2002 Qantas Annual Report

2002 Qantas Annual Report 

The Spirit of Australia

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Qantas was founded in the Queensland outback 

in 1920 and is Australia’s largest domestic and 

international airline. Registered originally as 

Queensland and Northern Territory Aerial Services 

Limited (QANTAS), the airline has built a reputation 

for excellence in safety, operational reliability, 

engineering and maintenance, and customer service. 

Qantas operates a fleet of 187 aircraft across a network 

spanning 142 destinations in 32 countries. Qantas 

carried more than 27 million passengers this year and 

employs more than 33,000 staff who speak more than 

50 different languages. Qantas also operates subsidiary 

businesses in specialist markets such as Qantas Holidays 

and Qantas Flight Catering. 

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1 Report from the 

Chairman and 

Chief Executive 

Officer 

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5 Review of our 

Business 

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24 Board of 

Directors 

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26 Corporate 

Governance 

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27 Financial 

Review 

Qantas Airways Limited ABN 16 009 661 901

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Chief Executive Officer Geoff Dixon 

Chairman Margaret Jackson 

to our fellow shareholders 

It has been a dramatic and at times traumatic year for Qantas and the 

global aviation industry. The events of 11 September 2001 changed the 

industry forever and the collapse of Ansett has transformed the Australian 

aviation market. Qantas performed well in the face of these tumultuous 

events and this was a tribute to our management and staff. 

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PROFIT BEFORE TAX OF $631.0 MILLION. REVENUE OF $11.3 BILLION 

Passengers Carried 

000 

Net Profit Attributable to 

Members of the Company 

$M 

27,128 

517.3 

22,147 

20,485 

19,236 18,865 

428.0 

415.4 

421.6 

304.8 

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02 

01 

00 

99 

98 

02 

01 

00 

99 

98 

A TUMULTUOUS YEAR In last year’s annual report, 

we noted that Qantas had performed well in a 

challenging environment and as part of an industry 

characterised by low overall profitability. 

Those words were written one week before 

September 11. 

The world is still trying to come to terms with 

the terrorist attacks in the United States and the 

thousands of lives lost, including a number of 

Australians. The tragic deaths included two Qantas 

staff members – Alberto Dominguez, 66, a baggage 

handler at Sydney Domestic Terminal and Laura Lee 

Morabito, 34, Area Sales Manager in Boston. Both 

Alberto and Laura Lee were highly regarded workers 

who were extremely popular with their colleagues. 

The impact of September 11 on our industry 

was enormous. According to the International Air 

Transport Association, 2001 was only the second year 

in the history of civil aviation in which international 

traffic declined. The IATA membership of airlines 

collectively lost more than US$12 billion. 

At the same time, in the domestic market, Ansett 

collapsed. Qantas leased extra aircraft and added 

hundreds of special flights, including to regional 

Australia, to help travellers stranded by the crisis. 

Qantas flew over 50,000 former Ansett passengers 

for free and another 65,000 on heavily discounted fares. 

Qantas was able to add the equivalent of about seven 

years’ growth, virtually overnight. This huge effort 

was critical in minimising the impact of the Ansett 

collapse on the Australian economy, tourism, business 

and national life. 

ANNUAL RESULTS In these extraordinary 

circumstances, Qantas delivered a profit before tax of 

$631.0 million for the year ended 30 June 2002 and a 

net profit after tax of $428.0 million. 

Domestic operations, QantasLink, Qantas Flight 

Catering and Qantas Holidays performed strongly 

and this offset the substantial decline in international 

operations after September 11. International 

operations improved in the second half of the year 

as some confidence was restored. 

The Directors declared a fully franked final dividend 

of nine cents per share, bringing total fully franked 

dividends for the year to 17 cents per share. 

Qantas staff received a special four per cent bonus 

payment due to their efforts during the year and in 

line with a commitment made to them in late 2001. 

The Board also decided to allocate $1,000 worth of 

Qantas shares to all Australia-based eligible employees 

under the Qantas Profitshare Scheme. 

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TOTAL FULLY FRANKED DIVIDENDS FOR THE YEAR OF 17 CENTS PER SHARE 

Sales and Operating Revenue 

$M 

Ordinary Dividends per Share* 

Cents per Share 

11,322.6 

10,188.2 

9,106.8 

8,448.7 8,131.5 

17.0 9.0 

9.0 

20.0 

22.0 

11.0 

19.0 

11.0 

Final 

Interim 

13.5 

7.0 

11.0 

11.0 

8.0 

8.0 

6.5 

02 

01 

00 

99 

98 

02 

01 

00 

99 

98 

* Excludes special dividends paid 

BOARD CHANGES Paul Anderson was appointed a 

non-executive Director on the Qantas Board on 2 

September 2002. Mr Anderson has outstanding 

management and operational skills and an 

extraordinary record as a senior executive in the 

international mining and energy industries. We are 

delighted that he is bringing his diverse range of 

corporate skills to Qantas. 

