Analysis of American Airlines and Qantas Airways

The assignment involves analyzing the financial statements of American Airlines Group and Qantas Airways to understand their market share, revenue, and profitability in the Asian markets. It also explores how these airlines can offset rising fuel costs and administrative expenses by entering the Asian market with cheaper airline fares. The analysis suggests that both American Airlines Group and Qantas Airways would benefit from increased profitability and a wider consumer base in the Asian markets.

Running head: ACCOUNTING FOR CORPORATE STRUCTURE
Accounting for Corporate Structure
Name of the Student
Name of the University
Authors Note
Course ID

1ACCOUNTING FOR CORPORATE STRUCTURE
Table of Contents
Introduction:...............................................................................................................................3
Brief overview of organizations:................................................................................................3
Future prospects of the organizations:.......................................................................................4
Company’s standing within the industry:..................................................................................5
Recent stock chart performance for each organization:.............................................................5
List of other Competitors:..........................................................................................................6
Analysis of Ratios:.....................................................................................................................7
Short term credit decision and long term credit decision:..........................................................9
Investment decision:.................................................................................................................10
Employment decision:..............................................................................................................10
Consulting decision:.................................................................................................................10
Conclusion:..............................................................................................................................10
Reference List:.........................................................................................................................12
Appendix:.................................................................................................................................14

2ACCOUNTING FOR CORPORATE STRUCTURE
Introduction:
The current report is based on the understanding of the financial performance for
Qantas Airlines and American Airlines Group. The study is based on the analysis of the
ratios, trend analysis and vertical analysis of American Airlines Group and Qantas Airlines.
Additionally, the report will be placing focus on the future directions of the organization and
the industry as well. The report will evaluate the position of the organization inside the
industry and emphasis will be placed on the recent stock performance and future anticipation.
An analysis of the short term and long term credit decision. Additionally, the decisions will
be placed on investment and employment related areas.
Brief overview of organizations:
Qantas airlines is regarded as the flag carrier of Australia and it is regarded as the
largest airline company by its size, international flights and overseas destinations
(Investor.qantas.com 2018). The company is considered as the third oldest airlines in the
world after KLM and Avianca. Having been founded during the year 1920 Qantas airlines
commenced its passenger flight operations in the year 1935. Qantas Airlines is based in the
suburbs of Sydney having its main hub at Sydney Airport.
American Airlines Group is considered as the American publicly traded airline
company that has its headquarters in the Fort Worth Texas. The company was merged with
the US Airways groups and US airways groups’ parent company (American Airlines 2018).
The airline group after merger formed the largest airline that operated in the world having
more than 6700 daily flights to 336 locations in 56 nations across the world. American
Airline Group generated around $40 billion revenue from operations with over 100,000
employees.

3ACCOUNTING FOR CORPORATE STRUCTURE
Future prospects of the organizations:
Considering the future performance of Qantas the company has undertaken a strong
ambitious turnaround plan at the Qantas group. The foundation was regarded as the strong
cause of future investment. The company is aiming to plan the pipeline of projects which
aims in improving the experience of its customers along with the return to shareholders
(Investor.qantas.com 2018). The company will be upgrading the Airbus A 380 with the plans
of installing the Nex 1 generation seats from the year 2019 onwards. The plan help in future
performance of the organization with overall economic improvement through smarter use of
the overall growth in premium seating.
The company is also accelerating the roll out of inflight Wi-Fi of its domestic A330
and 737 aircraft. Following the successful trail it represents that a positive customer feedback
with potential increase productivity would help in gaining flight planning and management
disruption (American Airlines 2018). Additionally the company is launching Dreamliner
aircraft that will help in opening unique routes of Perth to London direct under the lower
operating costs. All the identified improvements are dedicated to contribute the future of
Qantas Airlines margin advantage in the vital markets since they are central in driving the
future financial performance of the organization.
On the other hand, changes in the business model by American Airline group are
designed to increase a revenue. American Airlines Group has of late instituted to change the
business model in future to increase the revenues and offset the costs. The measures would
include implementing premium economy service, basic economy service and other lower
costs fares improve the American Airlines loyalty program. Separate charging of services
which was previously included in the price of ticket and increasing other pre-existing fees is
some of the future initiative that is undertaken by American Airlines Group to increase the
future revenue and profits.

