2: And the CEOs of each segment will also give their perspective during the Q&A. Group Domestic delivered a strong EBIT result of $1.44 billion, with an EBIT margin of 13%.

Speaker #2: Overall, domestic brand demand remained resilient, with strong leisure travel across both Qantas and Jetstar as customers continue to prioritize travel spending. Resource sector travel was supported by ongoing investment in Western Australia, despite some impact to demand from mine closures in Queensland.

Vanessa Hudson: Resource sector travel was supported by ongoing investment in Western Australia, despite some impact to demand from mine closures in Queensland. SME performance remained solid, underpinned by the need for face-to-face engagement. Larger corporates and government customers heightened their focus on cost management amid ongoing economic uncertainty. Qantas Domestic delivered a strong result prior to the Middle East conflict, with the last quarter impacted by higher fuel price and impact on corporate demand. As fuel prices rose during the final four months of the year, Qantas Domestic acted quickly through a combination of pricing, capacity, and network adjustments, helping to drive a 5% increase in unit revenue. Jetstar Domestic delivered another outstanding performance, with revenue growing by 11% on 4% capacity. Demand remained particularly resilient in the Q4 as value-conscious customers continued to seek affordable travel options closer to home. Group International delivered capacity growth across the year.

Speaker #2: SME performance remained solid, underpinned by the need for face-to-face engagement. Larger corporates and government customers heightened their focus on cost management amid ongoing economic uncertainty.

Speaker #2: Qantas Domestic delivered a strong result prior to the Middle East conflict, with the last quarter impacted by higher fuel prices and an impact on corporate demand.

Speaker #2: As fuel prices rose during the final four months of the year, Qantas Domestic acted quickly through a combination of pricing, capacity, and network adjustments, helping to drive a 5% increase in unit revenue.

Speaker #2: Jetstar Domestic delivered another outstanding performance, with revenue growing by 11% on 4% capacity. Demand remained particularly resilient in the fourth quarter, as value-conscious customers continued to seek affordable travel options closer to home.

Speaker #2: Group International delivered capacity growth across the year. Pre-conflict, international demand was strong and broad-based, supported by new Jetstar fleet deliveries, the return of the final A380, and ongoing premium cabin demand.

Vanessa Hudson: Pre-conflict international demand was strong and broad-based, supported by new Jetstar fleet deliveries, the return of the final A380, and ongoing premium cabin demand. As conflict began, both Qantas and Jetstar responded quickly to the circumstances. Qantas optimized the network, redeployed capacity from domestic to international to capture displaced demand to Europe while managing capacity in response to high fuel prices. Combined seat factors on Qantas London, Paris, and Rome connections grew to over 90% during the period. This enabled Qantas International to deliver a AUD 371 million EBIT, with revenue growing by 8% on 7% capacity for the year. Similar to Qantas, Jetstar made fair and capacity adjustments to optimize earnings and also attract displaced demand as other airlines reduced capacity to leisure markets.

Speaker #2: As conflict began, both Qantas and Jetstar responded quickly to the circumstances. Qantas optimized the network and redeployed capacity from domestic to international to capture and displace demand to Europe, while managing capacity in response to high fuel prices.

Speaker #2: Combined seat factors on Qantas London, Paris, and Rome connections grew to over 90% during the period. This enabled Qantas International to deliver a $371 million EBIT, with revenue growing by 8% on 7% capacity for the year.

Speaker #2: Similar to Qantas, Jetstar made fare and capacity adjustments to optimize earnings and also attract displaced demand, as other airlines reduced capacity to leisure markets.

Speaker #2: As a result, Jetstar Australia's international business performed strongly for the year, with EBIT of $279 million and an operating margin of 11%. Both Qantas and Jetstar continue to see strong demand internationally.

Vanessa Hudson: As a result, Jetstar Australia International business performed strongly for the year, with an EBIT of AUD 279 million and an operating margin of 11%. Both Qantas and Jetstar continue to see strong demand internationally. Now to Qantas Loyalty. Loyalty continues to demonstrate the value of resilience of the group's integrated portfolio. It delivered 12% EBIT growth to AUD 625 million while continuing to expand engagement across retail, financial services, and SMEs, with one in four Australian SMEs within the Qantas Business Rewards membership base. The program delivered record reward seat booking, increased member engagement, and continued growth in both points earned and points redeemed, both increasing at 9%. Now I will hand to Rob.

Speaker #2: Now to Qantas Loyalty. Loyalty continues to demonstrate the value and resilience of the group's integrated portfolio. It delivered 12% EBIT growth to $625 million, while continuing to expand engagement across retail, financial services, and SMEs, with 1 in 4 Australian SMEs within the Qantas Business Rewards membership base.

Speaker #2: The program delivered record reward seat bookings, increased member engagement, and continued growth in both points earned and points redeemed, both increasing at 9%. Now, I'll hand to Rob.

Speaker #1: Thanks, Vanessa. And so we'll now turn to slide 10 for a more detailed look at our financial metrics. Underlying profit before tax for the full year was $2.064 billion, down $330 million versus FY25.

Rob Marcolina: Thanks, Vanessa. We will now turn to slide 10 for a more detailed look at our financial metrics. Underlying profit before tax for the full year was AUD 2.064 billion, down AUD 330 million versus FY2025, and this included the net AUD 420 million impact from the Middle East conflict. Statutory profit after tax was AUD 1.289 billion, down AUD 360 million versus FY2025. Statutory profit included the impact of Jetstar Asia closure costs and legal provisions and related costs relating to Qantas' class action settlement. Underlying earnings per share was AUD 0.96, and the group's operating margin was 9.2%. For the full year, operating cash flow was strong at AUD 3.9 billion. Net debt ended the year at AUD 6.2 billion, at the middle of our FY2026 target net debt range of AUD 5.5 billion to AUD 6.9 billion, in line with our guidance provided in April.

Speaker #1: And this included the net $420 million impact from the Middle East conflict. Statutory profit after tax was $1.289 billion, down $360 million versus FY25.

Speaker #1: Statutory profit included the impact of Jetstar Asia closure costs and legal provisions and related costs, relating to Qantas's class action settlement. Underlying earnings per share was $0.96, and the Group's operating margin was 9.2%.

Speaker #1: For the full year, operating cash flow was strong at $3.9 billion. Net debt ended the year at $6.2 billion, at the middle of our FY26 target net debt range of $5.5 to $6.9 billion, in line with our guidance provided in April.

Speaker #1: Net capital expenditure was $4 billion, again in line with guidance provided in April. There were $700 million of dividends returned to shareholders. Our total unit revenue, or TRAS, increased by 3.6%, and total unit cost ex-fuel, or TCASC, increased by 4.1%.

Rob Marcolina: Net capital expenditure was AUD 4 billion, again in line with guidance provided in April. There were AUD 700 million of dividends returned to shareholders. Our total unit revenue, or TRASK, increased by 3.6%, and total unit cost ex fuel, or TCASK, increased by 4.1%. This was driven by several factors, which I will explain as part of the group profit bridge. Moving to slide 11, the group profit bridge. On this slide, I will walk through the key drivers in our underlying profit from FY2025 to FY2026. For the full year, group capacity increased 3.4%, with new fleet deliveries and the return of the final A380 contributing AUD 143 million in earnings. The increase in fuel costs in FY2026 was AUD 492 million, which included AUD 26 million of additional gross carbon costs and was predominantly as a result of the Middle East conflict.

Speaker #1: This was driven by several factors, which I'll explain as part of the group profit bridge. So, moving to slide 11, the group profit bridge.

Speaker #1: On this slide, I'll walk through the key drivers in our underlying profit from FY25 to FY26. For the full year, group capacity increased 3.4%, with new fleet deliveries and the return of the final A380 contributing $143 million in earnings.

Speaker #1: The increase in fuel costs in FY26 was $492 million, which included $26 million of additional gross carbon costs, and was predominantly as a result of the Middle East conflict.

Speaker #1: Group RASK grew by 5%, with group domestic at 4%, and group international at 5%. In the second half, RASK grew by 5% and 7%, respectively, at or better than the guidance we provided in April 2026.

Rob Marcolina: Group RASK grew by 5%, with group Domestic at 4% and group International at 5%. In the second half, RASK grew by 5% and 7% respectively, at or better than guidance we provided in April 2026. Our transformation program for FY2026 was above prior guidance, delivering AUD 455 million for the full year, more than offsetting CPI with a mixture of cost and revenue initiatives. For FY2026, depreciation amortization increased AUD 236 million, reflecting the acceleration of our investment in fleet. The ramp-up in fleet renewal saw the business incur fleet-related EIS entry into service costs, while our net increase in industry costs was AUD 95 million. Turning to slide 26. Our longstanding financial framework is core to our strategy. It is designed to structurally maintain financial strength, including low leverage, strong liquidity, and an investment-grade credit rating.

Speaker #1: Our transformation program for FY26 was above prior guidance, delivering $455 million for the full year, more than offsetting CPI with a mixture of cost and revenue initiatives.

Speaker #1: For FY26, depreciation and amortization increased by $236 million, reflecting the acceleration of our investment in fleet. The ramp-up in fleet renewal saw the business incur fleet-related EIS (entry into service) costs, while our net increase in industry costs was $95 million.

Speaker #1: Turning to slide 26, our longstanding financial framework is core to our strategy. It's designed to structurally maintain financial strength, including low leverage, strong liquidity, and an investment-grade credit rating.

Speaker #1: It also guides capital allocation, including opportunities for capital recycling to maximize group value through the cycle. As Vanessa mentioned earlier, our balance sheet strength has allowed us to navigate the current conditions, maintaining investment in fleet and base dividends for shareholders.

Rob Marcolina: It also guides capital allocation, including opportunities for capital recycling to maximize group value through the cycle. As Vanessa mentioned earlier, our balance sheet strength has allowed us to navigate the current conditions, maintaining investment in fleet and base dividends for shareholders. Capital expenditure, as I mentioned, for FY2026 was AUD 4 billion, in line with guidance provided in April. We are also today providing an update guidance for FY2027 for CapEx, which is now expected to be AUD 4.3 billion to AUD 4.6 billion. On shareholder distributions, we are committed to a base dividend that is sustainable through the cycle. Again, as Vanessa mentioned, we are delighted to share that the board has approved a final FY2026 shareholder distribution, a fully franked base dividend of AUD 300 million or AUD 0.198 per share. This takes the total FY2026 base dividend to AUD 600 million, AUD 0.396 per share fully franked.

Speaker #1: Capital expenditure, as I mentioned for FY26, was $4 billion, in line with guidance provided in April. We are also today providing an updated guidance for FY27 for capex, which is now expected to be $4.3 to $4.6 billion.

Speaker #1: On shareholder distributions, we are committed to a base dividend that is sustainable through the cycle, and again, as Vanessa mentioned, we are delighted to share that the Board has approved a final FY26 shareholder distribution.

Speaker #1: A fully-franked base dividend of $300 million, or 19.8 cents per share. This takes the total FY26 base dividend to $600 million, or 39.6 cents per share, fully-franked.

Rob Marcolina: This takes the total FY2026 base dividend to AUD 600 million, AUD 0.396 per share fully franked. As evidenced by the decision to divest our stake in Jetstar Japan, we remain focused on ensuring optimal capital allocation across the group. I will now hand back to Vanessa.

Speaker #1: As evidenced by the decision to divest our stake in Jetstar Japan, we remain focused on ensuring optimal capital allocation across the group. I'll now hand back to Vanessa.