In November 2001, Rod Eddington stepped down as 

a non-executive Director. This followed a $450 million 

placement of shares by Qantas in October 2001 and 

the consequent reduction of British Airways’ 

shareholding in Qantas to less than 22.5 per cent. 

As a result, British Airways was entitled to appoint 

two, rather than three, Directors to the Qantas Board. 

Roger Maynard and Nick Tait continue to serve on 

the Qantas Board as Directors appointed by British 

Airways. It has been a pleasure to have had Rod serve 

on the Qantas Board, we thank him for his 

involvement and we will continue to work with him 

in his role as Chief Executive of British Airways. 

GOING FORWARD Qantas will continue its strategies of: 

• segmenting its flying business to align costs and 

revenues in particular markets. This will see Qantas 

operate: 

■ the premium Qantas international product with 

three and two-class service; 

■ Australian Airlines, a full-service, single class 

international carrier that will begin flying between 

Cairns and a number of Asian ports from 

27 October; 

■ Cityflyer, the two-class domestic “shuttle” service 

tailored for business travellers on the popular 

Sydney–Melbourne, Sydney–Brisbane and 

Melbourne–Brisbane routes and which will 

soon be extended to Adelaide and Perth; 

■ the full service, two-class product for other 

domestic destinations; 

■ an all economy domestic service for leisure routes 

where there is little or no demand for business 

travel; and 

■ expanded QantasLink services to regional Australia. 

• investing in and growing subsidiary businesses – 

QantasLink, Qantas Flight Catering, Qantas Holidays 

and Qantas Freight – so that in the future they can 

contribute about one third of Qantas profits. 

THE SPIRIT OF AUSTRALIA 

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QANTAS CARRIED MORE THAN 27 MILLION PASSENGERS DURING THE YEAR 

Year Ended 30 June 2002 2001 2000 1999 1998 

Sales and Operating Revenue $M 11,322.6 10,188.2 9,106.8 8,448.7 8,131.5 

Earnings Before Interest and Tax $M 679.3 695.8 874.0 762.6 581.7 

Profit From Ordinary Activities Before Tax $M 631.0 597.1 762.8 662.5 478.0 

Net Profit Attributable to Members of the Company $M 428.0 415.4 517.3 421.6 304.8 

Earnings per Share cents 29.1 33.0 42.8 35.4 26.8 

Ordinary Dividends per Share cents 17.0 20.0 22.0 19.0 13.5 

Passengers Carried 000 27,128 22,147 20,485 19,236 18,865 

Available Seat Kilometres M 95,944 92,943 85,033 81,765 81,537 

Revenue Passenger Kilometres M 75,134 70,540 64,149 59,863 58,619 

Revenue Seat Factor % 78.3 75.9 75.4 73.2 71.9 

Aircraft in Service at Balance Date # 193 178 147 135 146 

• seeking mutually beneficial partnerships with other 

quality airlines. For example, Qantas is in 

discussions with Air New Zealand about the 

possibility of a strategic alliance between the two 

companies and an acquisition by Qantas of a 

minority equity interest in Air New Zealand. No 

agreement or commitment has been reached or 

entered into at this time and any agreement would 

be conditional on a number of approvals. 

Qantas is also well placed to continue substantial 

investment in new aircraft, upgraded inflight products 

and airport infrastructure. This investment is needed 

as our competitors are also upgrading aircraft and 

product and competing aggressively. 

On 21 August 2002, Qantas announced it intended 

to raise approximately $800 million of ordinary equity 

through an entitlement offer to existing shareholders 

to support our capital expenditure program and help 

fund other potential investment opportunities that 

may arise. 

The institutional entitlement offer closed successfully 

on 23 August and the retail entitlement offer is 

expected to close on 27 September. 

These strategic initiatives and substantial investment 

programs confirm our commitment to: 

• our customers, who will enjoy further improved 

facilities and services; 

• our employees, who will benefit from the airline’s 

strong foundations and growth opportunities; 

• our shareholders, who expect us to grow and be 

profitable; and 

• the Australian community, which we continue to 

support by employing over 31,000 Australians, 

spending billions of dollars with Australian suppliers 

and being a major supporter of arts, sports and 

charitable organisations. 