4ACCOUNTING FOR CORPORATE STRUCTURE
Company’s standing within the industry:
Considering the financial standings within the industry the company has reported an
Underlying profit before tax of $1,401 million over the twelve month operations with a fall of
$131 million from the financial result of 2015/16. Additionally, Qantas has also reported a
statutory profit after tax of $853 million after a fall of $176 million from the figures reported
in the previous year of 2016 (Scott 2015). The company’s lower profit is large attributable to
the decrease in the revenue by one percent since the competitive pressure in the international
markets have resulted in all of business revenue.
The airline industry is subjected to extensive amount of fees charged by the
government which negatively impacts the revenue and profitability. As evident American
Airline Industry have realised a net income of around $2.7 billion during the year 2016 in
comparison to net income of $7.6 billion during the year 2015. This included as special $3
billion non-cash benefits since the company has reversed the valuation allowance on the
deferred tax assets (Schaltegger and Burritt 2017). The American Airlines Industry has
realised a pre-tax income of around $4.3 billion and $4.6 billion during the year 2016 and
2015 individually. The 2016 pre-tax profit for American Airlines Group under the GAAP
excludes the pre-tax net special transactions that are impacted by the fall in the revenue yields
because of the lower yield salaries.
Recent stock chart performance for each organization:
Recently the shares of Qantas increased significantly with the company reporting a
second highest profit after its 97 years of operations since its domestic operations reported an
increased earnings and easing of overseas competition. The airline industry share price
experienced a sloppy start and swinging from 3.8 per cent to fall at 3.6 per cent gain. The
shares of Qantas increased by 3.1 per cent (Williams 2014). Qantas is anticipated to witness
an overall increase in the capacity by approximately 3 per cent during the first half of 2018

5ACCOUNTING FOR CORPORATE STRUCTURE
financial year. This is because the international capacity is anticipated to increase by 5 per
cent following the operation in new Asian routes. Additionally, Qantas announced dividend
of A$ 0.07 which is line with the previous year when the company reinstated the dividend in
2017 (Warren and Jones 2018). Qantas is regarded as the best performer on the Bloomberg
Asia Pacific Airline index since the overall index is up by 23.1% for the financial year 2017.
Considering the stock performance of the American Airlines Group the shares of the
American Airlines have increased by 3 percent with the US airline index stood 2.5 per cent.
Evidences from the stock performance suggest that American airlines anticipates its total
revenue per available seat mile during the quarter have increased by 5 to 6 per cent in
comparison to the previous year guidance of 2.5-45 percent (Robson, Young and Power
2017). The twelve month forecast for the American Airlines Group have the median target of
around 61.00 with as high as estimated value of 105 and lower estimate of around 49.00. The
median estimation represents a 17.62% increase from the past share price of 51.86.
List of other Competitors:
Considering the list competitors for Qantas a summary of competitions faced by the
company is stated below;
Fragport AG: This regarded as the leading players among the international airport business
with over 90 years of experience in aviation expertise.
Virgin America: Another competition faced by the company is from the Virgin America
with an employee strength of 2900 and estimated revenue of around $1.5 billion.
American Airlines Group on the other hand faces competition from the below listed
airline operating company are as follows;

6ACCOUNTING FOR CORPORATE STRUCTURE
Air Canada: American Airlines Group faces competition from the Air Canada since the
company provides cheap airline tickets and last minute deals (Henderson et al. 2015). The
company has an estimated revenue of around 10 billion revenues.
Air Astana Airlines: Another competitor for American Airlines is the Air Astana Airlines
having an estimated revenue of around $10 billion with 4,700 employees.
Analysis of Ratios:
On analysing the ratios a reference to the GAAP and IFRS measures of financial
analysis is made. The analysis uses the financial measures that is obtained from the
consolidated financial report of American Airlines Group which is not presented in
accordance to the GAAP measures to understanding and assess the operating performance for
period to period comparison (Macve 2015). The analysis considers that under IFRS a better
financial information can be provided to the investors and others. The IFRS measures might
not be considered comparable to the similarity titled under GAAP measures but it should be
considered as the substitute or the superior to measure the performance of liquidity prepared
in accordance with the GAAP.
On analysing the accounts payable ratio for American Airlines Group it is noticed that
the ratio stood stable over the three year period with accounts payable increasing marginally
to 23.3 in 2017. The Qantas Airlines on the other hand reported a similar stable trend in
accounts payable for the three year period with the ratio standing 7.2 in 2017 (Trotman,
Carson and Gibbins 2015). Both the companies has sufficient amount of cash flow to meets
its both short and long term debt obligations.
The accounts receivable for American Airlines Group during the three year span does
not reflect much of the variation (Carlon et al. 2015). This represents that company has been
collecting its receivables as and when they become due. While the Qantas Airlines reported a