Rob Marcolina: As evidenced by the decision to divest our stake in Jetstar Japan, we remain focused on ensuring optimal capital allocation across the group. I will now hand back to Rob.

Speaker #2: Thanks, Rob. We are on slide 29, the outlook for the first half of FY27. Travel intentions remain resilient, and customers continue to prioritize travel spending.

Vanessa Hudson: Thanks, Rob. We are on slide 29, the outlook for H1 FY27. Travel intentions remain resilient, and customers continue to prioritize travel spending. Ongoing conflict in the Middle East continues to influence the economic environment through higher jet fuel prices and industry capacity settings. Internationally, demand for both brands remains strong. Domestically, we see trends stabilizing and consistent with what we saw in Q4 2026. Going forward, we will be moving to TRASK. This is total revenue over ASK guidance for our airline segments, which includes ancillary revenue streams and we hope will simplify guidance for the market.

Speaker #2: The ongoing conflict in the Middle East continues to influence the economic environment through higher jet fuel prices and industry capacity settings. Internationally, demand for both brands remains steady, with trends stabilizing and consistent with what we saw in Q4 of 2026.

Speaker #2: Ongoing forward, we will be moving to TRASC, so this is total revenue over ASK guidance for our airline segments, which includes ancillary revenue streams, and we hope will simplify guidance for the market.

Speaker #2: We expect group total unit revenue, or TRASC, to increase for both the Group Domestic and Group International businesses also, equally in the range of 8% to 10% over the same period.

Vanessa Hudson: We expect group total unit revenue or TRASK to increase for both the Group Domestic and Group International businesses, also equally in the range of 8% to 10% over the same period. TRASK guidance is inclusive of the impact of capacity from tables provided on slide 30. Given the ongoing impact of the Middle East, TRASK guidance is aligned with the outlook provided on fuel. Fuel cost for H1 2027 is approximately AUD 3.6 billion, referencing a market jet fuel price of AUD 197 a barrel. The group remains highly hedged in Brent at 85% for H1 and maintains significant levels of participation should fuel price revert lower.

Speaker #2: Group TRASC guidance is inclusive of the impact of capacity from tables provided on slide 30, and given the ongoing impact of the Middle East, TRASC guidance is aligned with the outlook provided on fuel.

Speaker #2: Fuel costs for the first half of '27 are approximately $3.6 billion, referencing a market jet fuel price of 197 Australian dollars a barrel. The group remains highly hedged in Brent at 85% for the first half and maintains significant levels of participation should fuel prices revert lower.

Speaker #2: For the year, Qantas Loyalty underlying EBIT is expected to grow between 5 to 7% for the full year of '27, and will remain on track to our target of $800 million to $1 billion for FY30 in underlying EBIT.

Vanessa Hudson: For the year, Qantas Loyalty underlying EBIT is expected to grow between 5% to 7% for the full year of 2027 and will remain on track to our target of AUD 800 million to AUD 1 billion for FY30 in underlying EBIT. Our outlook slides provide further detail on specific line items including fuel, depreciation, and transformation on slide 29. We also have our latest capacity guidance on slide 30 for investor materials. I will now pass to Cam to provide a short update on Qantas International and its fleet strategy.

Speaker #2: Our outlook slides provide further detail on specific line items, including fuel, depreciation, and transformation, on slide 29. We also have our latest capacity guidance on slide 30 for investor materials.

Speaker #2: I'll now pass to Cam to provide a short update on Qantas International and its fleet strategy.

Speaker #1: Thank you, Vanessa. Thanks, Rob, and good morning, everyone. Today, I want to take you through an update on Qantas International—why we think this is an inflection point for the business, and for our future financial performance.

Cam Wallace: Thank you, Vanessa. Thanks, Rob, and good morning, everyone. Today, I want to take you through an update on Qantas International, why we think this is an inflection point for the business and for our future financial performance. Qantas International is going through an important fleet transformation. We started this in 2017 with our first 787, launching ultra-long-haul routes like Perth to London, Perth to Rome, and Perth to Paris, as well as Auckland to New York. The 787s deliver the highest customer satisfaction and the highest margin on our international network. What you will hear today is the next phase of the fleet strategy and our pathway for Qantas International to reach 10% EBIT margin by financial year 2031. I will take you through a small number of the select slides in the Qantas International investor presentation. If we move to slide five, let us talk about the fleet.

Speaker #1: Qantas International is going through an important fleet transformation. We started this in 2017 with our first 787, launching ultra-long-haul routes like Perth to London, Perth to Rome, and Perth to Paris, as well as Auckland to New York.

Speaker #1: The 787s deliver the highest customer satisfaction and the highest margin on our international network. What you'll hear today is the next phase of the fleet strategy and our pathway for Qantas International to reach a 10% EBIT margin by financial year '31.

Speaker #1: I'll take you through a small number of the selected slides in the Qantas International investor presentation. So if we move to slide 5, let's talk about the fleet.

Cam Wallace: If we move to slide five, let us talk about the fleet. Our future fleet is critical to delivering a sustainable uplift in both quantity and importantly, quality of earnings. This is driven by three key factors. Firstly, flexibility. The new fleet means more network options, diversifying our revenue, and covering more routes direct, the way our customers want to fly. Two, premiumization. Part of the fleet and network strategy is making sure we are driving growth in the cabins in which our customers want to travel. That means the new fleet has higher premium cabin density, growing the cabin mix of premium from 19% of our flying today to just under 30% by the financial year 2031. Three, cost and operational efficiency. This is what we get from new generation technology, simplification of our fleet, and the opportunities for future transformational, which is enabled by the fleet.

Speaker #1: Our future fleet is critical to delivering a sustainable uplift in both quantity and, importantly, quality of earnings. This is driven by three key factors.

Cam Wallace: Our future fleet is critical to delivering a sustainable uplift in both quantity and importantly, quality of earnings. This is driven by three key factors. Firstly, flexibility. The new fleet means more network options, diversifying our revenue, and covering more routes direct, the way our customers want to fly. Two, premiumization. Part of the fleet and network strategy is making sure we are driving growth in the cabins in which our customers want to travel. That means the new fleet has higher premium cabin density, growing the cabin mix of premium from 19% of our flying today to just under 30% by the financial year 2031. Three, cost and operational efficiency. This is what we get from new generation technology, simplification of our fleet, and the opportunities for future transformational, which is enabled by the fleet.

Speaker #1: Firstly, flexibility. The new fleet means more network options, diversifying our revenue and covering more routes direct—the way our customers want to fly. Two, premiumization. Part of the fleet and network strategy is making sure we're driving growth in the cabins in which our customers want to travel.

Speaker #1: That means the new fleet has higher premium cabin density, growing the cabin mix of premium from 19% of our flying today to just under 30% by the financial year '31.

Speaker #1: And three, cost and operational efficiency. This is what we get from new-generation technology, simplification of our fleet, and the opportunities for future transformation, which is enabled by the fleet.

Speaker #1: Increasingly, our narrowbody fleet of 220s and XLRs will play a role flying into the Tasman, the Pacific, and Asia, and ensuring that capacity is matched to demand whilst also optimizing frequencies.

Cam Wallace: Increasingly, our narrow body fleet of A220s and A321XLRs will play a role flying into the Tasman, the Pacific, and Asia, and ensuring that capacity is matched to demand whilst also optimizing frequencies. The A220 already flies between Brisbane and Wellington, and the A321XLR will fly early 2027 from Brisbane to Manila. The new wide-body fleet includes Project Sunrise A350 aircraft and the A350 standard variant, which will fly to some of our longest sectors in Europe and the USA. The 787-10s will join the 787 fleet and fly slightly closer to home. By financial year 2031, 70% of our capacity will be on next generation aircraft. All of these aircraft will deliver a step up in customer experience compared to what you see and what you experience today. We will also bring lie-flat to Qantas single-aisle aircraft for the first time with a new business suite for our A321XLR fleet.

Speaker #1: The 220 already flies between Brisbane and Wellington, and the XLR will fly in early 2027 from Brisbane to Manila. The new widebody fleet includes Project Sunrise A350 aircraft and the 350 standard variant, which will fly to some of our longest sectors in Europe and the USA.

Speaker #1: The 787-10s will join the 787 fleet and fly slightly closer to home. By financial year '31, 70% of our capacity will be on next-generation aircraft.

Speaker #1: All of these aircraft will deliver a step up in customer experience, compared to what you see and what you experience today. We'll also bring lie-flat to Qantas single-aisle aircraft for the first time, with a new business suite for our XLR fleet.

Cam Wallace: We will also bring lie-flat to Qantas single-aisle aircraft for the first time with a new business suite for our A321XLR fleet.

Speaker #1: The new wide-body aircraft will start arriving, first with Project Sunrise from April 2027, and the next 787 in financial year 2028. We will also start to see the progressive retirement of our 737s and A330s, and as Vanessa mentioned, today we announced our A380s will start to exit from mid-2028.

Cam Wallace: The new wide-bodied aircraft will start arriving, first with Project Sunrise from April 2027 and the next 787 in financial year 2028. We will also start to see the progressive retirement of our 737s and A330s, and as Vanessa mentioned, today we announced our A380s will start to exit from the mid-2028. Talking about the A380, let us turn to slide eight. The Airbus A380 is our flagship. It is much loved by customers and our people, and it has played a critical role in our fleet ever since the first delivery way back in 2008. Over the last six months, it has allowed us to optimize the network and fleet to capture demand arising from the Middle East conflict. Now, I know some of you may ask, given how loved this aircraft is, why retire it, and why retire it now? Well, there are three key reasons why.

Speaker #1: So, talking about the A380, let's turn to slide 8. The Airbus A380 is our flagship. It's much loved by customers and our people, and it's played a critical role in our fleet ever since the first delivery way back in 2008.

Speaker #1: Over the last six months, it's allowed us to optimize the network and fleet to capture demand arising from Middle East conflict. Now, I know some of you may ask, given how loved this aircraft is, why retire it—and there are three key reasons why.

Speaker #1: One, we are constantly looking for ways to optimize how and where we deploy our capital. The A380 retirement unlocks approximately $300 million of net cash flow benefit from FY28 to FY31, primarily through lower capitalized maintenance costs.

Cam Wallace: One, we are constantly looking for ways to optimize how and where we deploy our capital. The A380 retirement unlocks approximately AUD 300 million of net cash flow benefit from FY 2028 to 2031, primarily through lower capitalized maintenance cost. This capital can be more efficiently deployed to new aircraft and deliver sustainable earnings uplift. That is a big deal for how we sequence this transition. Two, it is an aircraft which has been out of production since 2021. We already have supply chain challenges today, and we know there is likely to be supply constraints into the future. This creates operational complexity and thus higher operating and maintenance costs. And three, with the first Sunrise aircraft now on the horizon, this gives us greater confidence in the delivery schedule of our future fleet.

Speaker #1: This capital can be more efficiently deployed to new aircraft and deliver sustainable earnings uplift. That's a big deal for how we sequence this transition.

Speaker #1: Second, it's an aircraft that has been out of production since 2021. We already have supply chain challenges today, and we know there are likely to be supply constraints in the future.

Speaker #1: This creates operational complexity and, thus, higher operating and maintenance costs. And three, with the first Sunrise aircraft now on the horizon, this gives us greater confidence in the delivery schedule of our future fleet.

Speaker #1: As the A380 transitions to newer tech, like the A350s, this will deliver value to Qantas International. And there are two stats that bring this to life.

