Qantas Airways Limited

Good morning and welcome to the first half Financial Year 2026 Investor and Analyst Results Briefing. My name is Philip Kiddin. I'm the Group Head of Investor Relations at the Qantas Group. I'd like to now hand over to our Chief Executive Officer, Vanessa Hudson, to take you through the results.

Thank you, Phil, and good morning to everyone. Thanks for joining us today at the Qantas Group Half Year 2026 Investor and Analyst Briefing. I am joined by Rob Markalina, our CFO, who will be assisting me in presenting the results today, but I'm also joined by our entire leadership team. Today's briefing will only be in audio format and Rob and I will take you through a number of the key slides in our materials that we lodged today, but then we will open to questions. We will start on slide four of our presentation with our results highlight. This has been another half year defined by execution. Our focus continues to be on delivering for our customers, our people and shareholders. By delivering these strong results for earnings, we can invest in the largest fleet renewal in our history. In summary, our underlying profit before tax for the half was up 71 million on last year. Our earnings per share at 68 cents was up 7%. Operating cash flow was strong at 1.8 billion. And we are delighted to announce that the Board has also improved an interim shareholder distribution of up to $450 million. This includes a fully franked base dividend of $300 million, an increase of $50 million, and an on-market share buyback of up to $150. Our performance is driven by three factors. One, the strong demand for travel across Australia and internationally. Two, the reinforcing strength of our integrated portfolio, which includes our premium and low fares airlines alongside a world-leading loyalty program. And three, the emerging benefits to our customers, people and shareholders as we execute one of the largest fleet renewal programs in our history. Fleet. The renewal of the Qantas Group fleet is accelerating. In this half, we invested $1.8 billion in fleet and other projects. This included 18 aircraft joining the fleet. Of these, nine were new aircraft, including two A321XLRs for Qantas, four A220s for QantasLink, two A321LRs and one A320neo for Jetstar. With Jetstar's fleet of A321s now at scale, we are seeing significant benefits in financial performance, customer experience and emissions reduction. In this half, our investment in A321LRs contributed to 60% of Jetstar's earnings uplift through efficiency and better aircraft utilisation. This gives us confidence in the benefits that will flow once the Qantas fleet reaches scale. We remain incredibly focused on all customer metrics, and it is pleasing to see this reflected in our operational and reputational scores. Our Qantas Net Promoter score lifted five points, and Jetstar lifted four points. Operationally, Qantas delivered 70% on-time performance, the highest of any major domestic airline, while Jetstar improved to 71%. Our customers have more to look forward to over the next 12 months. Fleet deliveries, including our first Project Sunrise aircraft, cabin refresh programs on our A330 and also Jetstar 787s, refreshing our international lounge in Los Angeles and also Sydney, rolling out Wi-Fi across our Qantas international fleet and progressive rollout of changes to our frequent flyer announced today. Turning to our people, none of this would have been possible without the dedication and the professionalism of our 30,000 team members across the group. During the half, we increased our frontline workforce by 4%. We are investing in our people through leadership programs, improved staff travel and creating opportunities for development and career progression. Eligible employees are on track to receive another $1,000 in Quanah shares later this year. We are excited to open a new Jetstar Perth cabin crew base later this year, creating 90 new roles. And Qantas will also re-establish a crew base in Singapore, supporting our growth in our international network. Now turning to slide five. The strength of today's result reflects the deeply integrated value across our group. I'll now provide an overview of business performance and the CEOs of each segment will be here with me to give their perspectives during Q&A. So firstly, Qantas Domestic, or Group Domestic. Group Domestic delivered strong performance with an EBIT of over $1 billion, up 14% last year and an EBIT margin of 18%. Group Domestic capacity grew by 5% and RASC was up 3%. This reflects the strong demand across both leisure and business purpose travel. Our dual brand strategy drives strong performance across all market segments, including business purpose, premium and low fares leisure. Jetstar Domestic had an outstanding half with earnings up 38%. EBIT margin was above target at 22%. Once again, fleet renewal is a key driver behind Jetstar's success. with its A321LRs and A320neo fleet now at scale. Qantas Domestic also saw strong demand contributing to RAS growth of 2% as capacity grew by 4%. This was underpinned by business purpose travel growth and premium leisure growth supported by strong event demand. Qantas Domestic achieved an operating margin of 16% despite the ongoing investment into entry into service of its new fleet. Group International, excluding Jetstar Asia and Jetstar Japan, saw its underlying EBIT impacted by 6%. This was due to cost escalations, including higher engineering and industry pressures, higher operational wages and commencement of training for new aircraft into Qantas International. We are offsetting these costs where possible and working across the industry to address what can be done to ensure this doesn't impact the affordability of air travel. Capacity for Group International Airlines increased by 3%. reflecting the impact of the closure of Jetstar Asia in July. Jetstar International performed strongly, with earnings from its Australian international operation up 9%. Jetstar International reached an operating margin of 14%, also above its margin target. For Qantas International, we continue to see strong demand, particularly in premium cabins on our long-haul routes. This half also saw the return of our final A380-2 service, continuing to restore our US market capacity. Now to loyalty. Underlying EBIT for loyalty was $286 million, up 12% on the prior year. Points earned were up 10 points, and points redeemed grew by 17%. The program is growing at pace, with Qantas Frequent Flyer membership now exceeding 18 million members. Engagement across our partner network remains a key driver, with the number of members earning across two or more categories up 8% on prior year. Today we are thrilled to unveil the most significant change to status in the program's history. For the first time, we are giving tiered members the ability to roll over unused status credits into their next membership year. Even more exciting, we are breaking new ground by allowing members to earn status credits through everyday spending on the ground. This represents a new era for Frequent Flyer program in the face of changing loyalty landscape. I am now going to pass to Rob to overview our financial performance.