7ACCOUNTING FOR CORPORATE STRUCTURE
rising trend of accounts receivable turnover of with figures standing 14.68 in 2015 and
subsequently increased to 20.38 representing that there may be delay in collection from the
debtors.
The inventory turnover for American Airlines Group has improved over the three year
trend as figures in 2015 stood 40.56 while in 2017 the figures has improved to 31.1
representing that the company is converting its inventory in less span of time (Kahng 2016).
Qantas on the other hand reported a higher span in conversion of inventory as in 2017 the
inventory turnover figures stood 8.72.
The cash flow ratios is considered where the cash ratio for American Airlines Group
stood 0.50 in 2016 and declined to 0.36 in 2017. Similarly the cash flow yield for American
Airlines Group stood strongly with 2.72 in 2017. Other cash flow measuring parameters such
as cash flow to sales and cash flow to assets stood 0.11 and 0.09 respectively for American
Airlines Group in 2017 (Hoyle, Schaefer and Doupnik 2015). Qantas on the other hand
reported a cash ratio of 0.31 in 2016 which marginally declined to 0.26 in 2017. The cash
flow yield for Qantas Airlines during 2016 stood strong with 2.74 and 3.17 in 2016 and 2017
respectively. The cash flow to sales and cash flow to assets stood relatively lower for Qantas
in 2017 as the figures stood 0.16 and 0.15 relatively.
The fixed asset turnover for American Airlines Group stood 1.37 in 2016 while in
2017 it stood 1.29. The total asset turnover for American Airlines Group over the three year
trend reflected marginal increase as the figures reported stood 0.82 representing that the
assets has been effectively utilised to generate revenue (Beck et al. 2017). Qantas fixed asset
turnover over the five year trend stood relatively strong as the figures in 2017 stood 1.34. The
total asset turnover for the company stood 0.94 in 2017. Preceding from the above discussion
it can be stated that company that company has reported an effective utilization of its assets.

8ACCOUNTING FOR CORPORATE STRUCTURE
The earnings per share for American Airlines Group has been disappointing as there
has been a declining trend in the EPS. The figures reported for American Airlines Group in
2015 stood $11.39 which significantly fell as low as $3.92 in 2017 (Gordon and Hsu 2017).
Similarly for Qantas too reflected a weaker earnings per share of $0.49 and 0.46 in 2016 and
2017 respectively.
The shareholders return is measured through dividend pay-out ratio. The dividend
pay-out ratio for American Airlines Group stood 10.19% in 2017 representing that the
company is able to provide sufficient return to the shareholders (Evans et al. 2014). The
dividend pay-out ratio for Qantas stood strong over the last couple of years as the company
reported a strong dividend pay-out of 23.13 and 23.16% respectively in 2016 and 2017.
To measure the profitability net margin and operating margin is considered. The net
margin for American Airlines Group in 2016 stood 6.66% while in 2017 it declined to 4.55%.
The operating margin for the company stood 13.15% in 2016 which also fell to 9.31% in
2017. Qantas reported a somewhat tumultuous operating margin as the ratio stood 10.14 in
2016 and 8.53% in 2018 (Abdallah 2016). The net profit margin in 2016 stood 6.35% which
declined to 5.31% in 2017. The debt ratio for the firm stood stable in 2016 and 2017 as the
ratio stood 0.92 for American Airlines Group. Qantas reported a lower debt ratio of 0.74 in
2017.
Overall the profitability margin for both the company has stood relatively lower and
stable debt conditions and somewhat fluctuating receivable turnover for Qantas. While
American Airlines Group too reflected a declining trend in profitability with stable debt and
solvency conditions.

9ACCOUNTING FOR CORPORATE STRUCTURE
Short term credit decision and long term credit decision:
The short term credit decision for American Airlines Group considered stable as the
company has maintained sufficient working capital and has been able to pay its short term
debt obligations with relatively strong cash flow. The long term credit decision though
reflects a tumultuous situation as the EPS has represented a declining trend.
Investment decision:
The investment decision in American Airlines Group can be considered viable despite
the volatile airline industry as the company revenue per seat has increase to 6% on average
basis. Though current share performance appears to be relatively low but with new market
discovery an investment decision in American Airlines Group can be considered viable.
Investing in Qantas may appear more viable as the pay-out ratio has been relatively stronger.
Employment decision:
The employment decision in American Airlines Group does not appear viable as the
company has been struggling of late to hold and retain its employees. From the financial
standpoint the declining profit can be considered as the one of the future hindrance in the
employee retention.
Consulting decision:
On the probable situation of being the CEO for both the firms exploring the Asian
market with lower air fares would help in increasing market share and increased revenue for
both the American Airlines Group and Qantas Airlines.
Conclusion:
Conclusively, the airline industry appears to be highly competitive. The findings from
the analysis suggest that entering the Asian market with cheaper airline fares can help in
covering the expenditure of higher fuel costs. Both the American Airlines Group and Qantas

10ACCOUNTING FOR CORPORATE STRUCTURE
Airlines would be able offset the rising administrative expenses with increased profitability
and wider consumer base in the Asian markets.