Cam Wallace: As the A380 transitions to newer tech like the A350s, this will deliver value to Qantas International, and there are two stats that bring this to life. The A350 standard variant has a higher premium density at more than 40%, compared to 30% on the A380. And on city pairs like Sydney to Dallas, switching to an A350 delivers an estimated 12% increase in contribution margin. Moving to slide 9. We have talked a lot about the A380s, but it is the A330s that actually make up more than half of our wide-body fleet. The Qantas A330s only have premium density of around 10%. It does not have a premium economy cabin, which we know our customers want, and the economy cabin is bigger than it needs to be on some of our thinner international routes.

Speaker #1: The A350 standard variant has a higher premium density at more than 40%, compared to 30% on the A380. And on city pairs like Sydney to Dallas, switching to an A350 delivers an estimated 12% increase in contribution margin.

Speaker #1: Moving to slide 9, we've talked a lot about the A380s, but it's the A330s that actually make up more than half of our widebody fleet.

Speaker #1: The Qantas A330s only have a premium density of around 10%. They don't have a premium economy cabin, which we know our customers want, and the economy cabin is bigger than it needs to be on some of our thinner international routes.

Speaker #1: The 330 flies a mix of international routes, and now we've got the chance to move on to two new aircraft types that will better match demand and optimize costs.

Cam Wallace: The 330 flies a mix of international routes, and now we have got the chance to move on to two new aircraft types that will better match demand and optimize costs. An example is Brisbane to LA, which is a long-haul city pair. Switching from a 330 to a 787 lifted contribution margin on that market by 20 percentage points. Higher premium density is a big part of that, especially on longer routes where we know the demand is there. We also know customers prefer the 787. OTP lifted and NPS doubled on that city pair. Now it is a different strategy on shorter city pairs like Perth to Singapore. Here, the challenge with the 330 is the high seat count. Put simply, we are flying more seats that we can fill at the right price.

Speaker #1: An example is Brisbane to L.A., which is a long-haul city pair. Switching from an A330 to a 787 lifted contribution margin on that market by 20 percentage points.

Speaker #1: Higher premium density is a big part of that, especially on longer routes where we know the demand is there. We also know customers prefer the 787. OTP lifted, and NPS doubled on that city pair.

Speaker #1: Now, it's a different strategy on shorter city pairs like Perth to Singapore. Here, the challenge with the 330 is the high seat count. Put simply, we're flying more seats than we can fill at the right price.

Speaker #1: This route can soon be served with a narrowbody like the XLR, which best matches capacity to demand whilst also retaining frequency. We expect to see a 10% increase in contribution margin.

Cam Wallace: This route can soon be served with a narrow body like the A321XLR, which best matches capacity to demand whilst also retaining frequency. We expect to see a 10% increase in contribution margin. Higher unit revenue plays a part, but also key to switching to a narrow body with its next generation technology. This turns up in lower fuel unit costs and lower unit depreciation relative to the 330. If I move to slide 10, a slide I suspect you will be keen to see. This slide outlines our indicative earnings trajectory from financial year 2027 to 2031. Qantas International EBIT margin is expected to go from 4% in financial year 2026 to 10% by financial year 2031. The earnings and margin trajectory is directly tied to the new fleet delivery, which unlocks premium cabin seat growth and delivers technology efficiencies.

Speaker #1: Higher unit revenue plays a part, but also key to switching to a narrowbody is next-generation technology. This shows up in lower fuel unit costs and lower unit depreciation relative to the 330.

Speaker #1: If I move to slide 10—a slide I suspect you will be keen to see—it outlines our indicative earnings trajectory from financial year '27 to '31.

Speaker #1: Qantas International EBIT margin is expected to go from 4% in FY26 to 10% by FY31. The earnings and margin trajectory is directly tied to the new fleet delivery.

Speaker #1: This unlocks premium cabin seat growth and delivers technology efficiencies. By financial year ’31, Sunrise is expected to deliver the $400 million in earnings uplift that we’ve mentioned in previous results.

Cam Wallace: By financial year 2031, Project Sunrise is expected to deliver the AUD 400 million in earnings uplift that was mentioned in previous results. Beyond financial year 2031, we expect Qantas International earnings to grow and margins to reach between 10% to 12% as the fleet renewal continues. We know entry into service cost is necessary to unlock these benefits. That is expected and captured in the earnings trajectory shown here. In financial year 2028/2029, the EIS cost is approximately AUD 150 million, but that will decline over time as the fleet reaches scale. While this slide is focused on the medium to long term, it is important to acknowledge that in the short term, Qantas International will be impacted by elevated fuel price, as mentioned in the outlook earlier. On to slide 11, integrated value. Group integrated value is the glue that underpins the success of the Qantas Group.

Speaker #1: Beyond financial year '31, we expect Qantas International earnings to grow and margins to reach between 10% and 12% as the fleet renewal continues. We know entry-into-service costs are necessary to unlock these benefits.

Speaker #1: That's expected and captured in the earnings trajectory shown here. In financial years '28 and '29, the ES cost is approximately $150 million, but that will decline over time as the fleet reaches scale.

Speaker #1: And while this slide is focused on the medium to long term, it is important to acknowledge that in the short term, Qantas International will be impacted by elevated fuel prices, as mentioned in the outlook earlier.

Speaker #1: Onto slide 11, integrated value. Group integrated value is the glue that underpins the success of the Qantas Group. The investment in Qantas International generates value across the group in three key ways.

Cam Wallace: The investment in Qantas International generates value across the Group in three key ways. One, international feeds domestic. Our international network proposition underpins the value we offer our domestic customers across the Group. With Project Sunrise and the increasing direct markets, we believe we will further strengthen that proposition. Two, international and loyalty reinforce each other. Members want to redeem points on Qantas International and particularly on premium seats. We actively invest in the loyalty program by ensuring reward seats are available to our customers. That is the flywheel. It drives the attractiveness of Qantas Frequent Flyer and Qantas Business Rewards program, which in turn attracts quality coalition partners and drives value for loyalty. Finally, freight. The investment in our future fleet means more freight capacity and unlocks earnings growth.

Speaker #1: First, international feeds domestic. Our international network proposition underpins the value we offer our domestic customers across the group. With Project Sunrise and the increasing number of direct markets, we believe we will further strengthen that proposition.

Speaker #1: Two, international and loyalty reinforce each other. Members want to redeem points on Qantas international, and particularly on premium seats. We actively invest in the loyalty program by ensuring reward seats are available to our customers.

Speaker #1: And that's the flywheel. It drives the attractiveness of Qantas Frequent Flyer and Qantas Business Rewards programs, which in turn attract quality coalition partners and drive value for Loyalty.

Speaker #1: And finally, freight. The investment in our future fleet means more freight capacity and unlocks earnings growth. Put it all together, and while the Qantas International segment was 15% of the group's FY26 underlying EBIT, it actually enabled 30% of that result.

Cam Wallace: Put it all together, while Qantas International segment was 15% of the Group's FY26 underlying EBIT, it actually enabled 30% of that result. It is also enabling around 40% of the Group revenue received in advance, which is critical to our working capital. To bring it all together, if we could move to slide 12. Qantas International is undergoing its most important fleet renewal. The sustainable earnings uplift is based on three key things: flexibility, premiumization, efficiency. That is the thesis, and we are already seeing it playing out with our 787s. Project Sunrise is almost here and will deliver a AUD 400 million uplift in earnings and working capital by FY31, when that fleet reaches scale. This means Qantas International has a clear pathway to the 10% margin target by FY31 and to 10% to 12% beyond that. That is before including the broader value delivered back to the Group.

Cam Wallace: Put it all together, while Qantas International segment was 15% of the Group's FY 2026 underlying EBIT, it actually enabled 30% of that result. It is also enabling around 40% of the Group revenue received in advance, which is critical to our working capital. To bring it all together, if we could move to slide 12. Qantas International is undergoing its most important fleet renewal. The sustainable earnings uplift is based on three key things: flexibility, premiumization, efficiency. That is the thesis, and we are already seeing it playing out with our 787s. Project Sunrise is almost here and will deliver a AUD 400 million uplift in earnings and working capital by FY31, when that fleet reaches scale. This means Qantas International has a clear pathway to the 10% margin target by FY31 and to 10% to 12% beyond that.

Speaker #1: It's also enabling around 40% of the group revenue to be received in advance, which is critical to our working capital. So, to bring it all together, if we could move to slide 12.

Speaker #1: Qantas International is undergoing its most important fleet renewal. The sustainable earnings uplift is based on three key things: flexibility, premiumization, and efficiency. That's the thesis.

Speaker #1: And we're already seeing it playing out with our 787s. Project Sunrise is almost here, and we'll deliver a $400 million uplift in earnings and working capital by FY31 when that fleet reaches scale.

Speaker #1: This means Qantas International has a clear pathway to the 10% margin target by FY31, and to 10% to 12% beyond that. And that's before including the broader value delivered back to the group.

Cam Wallace: That is before including the broader value delivered back to the Group. I would like to close by thanking our people around the globe for everything they do, taking Australians to where they want to travel and bringing them home safely again. Thank you to all of our customers for their continued loyalty and support. I am now going to hand back to Vanessa, who will head into the Q&A.

Speaker #1: I'd like to close by thanking our people around the globe for everything they do—taking Australians to where they want to travel, and bringing them home safely again.

Cam Wallace: I would like to close by thanking our people around the globe for everything they do, taking Australians to where they want to travel and bringing them home safely again. Thank you to all of our customers for their continued loyalty and support. I am now going to hand back to Vanessa, who will head into the Q&A.

Speaker #1: And thank you to all of our customers for their continued loyalty and support. I'm now going to hand back to Vanessa, who will head into the Q&A.

Speaker #2: Thanks, Cam. We close FY26, and we have entered FY27 from a position of strength. Customer satisfaction is at its highest level in the decade.

Vanessa Hudson: Thanks, Cam. We closed FY2026, and we have entered FY2027 from a position of strength. Customer satisfaction is at its highest level in a decade, and our domestic fleet renewal is well in progress. The first Sunrise aircraft arrives in April next year, and broader international fleet renewal will begin soon. Our integrated portfolio provides resilience to respond to market conditions as they evolve. As a management team, we remain focused on delivering to our customers, our people, and our shareholders. I would like to close by saying thank you also to all of our staff for making the results possible that we delivered here today. We now will open up to Q&A, and moderator, I will pass over to you.

Speaker #2: And our domestic fleet renewal is well in progress. The first Sunrise aircraft arrives in April next year, and broader international fleet renewal will begin soon.

Speaker #2: Our integrated portfolio provides resilience to respond to market conditions as they evolve. As a management team, we remain focused on delivering to our customers, our people, and our shareholders. I would like to close by saying thank you also to all of our staff for making possible the result that we delivered here today.

Speaker #2: We will now open up to Q&A. Moderator, I will pass over to you.

Speaker #3: Thank you. Your first question comes from Anthony Molder with Jefferies. Please go ahead.

Operator: Thank you. Your first question comes from Anthony Moulder with Jefferies. Please go ahead.

Speaker #4: Good morning, all. There’s a lot of detail on the medium-term transformation for the group in this presentation, which I appreciate, but can I just go back to domestic?

Anthony Moulder: Good morning, all. A lot of detail on the medium-term transformation for the group in this presentation, I appreciate, but can I just go back to domestic, and specifically around that RASK guidance for domestic 5% growth that we saw in Q4 2026, but that is now expected to step up to that 8% to 10% growth in H1 2027. I guess I'm wanting to understand as to whether or not you're expecting the fare increases that you've already pushed through will give you that growth across Qantas and Jetstar, or are you needing further increases to cover that higher growth through H1 2027, please?

