University Report: Financial and Economic Analysis of Qantas Airways

This report provides a detailed financial and economic interpretation of Qantas Airways Limited, one of Australia's oldest airlines. It analyzes the company's financial performance, including revenue, profit, and dividends, and discusses its market strategies, competitive environment, and the impact of economic factors like oil prices. The report examines the airline's operations, including domestic and international air transportation services, its loyalty programs, and freight services. It also considers the company's organizational structure, employee benefits, and the skills required for employees. The conclusion highlights the decrease in financial performance compared to the previous year, attributing it to economic factors, but also notes the company's continued growth in the second half of the financial year and its strategies to maintain financial health and attract customers. References to relevant academic sources are also included.

Running head: FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS
AIRLINES
FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
Name of the Student
Name of the University
Author Note

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
Table of Contents
Executive Summary...................................................................................................................2
Interpretation..............................................................................................................................2
Conclusion..................................................................................................................................4
References..................................................................................................................................6

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
Executive Summary
This report presents a discussion on the financial performance of Qantas Airways
Limited. It is one of the oldest airlines in Australia, which was established in 1920. The
headquarter is situated in Sydney. It becomes the largest airlines in the country when it
acquired Australian Airlines in 1992. The main area of operation is the transportation of
commuters and freight. The financial report analysis aims to provide a brief idea about the
financial performance of the organization. This will guide the stakeholders to invest in the
shares of Qantas Airways Limited.
Interpretation
 The core business area that the organization deals with is the operation of international
and domestic air transportation services. Qantas Airways Limited also has an operation of
a frequent flyer loyalty program and provision of freight services (Xian 2018). It offers
two types of airline, one is Qantas and other is Jetstar, these operates in international,
domestic and regional areas. The air quotes of Qantas are throughout Australia, Europe,
America, and New Zealand.
 As per the financial performance is concerned, there is an increase in the total revenue
from $17,128 million to $17,966 million. But there is a decrease in the net profit from
$953 million to $891 million. Shareholders have received $1 billion in capital during the
financial year of 2019. The profit before tax has also decreased from $1565 million to $
1302 million. The board declared a final dividend of 13 cents per share, which amounts to
$204 million.
 As Qantas operates one of the largest air travel markets in the world, there are huge
chances of verifying the trends in that business market. The organization follows the

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
technological factor which includes the mobile trend. Nowadays, there is an advancement
of technology where all the things are done via online (DAYI and ULUSOY 2018). Thus,
to keep up with the competitors Qantas developed two official apps that will benefit the
customers to book flights from their smartphone and also can check-in by showing the e-
ticket.
 The business strategies which Qantas Airways Limited is to satisfy the consumers
through providing low-cost fares. The flight frequency is also there so that it can able to
maintain their large portion of market share. It also has applications which can be used for
checking the lowest fare for the destination (Baxter, Srisaeng and Wild 2018). There are
two brands, on is Qantas which targets business travelers and high-class passengers.
Another is Jetstar, which targets normal passengers.
There are certain skills required to be an employee of Qantas as it provides high-
level services to the passengers. The skills are dependent on the position of the
department (Sarina and Wright 2015). Though, the employees of Qantas are given
training by the senior talent management, through the program their skills are developed.
 There is an increase in the competition in the current scenario of the airline industry. But
Qantas can achieve competitive benefits with their unique services.
One of the most important things that has affected the growth of Qantas is the
increase in oil prices (Sarhan, McMurray and Kopanidis 2015). This is the most current
impact which the organization faces because of the global financial crisis.
 There are certain approaches that the management team follows, which is a differentiation
strategy and cost leadership approach which help them to retain the consumers (Ayvaz et