11ACCOUNTING FOR CORPORATE STRUCTURE
Reference List:
Abdallah, W.M., 2016. The conversion from US-GAAP to IFRS and transfer pricing.
American Airlines. (2018). Investor Relations | American Airlines. [online] Available at:
https://americanairlines.gcs-web.com/ [Accessed 27 Mar. 2018].
Beck, A.K., Behn, B.K., Lionzo, A. and Rossignoli, F., 2017. Firm Equity Investment
Decisions and US GAAP and IFRS Consolidation Control Guidelines: An Empirical
Analysis. Journal of International Accounting Research, 16(1), pp.37-57.
Carlon, S., McAlpine-Mladenovic, R., Palm, C., Mitrione, L., Kirk, N. and Wong, L.,
2015. Financial Accounting: Reporting, Analysis and Decision Making. John Wiley and Sons
Australia.
Evans, M.E., Houston, R.W., Peters, M.F. and Pratt, J.H., 2014. Reporting regulatory
environments and earnings management: US and non-US firms using US GAAP or
IFRS. The Accounting Review, 90(5), pp.1969-1994.
Gordon, E.A. and Hsu, H.T., 2017. Tangible Long-Lived Asset Impairments and Future
Operating Cash Flows under US GAAP and IFRS. The Accounting Review, 93(1), pp.187-
211.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Investor.qantas.com. (2018). Qantas Investors | Investor Centre. [online] Available at:
http://investor.qantas.com/investors/?page=annual-reports [Accessed 27 Mar. 2018].

12ACCOUNTING FOR CORPORATE STRUCTURE
Kahng, L., 2016. Perspectives on the Relationship Between Financial and Tax Accounting.
In Controversies in Tax Law(pp. 105-122). Routledge.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
Robson, K., Young, J. and Power, M., 2017. Themed section on financial accounting as
social and organizational practice: exploring the work of financial reporting. Accounting,
Organizations and Society, 56, pp.35-37.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Trotman, K., Carson, E. and Gibbins, M., 2015. Financial accounting: an integrated
approach. Cengage Australia.
Warren, C.S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.

13ACCOUNTING FOR CORPORATE STRUCTURE
Appendix:

14ACCOUNTING FOR CORPORATE STRUCTURE
Ratio Analysis:
Particulars 2017 2016 2015 2017 2016 2015
Current Ratio 0.611 0.744 0.886 0.440 0.492 0.676
Quick Ratio 0.477 0.619 0.624 0.376 0.430 0.618
Cash Ratio 0.360 0.504 0.517 0.266 0.317 0.490
Accruals Ratio 1.038 1.001 0.936 0.379 0.400 0.510
Cash Flow Yield 2.472 2.438 0.821 3.170 2.740 3.657
Cash Flow to Sales 0.112 0.162 0.152 0.168 0.174 0.129
Cash Flow to Assets 0.092 0.128 0.134 0.159 0.165 0.118
Current Cash Debt Coverage Ratio 0.329 0.479 0.442 0.383 0.389 0.273
Free Cash Flow $1,551.40 $2,380.20 $1,550.80 $1,861.58 $1,572.38 $1,833.00
Accounts Receivable Turnover 25.228 26.662 25.707 20.338 18.472 14.678
Days' Sales Turnover 15.151 14.480 12.645 17.822 17.912 22.132
Inventory Turnover 31.104 36.927 40.567 42.757 44.246 46.222
Days' Inventory Outstanding 13.003 11.443 8.352 8.723 8.425 7.958
Accounts Payable Turnover 23.262 22.448 24.558 7.247 7.529 7.914
Days' Payable Outstanding 16.150 16.652 15.917 51.369 49.797 46.490
Fixed Asset Turnover 1.292 1.376 1.638 1.342 1.447 1.491
Total Asset Turnover 0.822 0.790 0.879 0.947 0.946 0.908
Cash Conversion cycle 12.003 9.271 5.079 -24.824 -23.460 -16.400
Basis Defence Interval 64.524 83.597 78.750 63.929 72.372 109.790
Expense Coverage Days 66.442 87.377 85.360 65.334 74.299 111.453
Current Liabilities Ratio 0.315 0.292 0.328 0.519 0.523 0.530
Cash Turnover Ratio 136.814 117.143 60.816 8.552 6.628 5.353
Inventory to Sales 0.032 0.027 0.019 0.022 0.021 0.020
Cash to Current Asset Ratio 0.589 0.678 0.584 0.605 0.644 0.724
Current Asset to Total Debt 0.365 0.424 0.630 0.645 0.711 0.908
Current Liabilities to Inventory 11.011 12.680 16.805 20.214 20.917 23.199
Debt Ratio 0.924 0.926 0.808 0.794 0.805 0.803
Equity Ratio 0.076 0.074 0.192 0.206 0.195 0.197
Debt to Equity 12.091 12.547 4.201 3.865 4.124 4.086
Interest Coverage 3.943 5.396 7.094 6.026 6.014 3.261
Cash Interest Coverage 6.612 9.221 11.503 13.902 12.317 7.524
Cash Debt Coverage 0.100 0.148 0.152 0.199 0.205 0.144
Interest Expense to Total Debt 0.042 0.041 0.047 0.049 0.058 0.063
Financial Leverage Index 0.025% 0.026% 0.010% 0.028% 0.031% 0.029%
Gross Margin Ratio
Operating Margin ratio 9.61% 13.15% 15.14% 8.53% 10.14% 6.63%
Pre-Tax Margin Ratio 7.31% 10.70% 11.26% 7.36% 8.79% 4.99%
Net Margin Ratio 4.55% 6.66% 18.57% 5.31% 6.35% 3.54%
Return on Total Assets 3.74% 5.26% 16.33% 5.03% 6.01% 3.21%
Return on Common equity 38380.00% 53520.00% 126833.33% 26.17% 28.39% 12.10%
Earnings per Share $3.92 $4.85 $11.39 $0.46 $0.49 $0.26
Book Value per Common Share $0.01 $0.01 $0.01 $1.76 $1.74 $2.11
dividend Payout Ratio 10.19% 8.25% 3.51% 30.41% 28.34% 0.00%
Effective Tax Rate 28.06% 30.35% 47.96% 23.16% 23.13% 20.12%
Price-Earnings Ratio 12.744 5.747 3.415 12.122 5.283 12.196
Price-Sales Ratiuo 0.579 0.383 0.634 0.644 0.336 0.432
Price-Book Ratio 4890.978 3075.744 4331.980 3.173 1.500 1.475
Dividend Yield Ratio 0.80% 1.44% 1.03% 2.51% 5.36% 0.00%
Dividend Coverage ratio 9.811 12.120 28.481 3.288 3.529 0.000
American Airlines Qantas Airways

15ACCOUNTING FOR CORPORATE STRUCTURE
Vertical Analysis:
Particulars 2017 2016 2015 $ Change % Change $ Change2 % Change3
(in million) (in million) (in million) (in million) (in million)
Cash 295 322 364 -27 -8.39% -69 -18.96%
Current Assets 9146 10324 11858 -1178 -11.41% -2712 -22.87%
Current Liabilities 14964 13872 13377 1092 7.87% 1587 11.86%
Total Liabilities 47470 47489 40741 -19 -0.04% 6729 16.52%
Retained Earnings 3129 1207 -1230 1922 159.24% 4359 -354.39%
Total Shareholders' Equity 3926 3785 9698 141 3.73% -5772 -59.52%
Weighted-average Common
Shares Outstanding 489 552 668 -63 -11.41% -179 -26.80%
Net Sales 42207 40180 40990 2027 5.04% 1217 2.97%
Operating expenses 38149 34896 34786 3253 9.32% 3363 9.67%
Operating Margin 4058 5284 6204 -1226 -23.20% -2146 -34.59%
Interest Expenses 1053 991 880 62 6.26% 173 19.66%
Net Income 1919 2676 7610 -757 -28.29% -5691 -74.78%
Earnings per share (in $) 3.92 4.85 11.39 -0.92 -19.05% -7.47 -65.55%
American Airlines 2017 2016
Particulars 2017 2016 2015 $ Change % Change $ Change2 % Change3
(in million) (in million) (in million) (in million) (in million)
Cash 1775 1980 2908 -205 -10.35% -1133 -38.96%
Current Assets 3119 3458 5049 -339 -9.80% -1930 -38.23%
Current Liabilities 7095 7028 7470 67 0.95% -375 -5.02%
Total Liabilities 13681 13445 14083 236 1.76% -402 -2.85%
Retained Earnings 472 -100 -1115 572 -572.00% 1587 -142.33%
Total Shareholders' Equity 3540 3260 3447 280 8.59% 93 2.70%
Weighted-average Common
Shares Outstanding 1853 2083 2196 -230 -11.04% -343 -15.62%
Net Sales 16057 16200 15816 -143 -0.88% 241 1.52%
Operating expenses 14687 14557 14768 130 0.89% -81 -0.55%
Operating Margin 1370 1643 1048 -273 -16.62% 322 30.73%
Interest Expenses 235 284 349 -49 -17.25% -114 -32.66%
Net Income 853 1029 560 -176 -17.10% 293 52.32%
Earnings per share (in $) 0.460 0.494 0.255 -0.034 -0.068 0.205 0.805
Qantas Airways 2017 2016
Trend Analysis:
Particulars 2017 2016 2015 2017 2016 2015
(in million) (in million) (in million)
Cash 295 322 364 81.04% 88.46% 100%
Current Assets 9146 10324 11858 77.13% 87.06% 100%
Current Liabilities 14964 13872 13377 111.86% 103.70% 100%
Total Liabilities 47470 47489 40741 116.52% 116.56% 100%
Retained Earnings 3129 1207 -1230 254.39% 98.13% -100%
Total Shareholders' Equity 3926 3785 9698 40.48% 39.03% 100%
Weighted-average Common
Shares Outstanding 489 552 668 73.20% 82.63% 100%
Net Sales 42207 40180 40990 102.97% 98.02% 100%
Operating expenses 38149 34896 34786 109.67% 100.32% 100%
Operating Margin 4058 5284 6204 65.41% 85.17% 100%
Interest Expenses 1053 991 880 119.66% 112.61% 100%
Net Income 1919 2676 7610 25.22% 35.16% 100%
Earnings per share (in $) 3.92 4.85 11.39 34.45% 42.55% 100%
American Airlines Trend Analysis