Speaker #4: And specifically around that TRAS guidance for domestic 5% growth that we saw in Q4 2026, but that is now expected to step up to that 8% to 10% growth in the first half of 2027.

Speaker #4: So, I guess what I'm wanting to understand is whether or not you're expecting the fare increases that you've already pushed through will give you that growth across Qantas and Jetstar, or are you needing further increases to cover that higher growth through the first half of '27, please?

Speaker #2: Yeah, great question. I will pass to Steph and Marcus in a minute to just kind of give you a flavor of what we're seeing, but also what our intakes are showing us.

Vanessa Hudson: Yeah. Great question, and I will pass to Steph and Markus in a minute to just kind of give you a flavor of what we're seeing, but also what our intakes are showing us. As you would appreciate in Q4, when the higher fuel price impacted, we'd actually sold quite a large amount of our revenue, and so therefore sold those on tickets that obviously weren't inclusive of fare increases. But across the business, we have taken active fare increases, in terms of capacity, but also the fare increases across Jetstar and Qantas was not just in Q4, but actually many across the financial year.

Speaker #2: But as you would appreciate, in Q4 when the higher fuel price impacted, we'd actually sold quite a large amount of our revenue and so therefore sold those on tickets that obviously weren't inclusive of fare increases.

Speaker #2: But across the business, we have taken active fare increases in terms of capacity, but also the fare increases across Jetstar and Qantas were not just in quarter four, but actually many across the financial year.

Speaker #2: I think, as we look forward, TRAS we think is a really important metric to move to because TRAS builds in not just fare increases, and also, obviously, average fares, but it includes increases in seat factor. It includes ancillary revenue, which we're driving very hard, but it also includes charter revenue, which is increasingly becoming a greater proportion of our revenue.

Vanessa Hudson: I think as we look forward, RASK, we think is a really important metric to move to, because RASK builds into not just fare increases and also obviously average fares, but it includes increase in seat factor, it includes ancillary revenue, which we are driving very hard, but it also includes charter revenue, which is increasingly becoming a greater proportion of our revenue. We think RASK as a metric, going forward, is going to be much more meaningful to investors. And just on the point of what we are going to continue to do, we are going to continue to drive and do what we need to do to respond to the market. We are not saying that everything that can be done has been done, because we are going to continue to drive.

Speaker #2: So, we think TRAS, as a metric going forward, is going to be much more meaningful to investors. And just on the point of what we are going to continue to do, we're going to continue to drive and do what we need to do to respond to the market.

Speaker #2: And so, we are not saying that everything that can be done has been done, because we're going to continue to drive. When we see demand, we're going to continue to push to maximize revenue.

Vanessa Hudson: Where we see demand, we are going to continue to push to maximize revenue, and clearly obviously maximize earnings. But the outlook that we have given you is the best indication that we see at the moment. And I might pass to Steph because Jetstar is seeing incredibly strong demand.

Speaker #2: And clearly, obviously, maximize earnings. But the outlook that we've given you is the best indication that we see at the moment. And I might pass to Steph because Jetstar's seeing incredibly strong demand.

Speaker #3: Yeah, thanks, Vanessa, and thanks, Anthony, for the question. I think we have a lot of confidence in the outlook from a leisure demand perspective, and I think there are a few proof points.

Steph Tully: Yeah. Thanks, Vanessa, and thanks, Anthony, for the question. I think we have a lot of confidence in the outlook from a leisure demand perspective, and I think there is a few proof points. Firstly, still in our research, we see that travel intention high and the prioritization of travel high. I think there genuinely has been a structural change in the desire for travel and experience in the last few years, and we are seeing that hold and in some ways strengthen. We are now late August, and so we have had 2 months of intakes, and we are seeing for the financial year, we are seeing very strong intakes. Jetstar had a record week last week, in fact. But very strong intakes across both domestic and international.

Speaker #3: Firstly, still in our research, we see that travel intention is high and the prioritization of travel is high. I think there genuinely has been a structural change in the desire for travel and experience in the last few years.

Speaker #3: And we're seeing that hold, and in some ways strengthen. We're now in late August, so we've had two months of intakes, and for the financial year, we're seeing very strong intakes.

Speaker #3: Jetstar had a record week last week, in fact—very strong intakes across both domestic and international. What you see in this first half, in particular, is a really strong events calendar. AFL finals are configured the way that we like.

Steph Tully: And what you see in this H1 in particular is a really strong events calendar, AFL finals configured the way that we like, and very strong concerts, et cetera, this half. And what I will say on just a managing yield perspective, we like to look at the way we manage prices always on. We have got sophisticated tools in our revenue management team, which means you do not just see blanket increases, you see multiple increases across different routes every week. And we will continue to manage that in a dynamic way to make sure we are getting the yield we need to look to mitigate the fuel. And as Vanessa said, I think from a RASK perspective, for Jetstar, that is particularly important as we look to keep innovating on ancillary revenue. Our new priority carry-on bag is an example of that, which really changes the mix.

Speaker #3: And very strong concerts, et cetera, this half. And what I will say on just a managing yield perspective, we like to look at the way we manage prices always on.

Speaker #3: We've got sophisticated tools in our revenue management team, which means you don't just see blanket increases—you see multiple increases across different routes every week.

Speaker #3: And we will continue to manage that in a dynamic way to make sure we're getting the yield we need, and to look to mitigate the fuel.

Speaker #3: And as Vanessa said, I think from a TRAS perspective, for Jetstar, that's particularly important as we look to keep innovating on ancillary revenue. Our new priority carry-on bag is an example of that, which really changes the mix.

Speaker #3: So, and seat factor is always a factor in TRAS as well. And we will keep driving high seat factors on Jetstar, whilst maintaining the flexibility with capacity.

Steph Tully: So, and seat factor is always a factor in RASK as well, and we will keep driving high seat factors on Jetstar whilst maintaining the flexibility with capacity. I think we have a very confident view of that outlook from a leisure demand perspective, which continues to be resilient and strong, I would say.

Speaker #3: So, I think we've got a very confident view of that outlook from a leisure demand perspective, which continues to be resilient and strong, I would say.

Speaker #2: Thanks, Steph. Marcus?

Vanessa Hudson: Thanks, Steph. Markus?

Speaker #5: Yeah, again, just echo what Vanessa and Steph said in terms of the outlook and the confidence we have in the outlook for the first half. As Steph mentioned, we're almost two months in, and what we're seeing is very much what Steph mentioned in terms of the strength of leisure demand as main demand.

Markus Svensson: Yeah. Again, just to echo what Vanessa and Steph said in terms of the outlook and the confidence we have in the outlook for H1. As Steph mentioned, we are almost 2 months in, and what we are seeing is very much what Steph mentioned in terms of the strength of leisure demand or SME demand and how the events calendar fall into place for us in H1. So yes, we have a high level of confidence in the numbers.

Speaker #5: And then how the events calendar falls into place for us in the first half. So yes, we have a high level of confidence in the numbers.

Speaker #2: Great, thank you. Next question, please.

Vanessa Hudson: Great. Thank you. Next question please.

Speaker #3: Next question is from Owen Beryl with RBC. Please go ahead.

Operator: Next question is from Owen Birrell with RBC. Please go ahead.

Speaker #4: Hi, good morning, guys. Just two questions from me. The first one is around the CAPEX guidance. I noticed a step down from what you were guiding in February.

Owen Birrell: Hi. Good morning, guys. Just two questions from me. Just the first one around the CapEx guidance. I noticed a step down from what you were guiding in February. I am just wondering whether that is a deferral or delay of deliveries or just a shifting of payment terms, or is it associated with the A380 retirement? Just wanted to get to the bottom of the CapEx reduction. Then in terms of a second question, just referring to the Loyalty business. Just wondering if you are starting to see. We are starting to see banks starting to reconfigure their loyalty-linked credit cards. Just wondering if you can give us a sense on what you think about the impact into 2027. Any measures you have to mitigate that?

Speaker #4: I'm just wondering whether that's a deferral or delay of deliveries, or just a shifting of payment terms, or is it associated with the A380 retirement?

Speaker #4: I just wanted to get to the bottom of the CAPEX reduction, and then in terms of a second question, just referring to the loyalty business, just wondering if you're starting to see—well, we're starting to see—banks starting to reconfigure their loyalty-linked credit cards.

Speaker #4: Just wondering if you can give us a sense of what you think about the impact into '27, and any measures you have to mitigate that.

Speaker #5: Hi, Owen. I might take the first question just on the capex. So, the $4.3 to $4.6 billion is essentially—there's four reasons. If you go back to February, when we had the previous guidance, we were calling for Sunrise aircrafts and FY27.

Rob Marcolina: Hi, Owen. I might take the first question just on the CapEx. The AUD 4.3 billion to AUD 4.6 billion is essentially, there are four reasons. If you go back to February when we had the previous guidance, we were calling four Sunrise aircraft and FY27. We have now got three, so that is the first reason. We have also seen improvement in the foreign exchange. Australian dollar has got better, which is obviously good for CapEx. With less flying, we have got less capitalized maintenance with scheduling in FY27. Then also just going back to the point around recycling of capital, we have called out the Jetstar Japan and expectations at the end of June, that those proceeds would also help with regards to the capital recycling. So they are probably the four main reasons with regards to CapEx guidance.

Speaker #5: We've now got three, so that's the first reason. We've also seen improvement in the foreign exchange; the Australian dollar's gotten better, which is obviously good for CAPEX.

Speaker #5: With less flying, we've got less capitalized maintenance that we're scheduling in FY27. And then also, just going back to the point around recycling of capital, we've called out the Jetstar Japan expectations at the end of June.

Speaker #5: Those proceeds would also help with regard to the capital recycling. So they're probably the four main reasons with regard to CAPEX guidance.

Speaker #2: And I might just make a couple of comments on loyalty, then I'll pass to Andrew. The financial services approach to defining the customer value proposition on credit cards has been a focus for them, given the change in the interchange rate.

Vanessa Hudson: I might just make a couple of comments on Loyalty, then I will pass to Andrew. The financial services approach to defining the customer value proposition on credit cards has been a focus of them, given the change in the interchange rate. We are really pleased that all of our banking partners we have reached in principle agreement across all of our banking partners who remain important to the Qantas Group for all of them. I think as you note, there are differences in the decisions that those banks have made, and that is okay in that regard. But I think that the one thing that I would say is that we continue to see incredibly strong demand with our customers for points and also points on credit cards. We are starting to see customers who are savvy, and who are focused on understanding how that market is changing.

Speaker #2: We're really pleased that all of our banking partners we've reached in principle agreement across all of our banking partners who remain important to the Qantas group for all of them.

Speaker #2: I think, as you note, there are differences in the decisions that those banks have made, and that's okay in that regard. But I think that the one thing that I would say is that we continue to see incredibly strong demand with our customers for points, and also points on credit cards.

Speaker #2: And we are starting to see customers who are savvy and who are focused on understanding how that market is changing. We are seeing our customers change and move across different kinds of card products, and so this will remain an incredibly important part of the loyalty program.

Vanessa Hudson: We are seeing our customers change and move across different kind of card products. This will remain an incredibly important part of the loyalty program, but so are the other parts of our program, because the team has been diversifying that over time.

Speaker #2: But so are the other parts of our program, because the team has been diversifying that over time.