Thanks Vanessa and good morning everyone. We'll now turn to slide 16 for a more detailed look at our financial metrics. Underlying profit before tax for the half was $1.46 billion up 5% versus first half $25. Statutory profit after tax was $925 million flat versus first half $25. Underlying earnings per share reached 68 cents, a 7% increase, and the group's operating margin was 12.3%. For the half, operating cash flow was strong at $1.8 billion, providing a solid foundation for our ongoing capital requirements. Net debt ended the half at $5.6 billion. This remains at the bottom of our FY26 target net debt range of $5.6 to $7 billion. Net capital expenditure was $1.8 billion. There were $400 million of dividends returned to shareholders in the half. Total unit revenue and total unit cost both increased by just over 2%. This was driven by several factors which I'll now explain as part of the group profit bridge. So if we now move to slide 17, on this slide I'll walk through the key drivers behind the year-on-year increase of $71 million in our underlying profit from first half 25 to first half 26. For the half, group capacity increased 4% and coupled with a moderation in oil prices saw $122 million in contributions during the period. Group RASC grew by 3% across both domestic and international. As previously guided, our transformation program is weighted to the second half and we remain on track to target $400 million for the full year to offset ongoing CPI pressures. Depreciation and amortisation increased $89 million, reflecting the acceleration of our fleet renewal program. The ramp-up in fleet renewal saw the business incur fleet-related EIS costs. These increased by $10 million for the period. Net industry costs increased by $40 million. Underlying airport security and navigation charges continued to escalate above the rate of inflation. Profit was impacted by $76 million from unfavourable foreign exchange movement across non-fuel costs during the period and Jetstar Japan's lease liability. Turning now to slide 25, we want to highlight the important role that the new fleet is playing to grow our profitability. Jetstar has delivered a stellar performance in the half and fleet investment is a key driver. The 321LR and the 320neo aircraft are providing significant replacement benefit. This includes lower fuel burn per seat and reduced maintenance costs. However, the fleet renewal extends beyond replacement benefits. Because these aircraft are more efficient and have longer range, we are seeing a step change in utilisation, allowing us to launch new short-haul international routes. And by deploying the 321LR onto these shorter international sectors, we have been able to redeploy our 787 widebodies onto longer, higher demand markets like Japan and Korea. For the first half 26, the contribution of these was approximately 60% of Jetstar's underlying EBIT growth. This gives us confidence as the Qantas fleet renewal reaches scale. Now turning to slide 31. Our long-standing financial framework is core to maintaining our financial strength. It's designed to structurally maintain low leverage, strong liquidity and investment grade credit rating. It also guides capital allocation, including opportunities for capital recycling to maximise group value through the cycle. An example of this is the closure of Jetstar Asia in July, and recently we announced our intention to sell our stake in Jetstar Japan. This allows us to focus on our core business in Australia. As previously guided, capital expenditure for FY26 is expected to be $4.1 to $4.3 billion. Today we are also providing guidance for FY27 which is expected to grow to $5.1 to $5.4 billion. This reflects the acceleration of our fleet renewal program including the arrival of the first four Project Sunrise aircraft. We are confident in the earnings and cash flow growth from this fleet and our Jetstar result demonstrates this. We are committed to a base dividend that is sustainable through the cycle. As Vanessa mentioned, we are delighted to share that the Board has approved an interim FY26 shareholder distribution. This includes a fully franked base dividend of $300 million, which is a $50 million increase over the first half-25 base dividend. This demonstrates our commitment to delivering sustainable value to our shareholders. We've also announced an on-market share buyback of up to $150 million. So whether it's the decisions about which routes to fly, which brands to fly or how to adjust the portfolio, we remain focused on ensuring optimal capital allocation across the group. I'll now hand back to Vanessa who will go through the outlook.