16ACCOUNTING FOR CORPORATE STRUCTURE
Particulars 2017 2016 2015 2017 2016 2015
(in million) (in million) (in million)
Cash 1775 1980 2908 61.04% 68.09% 100%
Current Assets 3119 3458 5049 61.77% 68.49% 100%
Current Liabilities 7095 7028 7470 94.98% 94.08% 100%
Total Liabilities 13681 13445 14083 97.15% 95.47% 100%
Retained Earnings 472 -100 -1115 42.33% -8.97% -100%
Total Shareholders' Equity 3540 3260 3447 102.70% 94.57% 100%
Weighted-average Common
Shares Outstanding 1853 2083 2196 84.38% 94.85% 100%
Net Sales 16057 16200 15816 101.52% 102.43% 100%
Operating expenses 14687 14557 14768 99.45% 98.57% 100%
Operating Margin 1370 1643 1048 130.73% 156.77% 100%
Interest Expenses 235 284 349 67.34% 81.38% 100%
Net Income 853 1029 560 152.32% 183.75% 100%
Earnings per share (in $) 0.460 0.494 0.255 180.52% 193.72% 100%
Qantas Airways Trend Analysis
Horizontal Analysis:
American Airlines:

17ACCOUNTING FOR CORPORATE STRUCTURE
Income Statement:
Particulars 2017 % in 2017 2016 % in 2016 2015 % in 2015
(in million) (in million) (in million)
Operating Revenues:
Mainline Passenger 29238 69.27% 27909 69.46% 29037 70.84%
Regional Passenger 6895 16.34% 6670 16.60% 6475 15.80%
Cargo 800 1.90% 700 1.74% 760 1.85%
Other 5274 12.50% 4901 12.20% 4718 11.51%
Total Operating Revenue 42207 100.00% 40180 100.00% 40990 100.00%
Operating Expenses:
Aircraft fuel and related taxes 6128 14.52% 5071 12.62% 6226 15.19%
Salaries, Wages & Benefits 11816 28.00% 10890 27.10% 9524 23.23%
Regional expenses 6546 15.51% 6044 15.04% 5983 14.60%
Maintenance, materials &
repairs 1959 4.64% 1834 4.56% 1889 4.61%
Other rent and landing fees 1806 4.28% 1772 4.41% 1731 4.22%
Aircraft rent 1197 2.84% 1203 2.99% 1250 3.05%
Selling Expenses 1477 3.50% 1323 3.29% 1394 3.40%
Depreciation and amortization 1702 4.03% 1525 3.80% 1364 3.33%
Special items, net 712 1.69% 709 1.76% 1051 2.56%
Other 4806 11.39% 4525 11.26% 4374 10.67%
Total Operating Expenses 38149 90.39% 34896 86.85% 34786 84.86%
Operating Income 4058 9.61% 5284 13.15% 6204 15.14%
Nonoperating Income
(expense):
Interest Income 94 0.22% 63 0.16% 39 0.10%
Interest Expense -1053 2.49% -991 2.47% -880 2.15%
Other, net -15 0.04% -57 0.14% -747 1.82%
Total non-operating expense,
net -974 2.31% -985 2.45% -1588 3.87%
Income before income taxes 3084 7.31% 4299 10.70% 4616 11.26%
Income tax provision (benefit) 1165 2.76% 1623 4.04% -2994 7.30%
Net Income 1919 4.55% 2676 6.66% 7610 18.57%