Speaker #5: Yeah, thanks very much, Vanessa, and thanks for the question, Owen. I think Vanessa's probably covered most of the points there, but I do think it's important to sort of acknowledge up front.

Andrew Glance: Yeah, thanks very much, Vanessa, and thanks for the question, Owen. I think Vanessa has probably covered most of the points there, but I do think it is important to acknowledge upfront, this was something that we were very much prepared for. We have been building these relationships over the last 30 years with our financial services partners. Going into these conversations, the conversations were essentially led through three overarching objectives. Number one was to ensure that we maintain that direct earn construct, of which members can earn points today. Number two, and really important, was to ensure that we preserve all of our financial services partnerships. Number three, it was about balance, and importantly balance for our members. I am extremely pleased to say that we have achieved all three of those.

Speaker #5: This was something that we were very much prepared for, and we've been building these relationships over the last 30 years with our financial services partners, going into these conversations.

Speaker #5: The conversations were essentially led through three overarching objectives. Number one was to ensure that we maintain that direct earn construct, through which members can earn points today.

Speaker #5: Number two, and really important, was to ensure that we preserve all of our financial services partnerships. And number three, it was about balance—and, importantly, balance for our members.

Speaker #5: I'm extremely pleased to say that we've achieved all three of those. The direct earn construct remains, all partnerships are preserved. But equally important—or most important, I should say—is that there has been a balanced outcome for our members overall.

Andrew Glance: The direct earn construct remains, all partnerships are preserved, but equally important or most important I should say, is there has been a balanced outcome for our members overall. Clearly each issuer has decided its own response through fees, rates, rewards, and a combination of these. From a timings perspective, yes, we will see the greatest impact in the H2 2027, and that is why we have guided between the 5% to 7%. Most importantly, we remain committed to the 10% through to 2028, and importantly, the AUD 800 million to AUD 1 billion.

Speaker #5: So, clearly, each issuer has decided its own response through fees, rates, rewards, and a combination of these. From a timing perspective, yes, we will see the greatest impact in the second half of '27.

Speaker #5: And that's what we've guided between the five to seven. But most importantly, we remain committed to the 10% through to '28 and, importantly, the $800 million to $1 billion.

Speaker #2: Next question, please.

Vanessa Hudson: Next question, please.

Speaker #3: Your next question is from Andre Formia with UBS. Please go ahead.

Operator: Your next question is from Andre Fromyhr with UBS. Please go ahead.

Speaker #4: Thank you. Good morning. I just wanted to follow up on Cam's presentation on International, including the retirements of the A330s and A380s. So, I guess you call out the capital benefits of no longer investing in the capitalized maintenance on those fleets.

Andre Fromyhr: Thank you. Good morning. I just wanted to follow up on Cam's presentation on international, including the retirements of the A330s and A380s. I guess, you called out the capital benefits of no longer investing in the capitalized maintenance on those fleets. Curious if there is any potential proceeds from retiring those. But then more broadly, what does that timeline of retirements mean for how international capacity growth will look over that medium term, and by extension, how would you build the confidence with investors that the Sunrise EBIT estimate of AUD 400 million is truly incremental rather than replacing income from the existing services on those aircraft?

Speaker #4: I'm curious if there are any potential proceeds from retiring those, but then more broadly, what does that timeline of retirements mean for how international capacity growth will look over that medium term and, by extension?

Speaker #4: How would you build the confidence with investors that the Sunrise EBIT estimate of $400 million is truly incremental, rather than just replacing income from the existing services on those aircraft?

Speaker #2: Well, a couple of things, and then I'll pass to Cam. I think first and foremost, we've been absolutely focused on making sure through the lens that we always apply, which is the financial framework, is that we are putting in place plans that not just kind of generate quality of earnings and improvement in earnings, but actually do that by minimizing the capital that we've got deployed across the business.

Vanessa Hudson: Well, a couple of things and then I will pass to Cam. I think first and foremost, we have been absolutely focused on making sure through the lens that we always apply, which is the financial framework, is that we are putting in place plans that not just kind of generate quality of earnings and improvement in earnings, but actually do that by minimizing the capital that we have got deployed across the business. That is absolutely what you can take, in terms of the objective and the intention that sits behind the plan that we put today. We have not yet defined the end point of the final retirement of the A380 because we also, as we said over time, want to maintain flexibility to operate through the next five years and making sure that we are responding appropriately to the competitive supply, and also demand environment.

Speaker #2: And that is absolutely what you can take in terms of the objective and the intention that sits behind the plan that we put forward today.

Speaker #2: We haven't yet defined the endpoint for the final retirement of the A380s, because we also, as we've said over time, want to maintain flexibility to operate through the next five years, making sure that we're responding appropriately to the competitive supply and also demand environment.

Speaker #2: And I think that remains really important, and it's something that we've committed to investors in the past and will continue to do. We've obviously outlined Project Sunrise, and if I come back to the A380, it was always going to be retiring in our plan.

Vanessa Hudson: I think that that remains really important, and that is something that we have committed to investors in the past and will do that. We have obviously outlined Project Sunrise, and if I come back to the A380 was always going to be retiring in our plan. We have just now brought forward the perspective and some confirmation of the commencement of the retirement date. We remain really confident that the AUD 400 million in uplift in Sunrise is contributing to this improvement in earnings performance over the next five years. But also you can see in that presentation that that will continue to run through earnings growth beyond that as the run rate and as the new fleet come in over time. But Cam, any-

Speaker #2: We've just now brought forward the perspective and some confirmation of the commencement of the retirement date. But we remain really confident that the $400 million in uplift in Sunrise is contributing to this improvement in earnings performance over the next five years. But also, you can see in that presentation that that will continue to run through earnings growth beyond that, as the run rate and as the new fleet come in over time.

Speaker #2: But Cam, any.

Speaker #4: Yeah, I mean, I think

Andrew Glance: Yeah, I mean, I think you've covered a lot of that, but in terms of the A380, just

Cam Wallace: Yeah, I mean, I think you've covered a lot of that, but in terms of the A380, just expand on that a little bit. In terms of the capitalized maintenance savings, that is for things like engine overhauls, landing gear, and heavy block checks that we can actively avoid. The key part of making the determination today around the start of the retirement was to give clarity to customers, but also importantly, our people, certainly our pilots, in terms of what aircraft they want to be trained on, and whether we can generate some opportunities and some savings through that process, which we are confident we can. But at the back end of the program, we are giving ourselves some flexibility. So we will be managing that actively and looking at the market conditions, looking at the growth, and looking at the competitive activity.

Speaker #5: You've covered a lot of that, but in terms of the A380, just expand on that a little bit. In terms of the capitalized maintenance savings, that's for things like engine overhauls, landing gear, and heavy block checks that we can actively avoid.

Cam Wallace: Expand on that a little bit. In terms of the capitalized maintenance savings, that is for things like engine overhauls, landing gear, and heavy block checks that we can actively avoid. The key part of making the determination today around the start of the retirement was to give clarity to customers, but also importantly, our people, certainly our pilots, in terms of what aircraft they want to be trained on, and whether we can generate some opportunities and some savings through that process, which we are confident we can. But at the back end of the program, we are giving ourselves some flexibility. So we will be managing that actively and looking at the market conditions, looking at the growth, and looking at the competitive activity.

Speaker #5: Now, the key part of making the determination today around the start of the retirement was to give clarity to customers, but also, importantly, our people—certainly our pilots—in terms of what aircraft they want to be trained on, and whether we can generate some opportunities and some savings through that process, which we are confident we can.

Speaker #5: But at the back end of the program, we are giving ourselves some flexibility. So we'll be managing that actively and looking at the market conditions, looking at the growth, and looking at the competitive activity.

Speaker #5: So, we'll still maintain our ASKs capacity, but, importantly, through that transition, we'll be having a material step up in the number of premium seats.

Cam Wallace: We will still maintain our ASKs capacity, but importantly, through that transition, we will be having a material step up in the number of premium seats, not just business class, but premium economy, and on the new aircraft, we will have Y+ as well. So what we are getting right as we retire the A380 is the right platform for us. We were based geographically in the markets we serve, which is more and more going to be nonstop direct point-to-point markets, but also the right premium density, and importantly for us in an environment like that, the right cost vehicle. So yeah, we have got flexibility at the back end of the program, but we thought it was important to announce today.

Speaker #5: Not just business class, but premium economy, and on the new aircraft, all have Y Plus as well. So what we're getting right, as we retire the A380, is the right platform for us.

Speaker #5: We were based geographically in the markets we serve, which is more and more going to be non-stop, direct, point-to-point markets, but also the right premium density. And importantly for us, in an environment like that, the right cost vehicle.

Speaker #5: So yeah, we have got flexibility at the back end of the program, but we thought it was important to announce today.

Speaker #2: Thank you. Next question, please.

Vanessa Hudson: Thank you. Next question, please.

Speaker #3: Your next question comes from Matt Ryan with Baron Joey. Please go ahead.

Operator: Your next question comes from Matt Ryan with Barrenjoey. Please go ahead.

Speaker #4: Thank you. I had a question about the fuel recapture and the new guidance. So, I guess at a high level—in fact, I think you’ve actually talked about TRASC sort of being aligned to the fuel outlook, and you don’t have any capacity growth per your guidance either.

Matt Ryan: Thank you. I had a question about the fuel recapture and your guidance. I think you have actually talked about RASK sort of being aligned to the fuel outlook and you do not have any capacity growth per your guidance either. Just interested in your ability to push RASK any further. I think 9% is clearly a huge number and if you can get there, that is very high on historical standards. Are you sort of pitching that number to recapture the fuel because that is about the limit that you think you can get to, because the consumer environment or what have you, or is there an ability to go any higher to actually provide growth ahead of the fuel?

Speaker #4: So, just interested in your ability to push RASK any further. So, I think 9% is clearly a huge number, and if you can get there, that's very high by historical standards.

Speaker #4: But it's sort of pitching that number to recapture the fuel, because that's about the limit that you think you can get to, given the consumer environment or what have you. Or is there an ability to go any higher to actually provide growth ahead of the fuel?

Speaker #2: So, Matt, I might take that. Just in terms of the recapture, obviously Vanessa talked earlier about the time period in the fourth quarter that we'd already pre-sold a number of the tickets, and so with greater time, it gives an opportunity to get more of that increased price.

Cam Wallace: Matt, I might take that. Just in terms of the recapture, Vanessa talked earlier around the time period in the Q4 that we had already pre-sold a number of the tickets, and with greater time, it gives an opportunity to get more of that increased price, and therefore be able to capture more of the price increase. As you saw in the Q4, it was around 30%, so we would expect to be able to capture more of that. I think your point on the RASK, again, going back to the components of RASK, it obviously includes price, but as Steph and Markus have also said, it also includes load factors, which we are going to be pushing hard on, and also ancillary.

Rob Marcolina: Matt, I might take that. Just in terms of the recapture, Vanessa talked earlier around the time period in the Q4 that we had already pre-sold a number of the tickets, and with greater time, it gives an opportunity to get more of that increased price, and therefore be able to capture more of the price increase. As you saw in the Q4, it was around 30%, so we would expect to be able to capture more of that. I think your point on the RASK, again, going back to the components of RASK, it obviously includes price, but as Steph and Markus have also said, it also includes load factors, which we are going to be pushing hard on, and also ancillary.

Speaker #2: And so, therefore, be able to capture more of the price increase. As you saw in the fourth quarter, it was around 30%. So we would expect to be able to capture more of that.