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
al. 2018). It focuses on the marketing campaign and provide huge discounts through
which it is ahead of the competition.
 In the Director’s report, the remuneration for the CEO has gradually decreased from
$8,028,000 to $6,973,000. As per the Current executives goes, there is a decrease from
$18,909,000 to $16,668,000.
 One of the biggest rivals of Qantas Airlines is Virgin Airlines, but as Qantas has a huge
strength of employees it has a total wage bill of more than $4 billion (Yang and
Baasandorj 2017). Recently, there is a wage agreement which includes an increase of 3
percent annually. There are almost 25,000 employees, where there is almost $32 million
in the staff travel bonuses.
 In the organizational structure of Qantas airlines, all the strategies and objectives are
taken by the management people. The organization consists of many subsidiaries that are
regulated by the executives (Leppäjärvi 2018). All this information is being given to the
board of directors, who is the decision-maker and later it is approved by the CEO. The
tops most organizational management consists of members related to corporate
governance and executive top-level management personnel. There are departments which
comprise project management, administrative management, and operations management.
 Qantas Airways knows how to keep their employees happy. The non-wage benefits which
the organization provided are travel industry discounts, access to salary sacrifice
programs, discount on products and services exclusively for employees, huge discounts
on airfare, paid parental leave and free assistance programs for employees. These are the
benefits which are enjoyed by the employees of Qantas Airways.

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
Conclusion
From the above discussion, it can be concluded that the financial performance of
Qantas Airways has decreased as compared to the previous year, due to some economic
factors. The factor that is affecting the performance is the increase in the oil prices and there
is an increase in the competition of that market segment. Though there are limitations, the
organization has continued to double-digit growth profit in the second half of the financial
year.
For the shareholders, the organization returned their dividends which was earned
through surplus, the amount for the total dividend paid in the financial year 2019 is $363
million and $637 millions of on-market share buybacks. Furthermore, the board declared a 13
cents per share fully paid dividend which amounts to $204 million and an additional off-
market share buy-back up to 79.7 million shares.
Therefore, the organization can take care of the competitors through different
strategies which will attract the customers to use the airway for traveling. The economic issue
that the organization is facing is unavoidable, thus they have to use cost-efficiently in the
other areas of operation to maintain financial growth.

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
References
Ayvaz, E., Polat, F., Kaplan, K. and Savici, A., 2018. OPTIMIZATION MODELLING FOR
REVENUE MANAGEMENT OFAN AIRLINE FLIGHT INA COMPETITIVE
ENVIRONMENT. Current Debates in Accounting & Finance: Volume 3, 3, p.241.
Baxter, G., Srisaeng, P. and Wild, G., 2018. The role of freighter aircraft in a full-service
network airline air freight services: The case of Qantas Freight. MAD-Magazine of Aviation
Development, 6(4), pp.28-51.
DAYI, F. and ULUSOY, T., 2018. EVALUATING FINANCIAL PERFORMANCE WITH
MINIMUM SPANNING TREE APPROACH: AN APPLICATION IN AIRLINES
COMPANIES. Electronic Turkish Studies, 13(30).
Leppäjärvi, P., 2018. Competitor analysis: Airlines’ leisure travel products from the frequent
flyer’s perspective.
Sarhan, N.M., McMurray, A. and Kopanidis, F., 2015. The Challenges and Opportunities in
Addressing the Needs of Middle Eastern Tourists: An Australian Cultural Perspective.
In Emerging Research on Islamic Marketing and Tourism in the Global Economy (pp. 136-
159). IGI Global.
Sarina, T. and Wright, C.F., 2015. Mutual gains or mutual losses? Organizational
fragmentation and employment relations outcomes at Qantas Group. Journal of Industrial
Relations, 57(5), pp.686-706.
Xian, W., 2018. Case Study on Qantas of ITS Strategic Management: The High Flyer of the
Airline Industry.

FINANCIAL AND ECONOMIC INTERPRETATION OF QANTAS AIRLINES
Yang, A.S. and Baasandorj, S., 2017. Exploring CSR and financial performance of full-
service and low-cost air carriers. Finance Research Letters, 23, pp.291-299.