18ACCOUNTING FOR CORPORATE STRUCTURE
Balance Sheet:
Particulars 2017 % in 2017 2016 % in 2016 2015 % in 2015
Current Assets:
Cash 295 0.57% 322 0.63% 390 0.81%
Short-Term Invetsment 4771 9.28% 6037 11.77% 5864 12.11%
Restricted Cash & Short-term
investment 318 0.62% 638 1.24% 695 1.44%
Accounts Receivable, net 1752 3.41% 1594 3.11% 1425 2.94%
Aircraft Fuel, Spare parts &
Supplies, net 1359 2.64% 1094 2.13% 863 1.78%
Prepaid Expenses & Other 651 1.27% 639 1.25% 748 1.54%
Total Current Assets 9146 17.80% 10324 20.13% 9985 20.62%
Operating property &
equipment:
Flight equipment 40318 78.45% 37028 72.22% 33185 68.54%
Ground property & equipment 8267 16.08% 7116 13.88% 6402 13.22%
Equipment purchase deposit 1217 2.37% 1209 2.36% 1067 2.20%
Total Property & equipment, at
cost 49802 96.90% 45353 88.45% 40654 83.97%
Less: Accumulated depreciation
& amortization -15646 30.44% -14194 27.68% -13144 27.15%
Total Property & Equipment,
net 34156 66.46% 31159 60.77% 27510 56.82%
Other Assets:
Goodwill 4091 7.96% 4091 7.98% 4091 8.45%
Intangibles 2203 4.29% 2173 4.24% 2249 4.65%
Deferred Tax Assets 427 0.83% 1498 2.92% 2477 5.12%
Other Assets 1373 2.67% 2029 3.96% 2103 4.34%
Total Other Assets 8094 15.75% 9791 19.10% 10920 22.55%
Total Assets 51396 100.00% 51274 100.00% 48415 100.00%
LIABILITIES & STOCKHOLDER'S
EQUITY
Current Liabilities:
Current maturities of long-term
debt and capital assets 2554 4.97% 1855 3.62% 2231 4.61%
Accounts Payable 1688 3.28% 1592 3.10% 1563 3.23%
Accrued Salaries & Wages 1672 3.25% 1516 2.96% 1205 2.49%
Air Traffic Liability 3978 7.74% 3912 7.63% 3747 7.74%
Loyalty Program Liability 2791 5.43% 2789 5.44% 2525 5.22%
Other Accrued Liabilities 2281 4.44% 2208 4.31% 2334 4.82%
Total Current Liabilities 14964 29.12% 13872 27.05% 13605 28.10%
Non-Current Liabilities
Long-term debt and capital
leasees 22511 43.80% 22489 43.86% 18330 37.86%
Pension and post retirement
benefit 7497 14.59% 7842 15.29% 7450 15.39%
Deferred Gains & credits 0.00% 0.00% 667 1.38%
Bakruptcy settlement obligation 0.00% 0.00% 193 0.40%
Other Liabilities 2498 4.86% 3286 6.41% 2535 5.24%
Total noncurrent liabilities 32506 63.25% 33617 65.56% 29175 60.26%
Stockholder's equity:
Common Stock 5 0.01% 5 0.01% 6 0.01%
Additional Paid in Capital 5714 11.12% 7223 14.09% 11591 23.94%
Accumulated other
comprehensive loss -5154 10.03% -5083 9.91% -4732 -9.77%
Retained Earnings 3361 6.54% 1640 3.20% -1230 -2.54%
Total Stockholder's Equity 3926 7.64% 3785 7.38% 5635 11.64%
Total Liabilities & Stockholder's
equity 51396 100.00% 51274 100.00% 48415 100.00%