Speaker #2: I think your point on the TRASC—again, going back to the components of TRASC—so it obviously includes price, but as Steph and Marcus have also said, it also includes load factors, which we're going to be pushing hard on, and also ancillary.

Speaker #2: So whether it's through the baggage product, whether it's through Economy Plus, that we've now got in a greater part of the Qantas domestic network.

Cam Wallace: Whether it is through the baggage product, whether it is through Economy Plus that we have now got in a greater part of the Qantas Domestic network. There are a lot of ways that we can help to recapture the price. Your point on elasticity is well-founded, though. We are very focused on that, very aware of it. I think what Steph said earlier in terms of the intakes indicates that there is very strong and continued demand from leisure and a number of the other segments. We are very conscious of the elasticity and we continue to monitor that on a weekly basis.

Rob Marcolina: Whether it is through the baggage product, whether it is through Economy Plus that we have now got in a greater part of the Qantas Domestic network. There are a lot of ways that we can help to recapture the price. Your point on elasticity is well-founded, though. We are very focused on that, very aware of it. I think what Steph said earlier in terms of the intakes indicates that there is very strong and continued demand from leisure and a number of the other segments. We are very conscious of the elasticity and we continue to monitor that on a weekly basis.

Speaker #2: So, there are a lot of ways that we can help to recapture the price. Your point on elasticity as well—founder, though, we are very focused on that and very aware of it.

Speaker #2: I think what Steph said earlier in terms of the intakes indicates that there's very strong and continued demand from leisure and a number of the other segments.

Speaker #2: And so we are very conscious of the elasticity, and we continue to monitor that on a weekly basis. Next question, please.

Vanessa Hudson: Next question, please.

Speaker #3: Your next question comes from Jacob Kakanis with Garden Australia. Please go ahead.

Operator: Your next question comes from Jacob Kukanis with Jarden Australia. Please go ahead.

Operator: Your next question comes from Jacob Cakarnis with Jarden Australia. Please go ahead.

Speaker #4: Hi Vanessa. Hi Rob. Hi Qantas team. Rob, if I could just pitch one to you, please—slide 26 and 27. I mean, the message seemingly is that there's a capex reduction in 2027, the buybacks have probably prudently been put to the side.

Jacob Kukanis: Hi, Vanessa. Hi, Rob. Hi, Qantas team. Rob, if I could just pitch one to you, please. Slide 26 and 27. I mean, the message seemingly is that there's a CapEx reduction in 2027. The buyback's probably prudently been put to the side. You're telling us that gearing's going to be top end of the target range. I guess wrapping that all together with Cam's presentation, how do we think about the suitability of the capital framework moving forward? I mean, it's been a couple of years since you've been at that 10% ROIC level that that's set on. Can you just help us, firstly, are we seeing prudence today given the outlook? Presumably there's some flex in non-fleet CapEx and then, yeah, just the viability of that capital framework as we move to fleet changes for international, please.

Jacob Cakarnis: Hi, Vanessa. Hi, Rob. Hi, Qantas team. Rob, if I could just pitch one to you, please. Slide 26 and 27. I mean, the message seemingly is that there's a CapEx reduction in 2027. The buyback's probably prudently been put to the side. You're telling us that gearing's going to be top end of the target range. I guess wrapping that all together with Cam's presentation, how do we think about the suitability of the capital framework moving forward? I mean, it's been a couple of years since you've been at that 10% ROIC level that that's set on. Can you just help us, firstly, are we seeing prudence today given the outlook? Presumably there's some flex in non-fleet CapEx and then, yeah, just the viability of that capital framework as we move to fleet changes for international, please.

Speaker #4: And you're telling us that gearing is going to be at the top end of the target range. I guess, wrapping that all together with Cam's presentation, how do we think about the suitability of the capital framework moving forward?

Speaker #4: I mean, it's been a couple of years since you've been at that 10% ROIC level that that's set on. Can you just help us—firstly, are we seeing prudence today given the outlook?

Speaker #4: Presumably, there's some flex in non-fleet CapEx. And then, yeah, just the viability of that capital framework as we move to fleet changes for international, please?

Speaker #2: Yeah, thanks for the question, Jacob. I would say the financial framework is the bedrock of the way we run the business. As you've indicated, the financial framework is conservative in nature because it assumes a 10% ROIC.

Rob Marcolina: Yeah. No, thanks for the question, Jacob. I would say the financial framework is a bedrock of the way that we run the business. As you've indicated, the financial framework is conservative in nature because it assumes a 10% ROIC. Our confidence level in moving to the upper end of the net debt range, which we flagged in this presentation, why are we doing it? Well, we're doing it because we're investing in aircraft, and we continue to see the benefit from doing that and up to 31 aircraft. But why are we confident moving to the upper end of the net debt range is because it is a conservative range. It is based on the 10%, but I think also the liquidity that we've got in the business, over AUD 3 billion now, gives us continued confidence in the settings of the business.

Speaker #2: And so our confidence level in moving to the upper end of the net debt range, which we flagged in this presentation—why are we doing it?

Speaker #2: What we're doing is investing in aircraft, and we continue to see the benefit from doing that, up to 31 aircraft. But why are we confident moving to the upper end of the net debt range? It's because it is a conservative range.

Speaker #2: It is based on the 10%, but I think also the liquidity that we've got in the business, over $13 billion now, gives us continued confidence in the settings of the business.

Speaker #2: And also, we're a long way from the threshold with an investment grade rating. The other thing I'd say, though, is that we also made reference to the net debt range—that in FY28, we're not giving any specifics, but it's our intention to come back towards the middle in FY28.

Cam Wallace: Also, we are a long way from the threshold with an investment-grade rating. The other thing I would say, though, is that we also made reference to the net debt range that in FY 2028, we are not giving any specifics, but it is our intention to come back towards the middle in FY 2028. So we are very confident that what Cam laid out and the fleet investments that we have also given you for FY 2028, which obviously will require an increase in CapEx. We feel quite comfortable with that given the conservative nature of how the financial framework is set up.

Rob Marcolina: Also, we are a long way from the threshold with an investment-grade rating. The other thing I would say, though, is that we also made reference to the net debt range that in FY 2028, we are not giving any specifics, but it is our intention to come back towards the middle in FY 2028. So we are very confident that what Cam laid out and the fleet investments that we have also given you for FY 2028, which obviously will require an increase in CapEx. We feel quite comfortable with that given the conservative nature of how the financial framework is set up.

Speaker #2: So we're very confident that what Cam laid out and the fleet investments that we've also given you for FY28, which obviously will require an increase in capex, we feel quite comfortable with that given the conservative nature of how the financial framework is set up.

Speaker #2: Great. Thanks, Rob. Next question, please.

Vanessa Hudson: Great. Thanks, Rob. Next question, please.

Speaker #3: Your next question comes from Lee Power with JP Morgan. Please, go ahead.

Operator: Your next question comes from Lee Power with J.P. Morgan. Please go ahead.

Operator: Your next question comes from Lee Power with JPMorgan. Please go ahead.

Speaker #4: Good morning, Vanessa, Rob, and team. Just on cost and fuel, is it possible to give us an idea of how you see them tracking?

Lee Power: Good morning, Vanessa, Rob, and team. Just on costs ex fuel, is it possible to give us an idea of how you see them tracking? I see you have obviously transformation benefits. Markets are looking, then any comment, I think in the annual rate review, there was some call out of flight attendant wages. So anything that is changed around that would be useful. Thanks.

Speaker #4: I see you've obviously got transformation benefits, but it would be interesting to see how the different buckets are looking, and then any commonalities. I think in the annual rate review, there was some call-out of flight attendant wages.

Speaker #4: So, anything that's changed around that would be useful. Thanks.

Speaker #2: Yeah, look, I think that broad comment on cost X fuel is that we have seen and we have provided in the investor presentation a bridge that kind of helps you step through on a gross basis of what are the drivers of cost.

Vanessa Hudson: Yeah, look, I think that broad comment on costs ex fuel is that we have seen, and we have provided in the investor presentation, a bridge that kind of helps you step through on a growth basis, of what are the drivers of cost. That is inclusive of wage growth. We have seen many industry costs grow ahead of CPI, including airports and particularly also security, and also government charges as well. That table that we've provided shows approximately a 4% growth in underlying cost excluding fuel. But as we've said in the past, our focus is on making sure that we continue to drive transformation across the group, both revenue and also cost, to offset the impact of CPI on our business. That is inclusive of wage escalation as we move through new EBAs and as we close EBAs as well.

Speaker #2: And that is inclusive of wage growth. We have seen many industry costs grow ahead of CPI, including airports, and particularly also security and government charges as well.

Speaker #2: And so that table that we've provided shows approximately a 4% growth in underlying cost, excluding fuel. But as we've said in the past, our focus is on making sure that we continue to drive transformation across the group, both revenue and also cost, to offset the impact of CPI on our business.

Speaker #2: And that is inclusive of wage escalation as we move through new EBAs and as we close EBAs as well. And that's going to be our commitment going forward.

Vanessa Hudson: That is going to be our commitment going forward. Increasingly, that transformation is going to be unlocked through automation, digitization, use of AI. We look forward to talking to you more about what those use cases are over time, because we are seeing incredible value being unlocked across the business, not just in terms of productivity and driving efficiency, but unlocking better customer outcomes and also better outcomes that drive improved operational performance. So, we see that this is an incredibly important part of our forward view, and it is a commitment that, as you can see in our outlook statement, that we maintain. Next question please.

Speaker #2: Increasingly, that transformation is going to be unlocked through automation, digitization, and use of AI. We look forward to talking to you more about what those use cases are over time, because we are seeing incredible value being unlocked across the business—not just in terms of productivity and driving efficiency, but also by unlocking better customer outcomes and better outcomes that drive improved operational performance.

Speaker #2: So, we see that this is an incredibly important part of our forward view, and it's a commitment that, as you can see in our outlook statement, we maintain.

Speaker #2: Next question, please.

Speaker #3: Thank you. Your next question comes from Cameron McDonald with ENP. Please go ahead.

Operator: Thank you. Your next question comes from Cameron McDonald with E&P. Please go ahead.

Speaker #4: Good morning. Can I get some breakdown of what you're seeing in international in particular, and even into the fourth quarter of last year? You made some very quick comments around Europe, but could you clarify the split between the European contribution, the capacity that went into that market to offset the Middle East and carriers, the fare increases, and then correspond that to what you're seeing in the US? Noting that Flight Centre in particular yesterday actually called out that the US was, quote, unquote, booming.

Cameron McDonald: Good morning. Can I get a breakdown of what you're seeing in International in particular, and even into Q4 of last year? You made some very quick comments around Europe, but the split between the European contribution, the capacity that went into that market to offset the Middle Eastern carriers, the fare increases, and then correspond that to what you're seeing in the US, noting that Flight Centre in particular yesterday actually called out that the US was "booming." So, interested in seeing what you're seeing in that space.

Speaker #4: I'm really interested to see what you're observing in that space.

Speaker #2: Yeah, I'll make a few comments and then I'll pass to Cam. We have seen, in the fourth quarter, really significant growth in demand to Europe.

Vanessa Hudson: Yeah, I will make a few comments and I will pass to Cam. We have seen in Q4 really significant growth in demand to Europe, and we saw our RASK respond accordingly and also driven by a much improved seat factor. The capacity, we maximized the capacity or the additional capacity that we could get into Europe, and that has been both in terms of redeploying aircraft across our network, but also driving utilization. We believe we positioned Qantas International as best we can for that. Cam will give you a bit of an overview across all of the different markets because we have seen strong performance across other markets than just Europe as well.

