Qantas Airways Limited

Prepared by: VINCENT MICAH FARRUKH, MUHAMMAD BABUR BUSAYO FEMI OJO KORNILOV VITALY 7/15/12

COMPANY PROFILE

Australias Premium Airline Founded in 1920 2nd oldest airline industry in the world Notable for its outstanding record for safety Covers 182 destinations in 44 countries

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Business and Investment

Primary Business is transportation of passengers Divided into three groups. Commercial group:- Includes sales and distribution, commercial planning and alliances Customer and Marketing:- Includes customer experience, cabin crew, in7/15/12 flight services and marketing

Flight route

Operating around 5,600 flights a week to 59 cities and regional destinations in all states and mainland territories

Fleets Operates a fleet of 252 aircraft, comprising of Boeing 747s, 767s, 737s and 717s, Airbus A380s, A330s and A320s, Bombardier Dash 8s and 7/15/12 Bombardier Q400s

Cooperate Social Responsibilities

The Qantas foundation, established as a charitable trust in 2008. The foundation also aims to consolidate and expand on some of the Qantas Groups existing charitable and community endeavours Others environment social involves reducing the impact of carbon 7/15/12 emissions on the environment,

Strategies
5 year strategic plan.

Changes are expected to strip tens of millions of dollars of operating costs These include Cutting :1000 jobs from its 36000 workforce Shifting its base closer to Asia Changing its fleet plan by buying lots of the fuel efficient Airbus Seeking more strategic alliances

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Profitability Ratio

Profitability ratios show how well a company is able to perform and return profits to the business Qantas is bouncing back to more profitability in 2010 and 2011 showing that the company is better prepared to handle downtrends brought on by adverse conditions of the global financial meltdown during year 2007 2009, which had great 7/15/12

Profitability Ratio
Year/ Ratio 2007 2008 2009 2010 2011

Return on total assets (ROA) Return on ordinary shareholders' funds(ROSF) Return on capital Employed (ROCE) Gross profit margin Net profit Margin 7/15/12 Return on Equity

4.01%

3.77%

0.71%

0.86%

1.26%

8.56%

8.19%

1.66%

1.95%

2.89%

10.70% 7.34% 5.18% 12.68%

8.44% 7.21% 4.71% 12.94%

2.15% 1.57% 0.98% 2.48%

2.82% 2.27% 1.24% 2.89%

3.86% 1.76% 1.76% 4.26%

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Financial Gearing Ratio

Thegearing ratiois the proportion of a company'sdebtto itsequity where a high gearing ratio represents a high proportion of debt to equity and Vice-versa The interest cover ratio as at 2007 was at the high end which was 75% nevertheless in the year 2008 Higher interest ratio returned in the

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Gearing

Year/ Ratio Financial leverage Interest Cover Ratio

2007 3.16476

2008 3.43513

2009 3.47771

2010 3.32887

2011 3.39099

74.718

-24.8904

10.409

4.16

3.9646

NET Gearing ratios 7/15/12

27.6303

27.2193

32.7147

33.6733

41.2128

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Efficiency Ratio

Efficiency ratios are used to analyse how well a company uses its assets and liabilities internally Qantas asset turn over 7/15/12 declined from 2009 to

EFFICIENCY

Year/ Ratio Asset turnover period(days) PPE Turnover Working Capital Turnover
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2007

2008

2009

2010

2011

282 1.23

292 1.28

265 1.20

252 1.10

261 1.09

-17.432

-7.9231

-19.455 -33.672

-25.074

LIQUIDITY RATIO / SOLVENCY RATIO

Liquidity Ratio is the ability of an entity to earn profit, pay its debts The better a company's solvency, the better it is financially. The Current Ratios shows Qantas Airways had a higher current ratio 7/15/12 during the fiscal year 2009, 2010,

LIQUIDITY RATIO / SOLVENCY RATIO

Year/ Ratio

2007

2008

2009

2010

2011

Current Ratio

0.86624

0.73859

0.88859

0.93447

0.90473

Acid Test Ratio

0.83851

0.71023

0.85136

0.88335

0.84507

Cash Flow Operation Ratio

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0.36184

0.27991

0.16816

0.20942

0.27137

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Investment Ratio

A ratio that helps to determine whether an investment in a particular entity is likely to be profitable and safe, from the ratio derived from Qantas Dividend per share increased drastically at 2008 but later went down at 2009, dividend pay-out ratio
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Dividend yield high in 2008 and

INVESTMENT RATIO
Dividend per share Dividend payout ratio Dividend yield ratio Earnings per share Operating cash flow per share Price earnings ratio 7/15/12 2007 2008 2009 2.50482 81.8182 1.78 2010 2011 7.193472 0.363324 0.26

6.69199 16.9651 37.8898 89.5013 1.71 7.97

24.69091 30.15966 4.431599 5.069519 0.52902 0.543722 0.241704 0.279572 0.23 0.1 0.45 0.43

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Gross profit margin, Net Profit, Return on Investment

The gross profit margin ratio indicates Qantas Airways financial health; this shows investors how much gross profit every AUD of revenue the company is earning Compared with company average, there was a slight fall at the year 2008, then a sharp decline in the gross profit at 2009 till 2011 7/15/12

Gross profit margin, Net Profit, Return on Investment

Yet, the company was still able to declare profit. Net Profit margin of the company also follows the same trend. The Return on investment using our ROE and ROA we could see that the returns fell drastically at 2009 from Net profit of 7.4 million of the previous year to 1.4million against 7/15/12

Liquidity

The Current Ratios shows Qantas Airways had a higher current ratio during the fiscal year 2009, 2010, and year 2011 respectively, ranging from 0.89, 0.93 and 0.90 Quick ratio also reflects the company's financial strength or weakness, higher ratio shown in 7/15/12

Liquidity

10 9 8 7 6 5 4 3 2 1 0

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Peer Analysis

Interesting to note that both the companies, Air NZ and Qantas, had low turnout profits in 2008. Affected Air NZ more than Qantas but Air NZ recovery was also much better than Qantass Comparing ROE Ratios, both have drastically decremented in the year 2009 due to the Economic meltdown
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NET PROFIT MARGIN:

Year/ Company

2007

2008

2009

2010

2011

Air New Zealand

4.981378 4.671095

0.45563 2.026693

1.86593

Qantas 7/15/12

5.18077

4.71147

0.98268

1.24165

1.7591

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NET PROFIT MARGIN:

Year/ Company

2007

2008

2009

2010

2011

Air NewZealand

12.24% 13.82%

1.30%

5.24%

5.39%

Qantas 7/15/12

12.69% 12.95%

2.50%

2.88%

4.26%

Return On Equity (ROE)

12 10 8 6 4 2 0 7/15/12

FUTURE EXPECTATION

Based on the analysis and ratios, Qantas revenue has increased from 2010. Growth recorded in gross profit and net profit in 2010 and 2011. New 5 years strategy plan is based 7/15/12 on cutting cost to reduce it expenses

RECOMMENDATIONS AND CONCLUSION

With the future forecast, the new strategic plans by Qantas and the recent growth and improvement recorded in the last 2 financial years. The existing Shareholders are advised to hold the share as more profit are expected in the coming financials years and the potential share holder are recommended to 7/15/12 venture into Qantas shares now that

Thank you for attention!

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