19ACCOUNTING FOR CORPORATE STRUCTURE
Qantas Airways:
Income Statement:
Particulars 2017 % in 2017 2016 % in 2016 2015 % in 2015
Operating Revenues:
Net Passenger Revenue 13857 86.30% 13961 86.18% 13667 86.41%
Net Freight Revenue 808 5.03% 850 5.25% 936 5.92%
Other 1392 8.67% 1389 8.57% 1213 7.67%
Revenue & Other Income 16057 100.00% 16200 100.00% 15816 100.00%
Expenditure:
Manpower & staff related 4033 25.12% 3865 23.86% 3604 22.79%
Fuel 3039 18.93% 3250 20.06% 3937 24.89%
Aircraft Operating Revenue 3436 21.40% 3346 20.65% 3206 20.27%
Depreciation and amortization 1382 8.61% 1224 7.56% 1096 6.93%
Impairment of cash generating unit 0 0.00% 0 0.00% 0 0.00%
Impairment of specific assets 0 0.00% 0 0.00% 28 0.18%
Non-Cancellable aircraft operating
lease rentals 356 2.22% 461 2.85% 495 3.13%
Share of net loss of investment
accounted for under the equity
method 7 0.04% 0.00% 40 0.25%
Other 2434 15.16% 2411 14.88% 2362 14.93%
Expenditure 14687 91.47% 14557 89.86% 14768 93.37%
Statutory profit before income tax
and net finance cost 1370 8.53% 1643 10.14% 1048 6.63%
Finance Income 46 0.29% 65 0.40% 90 0.57%
Finance Costs -235 1.46% -284 1.75% -349 2.21%
Net Finance Costs -189 1.18% -219 1.35% -259 1.64%
Statutory profit before income tax
expense 1181 -7.36% 1424 -8.79% 789 -4.99%
Income Tax Expenses -328 -2.04% -395 -2.44% -229 1.45%
Net Income 853 5.31% 1029 6.35% 560 3.54%

20ACCOUNTING FOR CORPORATE STRUCTURE
Balance Sheet:
Particulars 2017 % in 2017 2016 % in 2016 2015 % in 2015
Current Assets:
Cash and Cash equivalents 1775 10.31% 1980 11.85% 2908 16.59%
Receivables 784 4.55% 795 4.76% 959 5.47%
Other Financial Assets 100 0.58% 229 1.37% 613 3.50%
Inventories 351 2.04% 336 2.01% 322 1.84%
Assets classified as held for sale 12 0.07% 17 0.10% 136 0.78%
Other 97 0.56% 101 0.60% 111 0.63%
Total Current Assets 3119 18.11% 3458 20.70% 5049 28.80%
Non-Current Asset:
Receivables 123 0.71% 134 0.80% 134 0.76%
Other Financial Assets 43 0.25% 46 0.28% 49 0.28%
Investment accounted for under
the equity method 214 1.24% 197 1.18% 134 0.76%
Property,Plant & equipment 12253 71.15% 11670 69.86% 10715 61.12%
Intangible Assets 1025 -5.95% 909 -5.44% 803 -4.58%
Deferred Tax Assets 0.00% 39 0.23% 333 1.90%
Other Assets 444 2.58% 252 1.51% 313 1.79%
Total Non-Current Assets 14102 81.89% 13247 79.30% 12481 71.20%
Total Assets 17221 100.00% 16705 100.00% 17530 100.00%
Current Liabilities:
Payables 2067 12.00% 1986 11.89% 1881 10.73%
Revenue received in advance 3685 21.40% 3525 21.10% 3584 20.45%
Interest bearing liabilities 433 2.51% 441 2.64% 771 4.40%
Other financial liabilities 69 0.40% 203 1.22% 416 2.37%
Provisions 841 4.88% 873 5.23% 818 4.67%
Total Current Liabilities 7095 41.20% 7028 42.07% 7470 42.62%
Non-Current Liabilities:
Revenue received in advance 1424 8.27% 1521 9.11% 1359 7.75%
Interest bearing Lliabilities 4405 25.58% 4421 26.47% 4791 27.34%
Other financial liabilities 56 0.33% 61 0.37% 68 0.39%
Provisions 348 2.02% 414 2.48% 395 2.25%
Deferred Tax liabilities 353 2.05% 0 0.00% 0 0.00%
Total noncurrent liabilities 6586 38.24% 6417 38.41% 6613 37.73%
Total Liabilities 13681 79.44% 13445 80.48% 14083 80.36%
Net Assets 3540 20.56% 3260 19.52% 3447 19.67%
Stockholder's equity:
Issued Capital 3259 18.92% 3625 21.70% 4630 26.42%
Treasury Stocks -206 -1.20% -50 -0.30% -7 -0.04%
Reserves 12 -0.07% -220 1.32% -66 -0.38%
Retained Earnings 472 2.74% -100 -0.60% -1115 -6.36%
Equity attributable to the
members of Qantas 3537 20.54% 3255 19.49% 3442 19.64%
Non-Controlling interest 3 0.02% 5 0.03% 5 0.03%
Total equity 3540 20.56% 3260 19.52% 3447 19.67%
Total Liabilities & Stockholder's
equity 17221 100.00% 16705 100.00% 17525 100.00%

21ACCOUNTING FOR CORPORATE STRUCTURE