Speaker #2: And we saw our RASC respond accordingly and also driven by a much improved seat factor. And so, with the capacity, we maximized the capacity or the additional capacity that we could get into Europe.

Speaker #2: And that's been both in terms of redeploying aircraft across our network, but also driving utilization. And so, we believe we've positioned Qantas International as best we can for that.

Speaker #2: But Cam will give you a bit of an overview across all of the different markets because we've seen strong performance across other markets, not just Europe, as well.

Speaker #1: Yeah, I mean, if I look at how we have leveraged the network—and it’s not just the international network, it’s actually the power of the group—taking some equipment from domestic and redeploying it internationally, then moving our 787 fleet into parts of the network where we could extract value and minimize some of the cost impact.

Cam Wallace: Yeah, if I look to how we have leveraged the network, it is not just the international network, it is actually the power of the group taking some equipment from Domestic and redeploying it in International, and then moving our 787 fleet into parts of the network where we could extract value and minimize some of the cost impact. That has been really successful for the UK, for Paris, for Rome. Also in the short term, the USA, we actually developed some connecting traffic after the war started through the USA, where there really was demand, looking for ways and means to get to their final destination. Importantly for us, actually Africa, which we serve with an A330 from Perth and an A380 from Sydney, is emerging as another connecting way to get to the UK and Europe.

Speaker #1: That's been really successful for the UK, for Paris, for Rome, but also, in the short term, the USA. We actually developed some connecting traffic after the war started.

Speaker #1: Through the USA, where there really was demand, looking for ways and means to get to their final destination. And then, importantly for us, actually Africa, which we serve with the A330 from Perth and the A380 from Sydney, is emerging as another connecting way to get to the UK and Europe.

Speaker #1: In terms of the USA, that's a market that we deployed the A380 on. So that was a 14% step up in ASKs, and that has rebounded.

Cam Wallace: In terms of the USA, that is a market that we deployed the A380 on, so that was a 14% step-up in ASKs. That has rebounded, so we are about flat on our RASK at the moment. We are seeing strong both outbound demand from Australia to the USA, as well as a strong response in the USA for getting people to Australia. So, I would agree with the analysis from Flight Centre that that is a market that has rebounded, and we had the capacity available to absorb that demand. So very happy with the way US has gone in the last six months.

Speaker #1: So we're about flat on our RASC at the moment. We're seeing strong outbound demand from Australia to the USA, as well as a strong response in the USA for getting people to Australia.

Speaker #1: So I would agree with the analysis from Flight Centre that that is a market that has rebounded, and we had the capacity available to absorb that demand.

Speaker #1: So, very happy with the way the US has gone in the last six months.

Speaker #2: Thanks, Cam. Next question, please.

Vanessa Hudson: Thanks, Cam. Next question please.

Speaker #3: Thank you. Your next question comes from Sam Sow with Citi. Please go ahead.

Operator: Thank you. Your next question comes from Sam Seow with Citi. Please go ahead.

Speaker #4: Thank you. Morning, Finestra and team. Just a question on domestic RASCs. I guess we can see the divergence in seat factors across the brands.

Sam Seow: Thank you. Morning, Vanessa and team. Just a question on domestic RASKs. I guess we can see the divergence in seat factors across the brands. As we think about H1 2027, are we expecting that domestic RASK to be even across the two or more weighted to one versus the other? If refining margins do come down, should we be expecting RASKs to follow? Or how we should think about any margin or catch-up you might be targeting? Thanks.

Speaker #4: Expect so. As we think about the first half of 2027, are we expecting that domestic RASC will be even across the two, or more weighted to one versus the other?

Speaker #4: And if refining margins do come down, should we be expecting RASCs to follow, or how should we think about any marginal catch-up you might be targeting?

Speaker #4: Thanks.

Speaker #2: Well, obviously, we haven't given a breakdown of the RASC. We've given you at-RASC for the domestic flying segments. And just to reiterate that, Marcus and Cam, in terms of what we're seeing in the intakes across the two businesses, gives us the confidence that that outlook statement is on track.

Vanessa Hudson: Well, obviously we haven't given a breakdown of the RASK. We've given you a TRASK for the domestic flying segments. Just to reiterate that Markus and Cam, in terms of what we're seeing in the intakes across the two business, gives us the confidence that that outlook statement is on track. I think that that's really important. In terms of just the broader question that you ask around normalization of fuel, I believe that some of our RASK performance will become structural. It needs to in some regard, because we're seeing a certain amount of escalation in costs in other categories, industry costs, airport costs, government costs. That is a cost that's borne by all operators. We would not expect that RASK would normalize in line with fuel. That would be the same for the international businesses as well.

Speaker #2: And I think that that's really important. In terms of just the broader question that you asked around normalization of fuel, I believe that some of our RASC performance will become structural.

Speaker #2: And it kind of needs to, in some regard, because we're seeing a certain amount of escalation in costs in other categories—industry costs, airport costs, government costs.

Speaker #2: And that is a cost that's borne by all operators, so we would not expect that RASC would normalize in line with fuel. That would be the same for the international businesses as well.

Speaker #2: Duke, Stairfall, Marcus, do you have anything else to add to that? Next question, please.

Vanessa Hudson: Steph or Markus, do you have anything else to add to that?

Steph Tully: No.

Vanessa Hudson: Next question, please.

Speaker #3: Your next question comes from Justin Barrett with CLSA. Please go ahead.

Operator: Your next question comes from Justin Barratt with CLSA. Please go ahead.

Speaker #4: Hi Vanessa. Hi Rob and team. I think my question today is for Steph. From what I can see, again, a really strong revenue performance from Jetstar, but the really positive EBIT result, I think, comes equally from the benefits to your cost base.

Justin Barratt: Hi, Vanessa. Hi, Rob, and team. I think my question today is for Steph. I guess from what I can see, again, a really strong revenue performance from Jetstar, but the really positive EBIT result, I think, comes equally from the benefits to your cost base. I am just wondering, Steph, if you could talk to the relative advantages that you believe that you have in your cost base, what the key drivers are of that. I appreciate a lot of it may come from the fleet renewal program, but if there is anything else there that we should be aware of, I guess.

Speaker #4: So, I'm just wondering, Steph, if you could talk to the relative advantages that you believe you have in your cost base, and what the key drivers are of that.

Speaker #4: I mean, I appreciate a lot of it may come from the fleet renewal program, but if there’s anything else there that we should be aware of, I guess.

Speaker #2: Yeah, thanks, Justin, for the question. I think there are a few things that are worth probably pointing out. First and foremost, the biggest contributor is the fleet.

Steph Tully: Yeah. Thanks, Justin, for the question. I think there are a few things that are worth probably pointing out. First and foremost, the biggest contributor is the fleet. That is not just the efficiency of the fleet, but also the growth it has enabled for Jetstar. I think secondly, just to Vanessa's earlier narrative on transformation, absolutely, for Jetstar, we are always going to be laser-focused on transformation, both cost and revenue, and we are seeing some really great outcomes there across the different parts of the business. I think the other thing for Jetstar that is really important is just operational stability, because a good operation is the lowest cost operation, and we are really focused on cancellations and seeing good results there. The other thing I would say for Jetstar, it is worth noting, we have made tough decisions.

Speaker #2: And that's not just the efficiency of the fleet, but also the growth it's enabled for Jetstar. I think, secondly, just to Vanessa's earlier narrative on transformation, absolutely, for Jetstar, we're always going to be laser-focused on transformation.

Speaker #2: Both cost and revenue. And we're seeing some really great, great outcomes there across the different parts of the business. And I think the other thing for Jetstar that's really important is just operational stability, because a good operation is the lowest cost operation.

Speaker #2: And we're really focused on cancellations and seeing good results there. The other thing I would say for Jetstar—it's worth noting we've made tough decisions.

Speaker #2: We sold an airline, and we closed an airline in this reporting result. And they will have positive outcomes, given their financial performance, for Jetstar's result going forward.

Steph Tully: We sold an airline and we closed an airline in this reporting result, and they will have positive outcomes given their financial performance for Jetstar's result going forward. I think there's lots of momentum to continue that trajectory.

Speaker #2: So I think there's lots of momentum to continue that trajectory. Thanks, Steph. Next question, please.

Vanessa Hudson: Thanks, Steph. Next question, please.

Speaker #3: Your next question comes from Ian Miles with Macquarie Research. Please go ahead.

Operator: Your next question comes from Ian Myles with Macquarie Research. Please go ahead.

Speaker #4: Yeah, thanks, guys. Just following up on that—you've got the fleet renewals or new planes coming in. It's curious to see Jetstar's the outperformer, yet it doesn't actually have any more planes arriving post the four this year.

Ian Myles: Yeah, thanks, guys. Just following up on that, you've got the fleet renewals or new planes coming in. It's curious to see Jetstar as the outperformer, yet it doesn't actually have any more planes arriving post the fall this year. What's your thought process on that? The follow-up to that is, what's the latent capacity in the fleet given high fuel prices you're optimizing? If things go back, how much can you surge the fleet without actually needing more planes?

Speaker #4: Just sort of, what is your thought process on that? And the follow-up to that is, what's the latent sort of capacity in the fleet, given high fuel prices you're optimizing?

Speaker #4: If things go back, how much can you sort of surge the fleet without actually needing more planes?

Speaker #2: So just the question on the mix of allocation of capital to the Jetstar re-fleet versus Qantas Domestic. I mean, clearly the decisions that we have made to prioritize the capital into commencing and accelerating the Jetstar fleet to almost 50% new fleet has been a fundamental part of our strategy to make sure that Jetstar is fighting fit, but also enabling Jetstar to grow and expand into new markets.

Vanessa Hudson: Just the question on the mix of allocation of capital to the Jetstar refleet versus Qantas Domestic. Clearly, the decisions that we have made to prioritize the capital into commencing and accelerating the Jetstar fleet to almost 50% new fleet has been a fundamental part of our strategy to make sure that Jetstar is fighting fit, but also enabling Jetstar to grow and expand into new markets. The one thing that I think is important to recognize is that Jetstar were not changing the fleet type. It was remaining with just the next fleet variant of the A320 and the A321. Jetstar has been able to demonstrate, without the entry into service costs, the fast ramp-up and improvement of earnings that have come from that. That is both in terms of driving transformation, fuel efficiency, but most important, utilization and opening new markets.

Speaker #2: And the one thing that I think is important to recognize is that Jetstar were not changing the fleet type. It was remaining with just the next fleet variant of the A320 and the A321.

Speaker #2: And so Jetstar has been able to demonstrate, without the entry into service costs, the fast ramp-up and improvement of earnings that have come from that.

Speaker #2: And that's both in terms of driving transformation, fuel efficiency, but most importantly, utilization and opening new markets. Again, not just driving improvement in profit, but actually bringing lower fares and affordable fares to customers.

Vanessa Hudson: Again, not just driving improvement in profit, but actually bringing lower fares and affordable fares to customers. We are going to continue to be focused on that. We also have to make sure that we get the balance right across the renewal of the group. Commencing the narrow-body replacement for the Qantas fleet is important. A large amount of allocated capital in the next 12 months will be to get the Qantas A321XLR and A220 to scale. That is really, really important for Qantas Domestic because as Qantas is moving from a 737 fleet to the Airbus fleet, we need to do that as quickly as possible. This is always through the lens of the financial framework, and that is, again, the commitment that we have to the market is that we get that balance right.

Speaker #2: And we're going to continue to be focused on that. But we also have to make sure that we get the balance right across the renewal of the group.

Speaker #2: And so commencing the narrowbody replacement for the Qantas fleet is important. And so a large amount of allocated capital in the next 12 months will be to get the Qantas XLR and 222 scale.

Speaker #2: That's really, really important for Qantas Domestic, because as Qantas is moving from a 737 fleet to the Airbus fleet, we need to do that as quickly as possible.

Speaker #2: And this is always through the lens of the financial framework. That is, again, the commitment that we have to the market: that we get that balance right.

Speaker #2: We focus on making sure that the fleet renewal is balanced across the different brands, but also driving towards that earnings uplift and that scale really quickly.

Vanessa Hudson: We focus on making sure that the fleet renewal is balanced across the different brands, but also driving towards that earnings uplift and that scale really quickly. Now, I have forgotten a part of the question.

Speaker #2: Now, I've forgotten the part of the question.

Steph Tully: No, I will answer the second part of the question. I think your words, Ian, were sort of surge in ASK. I think what I wanted to just point out here again is just to reiterate the benefits of owning our own fleet. Owning 85% of our fleet allows us, and Cam mentioned it earlier, but allows us the flexibility to not be beholden to lease rates and lease returns. Whilst we do have a retirement plan and with the aircraft, I think the flexibility we have to steer into that retirement plan is an advantage that we have versus many other airlines.

Rob Marcolina: No, I will answer the second part of the question. I think your words, Ian, were sort of surge in ASK. I think what I wanted to just point out here again is just to reiterate the benefits of owning our own fleet. Owning 85% of our fleet allows us, and Cam mentioned it earlier, but allows us the flexibility to not be beholden to lease rates and lease returns. Whilst we do have a retirement plan and with the aircraft, I think the flexibility we have to steer into that retirement plan is an advantage that we have versus many other airlines.

Speaker #1: No, I'll answer the second part of the question. So, I think your words, Ian, were sort of 'surge' and 'ASKs.' I think what I wanted to just point out here again is just to reiterate the benefits of owning our own fleet.

Speaker #1: So, owning 85% of our fleet allows us—and I may have mentioned it earlier—but it allows us the flexibility to not be beholden to lease rates and lease returns.

Speaker #1: And so, whilst we do have a retirement plan with the aircraft, I think the flexibility we have to stare into that retirement plan is an advantage that we have versus many other airlines.

Speaker #2: Yeah, thank you. Next question, please.

Vanessa Hudson: Yeah. Thank you. Next question, please.

Speaker #3: Your next question comes from Joseph Michael with Morgan Stanley. Please go ahead.

Operator: Your next question comes from Joseph Michael with Morgan Stanley. Please go ahead.

Speaker #4: Hi Vanessa. Hi team. Thanks for taking my question. I just had a question on Project Fish, and more specifically, the returns. I guess the A330 fleet renewal case studies you've given us today show a pretty meaningful contribution margin improvement.

Joseph Michael: Hi, Vanessa. Hi, team. Thanks for taking my question. I just had a question on Project Fysh and more specifically, the returns. I guess the A330 fleet renewal case studies you've given us today show a pretty meaningful contribution margin improvement. My question is, how should we think about Project Fysh returns compared to the broader group and Project Sunrise? Thank you.

Speaker #4: So my question is, how should we think about Project Fish returns compared to the broader group and Project Sunrise? Thank you.

Speaker #1: Well, I might just take it at the group level. And obviously, each of the individual fleet programs that we put in place has a return that's above the cost of capital.

Rob Marcolina: Well, I might just take it at the group level, and obviously each of the individual fleet programs that we put in place have a return that is above the cost of capital. But I think more holistically, and Cam mentioned this before, is we operate the group as an integrated value. With the investment that we are seeing in Qantas International, whether it is Sunrise, whether it is Project Fysh, is being monetized not just directly in Qantas International, but also across Qantas Domestic and Qantas Loyalty. We have a return on investment for this financial year of 32%. That is coming down as the invested capital increases. But as we have said before, we expect to normalize, if you like, the number that is higher than pre-COVID levels. So we are really happy with the returns, and we just want to get those aircraft here as soon as we can.

Speaker #1: But I think more holistically and can mention this before is we operate the group as an integrated value. And so with the investment that we're seeing in Qantas International, whether it's Sunrise, whether it's Project Fish, is being monetized not just directly in Qantas International, but also across Qantas domestic and Qantas loyalty.

Speaker #1: And so, we have a return on investment for this financial year of 32%. That is coming down as the invested capital increases. But as we've said before, we expect to normalize, if you like, at a number that's higher than pre-COVID levels.

Speaker #1: So we're really happy with the returns, and we just want to get those aircraft here as soon as we can.

Rob Marcolina: So we are really happy with the returns, and we just want to get those aircraft here as soon as we can.

Speaker #2: Thanks, Rob. Next question.

Vanessa Hudson: Thanks, Rob. Next question.

Speaker #3: Your next question comes from Nathan G. with Bank of America. Please go ahead.

Operator: Your next question comes from Nathan Gee with Bank of America. Please go ahead.

Speaker #4: Oh, hey team, thanks for the call. Maybe just a question on corporate demand—can I dig a little bit more into the weakness you're seeing in corporate and government, and any signs of improvement in the forward book?

Nathan Gee: Hey, team. Thanks for the call. Maybe just a question on corporate demand. Can I dig just a little bit more into that weakness you are seeing in corporate and government, and any signs of improvement in the forward book? Thanks.

Speaker #4: Thanks.

Speaker #2: Well, I think, yeah, thank you for the question. What we did see in Q4, and probably not unexpectedly, is that the trickle-down effect of the higher energy prices and moves in interest rates has actually impacted business confidence.

Vanessa Hudson: Well, thank you for the question. What we did see in Q4, and probably not unexpected, the trickle-down effect of the higher energy prices moves in interest rates has actually impacted business confidence. What we saw in Q4, that there was some non-corporate and also government just actually reduced some travel demand or travel spend in reaction to that. But we have not seen that deteriorate. In actual fact, we have seen that stabilize. That is actually what we are planning on for at least the H1, and that has been incorporated into the capacity settings that we have provided guidance on because that is a really important part of the levers that we have to manage in an environment where fuel is higher in the H1, but also based on the demand outlook.

Speaker #2: And what we saw in Q4 is that there were some non-corporate and also government sectors that actually reduced some travel demand or travel spend in reaction to that.

Speaker #2: But we have not seen that deteriorate. In actual fact, we've seen that stabilize, and that is actually what we are planning on for at least the first half.

Speaker #2: And that has been incorporated into the capacity settings that we've provided guidance on, because that's a really important part of the levers that we have to manage in an environment where fuel is higher in the first half, but also based on the demand outlook.

Speaker #2: But I think, really importantly, to come back to, that's a subset of the corporate market. It shouldn't be taken as an indicator of the whole market.

Vanessa Hudson: But I think really importantly, to come back to, that's a subset of the corporate market. It shouldn't be taken as an indicator of the whole market. We are seeing really strong ongoing demand in the corporate market and the mining market in Western Australia, and that is continuing to grow. We are also seeing the SME market continuing to remain really resilient. When we talk to SMEs, what we hear from them is how important face-to-face interactions are with suppliers or customers or their people. Therefore, we continue to be really optimistic around that part of the business purpose travel market. Next question.

Speaker #2: And we are seeing really strong, ongoing demand in the corporate market and the mining market in Western Australia, and that is continuing to grow.

Speaker #2: And we are also seeing the SME market continue to remain really resilient. When we talk to SMEs, what we hear from them is how important face-to-face interactions are with suppliers, customers, or their people.

Speaker #2: And so, therefore, we continue to be really optimistic around that part of the business purpose travel market. Next question.

Speaker #3: Your next question comes from Nara Shah with Goldman Sachs. Please go ahead.

Operator: Your next question comes from Neeraj Shah with Goldman Sachs. Please go ahead.

Operator: Your next question comes from Niraj Shah with Goldman Sachs. Please go ahead.

Speaker #4: Hi, all. Thanks for taking my question. One first step, perhaps. What percentage of Jetstar revenues would be sort of annual at this point in time?

Neeraj Shah: Hi, all. Thanks for taking my question. One for Steph, perhaps. What percentage of Jetstar revenues would be ancil at this point in time? What could or should that get to now that we've kind of rolled into a TRASK measure? I'm just trying to get a sense of what that should contribute over time.

Niraj Shah: Hi, all. Thanks for taking my question. One for Steph, perhaps. What percentage of Jetstar revenues would be ancil at this point in time? What could or should that get to now that we've kind of rolled into a TRASK measure? I'm just trying to get a sense of what that should contribute over time.

Speaker #4: What could or should that get to? Now that we've kind of rolled into a tier-ask measure, I'm just trying to get a sense of what that should contribute.

Speaker #4: Over time.

Speaker #2: Nope. Thanks for the question. We haven't given that breakup before. But what I will say is, over time in our planning, we will see ancillary proportion become a greater component of the Jetstar revenue.

Vanessa Hudson: Yeah. Steph, do you want to?

Steph Tully: Thanks for the question. We haven't given that breakup before, but what I will say is over time in our planning, we will see ancillary proportion become a greater component of the Jetstar revenue. It's already over AUD 1 billion of our revenue, we've said before. But what we're trying to do to make sure our lead-in fare stays as low as it can in an environment where we've got those escalating costs is to unbundle as much as possible. That means we can keep that lead-in fare low for the majority of customers, but we have the opportunity to charge for anything extra. Obviously, we've launched a product in the last few weeks that's got a bit of attention around baggage, but we've got many more to come, to be honest. We've got a whole pipeline of ancillary initiatives.

Speaker #2: It's already over a billion of our revenue. We've said before—but what we will see, and what we're trying to do to make sure our lead-in fare stays as low as it can in an environment where we've got those escalating costs—is to unbundle as much as possible.

Speaker #2: And that means we can keep that lead-in fare low for the majority of customers, but we have the opportunity to charge for anything extra. And obviously, we've launched a product in the last few weeks that's got a bit of attention around baggage.

Speaker #2: But we've got many more to come, to be honest. So we've got a whole pipeline of ancillary initiatives. It's hard to compare across airlines.

Steph Tully: It's hard to compare across airlines, I would just warn, because many airlines when they report results include frequent flyer in their ancillary revenue, and that often leads to more inflated numbers than maybe what I'm saying. But I think for Jetstar, it will be increasing part of the mix, and I know for Qantas as well.

Speaker #2: I would just warn, because many airlines, when they report results, include frequent flyer in their ancillary revenue. And that often leads to more inflated numbers than maybe what I'm saying.

Speaker #2: But I think for Jetstar, it will be an increasing part of the mix, and I know for Qantas as well.

Speaker #3: Thank you, Steph. And just checking whether there are any more questions? I'm seeing that there might not be any on hold, but let's just wait a minute.

Vanessa Hudson: Thank you, Steph. Just calling whether there's any more questions. I'm seeing that there might not be any on hold, but just wait a minute, moderator, if there's any questions that come in.

Speaker #3: Moderator, if there are any questions that come in—there are no further questions at this time.

Operator: There are no further questions at this time.

Speaker #2: Okay, fantastic. Well, thank you so much for your time this morning. We are really looking forward to coming out and having more conversations with you all next week.

Vanessa Hudson: Well, thank you so much for your time this morning. We are really looking forward to coming out and having more conversations with you all next week. Thanks again, and catch up next week.

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Q4 2026 Qantas Airways Ltd Earnings Call

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