Chairman Margaret Jackson 

Chief Executive Officer Geoff Dixon 

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THE SPIRIT OF AUSTRALIA

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6 International 

Operations 

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10 Domestic 

Operations 

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14 Regional 

Operations 

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16 Subsidiary 

Businesses 

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18 Freight p 

20 Fleet p 

22 Community 

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international operations 

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QANTAS operates approximately 540 international flights every week to and from Australia, offering 

services to 68 destinations in 31 countries across the Asia Pacific region, Europe, North America, 

South America and South Africa. 

IMPROVED PRODUCT During the year, Qantas substantially upgraded many of its international 

aircraft and lounges. A highlight was the $300 million project to install a new inflight entertainment 

system on the Qantas fleet of Boeing 747-400s – featuring larger screens in First and Business Class, 

individual seatback video screens in Economy Class, and inseat telephones in all classes. 

The interiors of the Boeing 747-400 aircraft are also being upgraded, with new design seat fabrics, 

curtains, carpets and accessories for First, Business and Economy Class cabins. 

The upgrade program has been extended to the Boeing 747-300 fleet at an additional cost of 

$125 million and is due for completion by the end of 2003. 

Qantas will invest a further $300 million to relaunch its International Business Class, featuring 

newly designed sleeper seats and cabin upgrades. The first of the new Business Class seats will be 

available on the London and Hong Kong routes in the first half of 2003. 

Facilities are also being improved on the ground. The new flagship Qantas Club Lounge at Sydney 

International Terminal opened in May 2002, accommodating up to 150 First Class customers and 

500 Business Class customers. This facility sets a new standard for First and Business Class 

passengers, top tier Frequent Flyers and Qantas Club members. 

Overseas, the completely redesigned Qantas Club Lounge at Honolulu International Airport 

reopened in August 2001 and a substantially larger Qantas and British Airways First Class Lounge 

at Changi Airport in Singapore opened in November 2001. 

NETWORK Qantas has always managed its international network closely, scrutinising every route 

to ensure its ongoing viability. 

Following the terrorist attacks in the United States on 11 September 2001 and the resulting fall 

in demand for international air travel, Qantas reduced a number of scheduled international 

flights. Demand is steadily increasing, resulting in the reintroduction or planned reintroduction 

of additional services. 

• United States Soon after September 11, Qantas reduced return services between Australia and 

Los Angeles from 31 per week to 26 per week, and suspended New York services. New York 

services resumed in February 2002 and services to Los Angeles increased to 28 per week in 

July 2002. 

Qantas also operates three 747 services each week to Honolulu. 

• United Kingdom and Europe Qantas will add three Boeing 747-400 services to London from 

December 2002, taking the total number of Australia–London return services to 21 per week. 

A fourth return weekly service to Rome will also be added from the end of October 2002. 

• Hong Kong Qantas boosted Hong Kong capacity significantly in April 2001, including a 

25 per cent increase between Sydney and Hong Kong and a 20 per cent capacity increase 

on the Melbourne and Brisbane–Hong Kong routes. 

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QANTAS IS SUBSTANTIALLY UPGRADING ITS INTERNATIONAL AIRCRAFT AND LOUNGES 

PETER BOTTEN, Managing Director Oil Search Ltd. A top tier frequent flyer, Peter 

Botten appreciates the high standard of facilities that Qantas offers the international 

business traveller. This includes the new flagship Qantas Club Lounge in the Sydney 

International Terminal which opened in May 2002 as part of a $50 million program 

to upgrade lounge facilities in Australia and overseas. 


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INTERNATIONALLY, QANTAS OPERATES 540 FLIGHTS EACH WEEK TO 68 DESTINATIONS IN 31 COUNTRIES 

SPIRIT OF FRIENDSHIP. In late June 2002, Qantas launched 

a unique global initiative that focused worldwide attention 

on international air travel. 

International star John Travolta joined Qantas as Ambassadorat-Large 

and promptly flew his former Qantas Boeing 707, 

repainted in its original livery, around the world on a Spirit 

of Friendship tour. The tour attracted huge interest and 

support at each stage of its 13-city journey, from Los Angeles 

to New York via Auckland, Sydney, Melbourne, Perth, 

Singapore, Hong Kong, Tokyo, London, Rome, Paris 

and Frankfurt. 

A talented and highly qualified pilot and avid fan of aviation 

and Qantas, Travolta used the tour as a way of reaching 

across borders and bringing a sense of excitement and 

optimism back to air travel. 

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international operations 

• Japan The opening of the new runway at Narita Airport provided Qantas with an opportunity to 

increase services. In July 2002, Qantas introduced a daily Melbourne–Narita 767 service and 

Cairns–Narita services have been boosted by 10 per cent. Bookings have returned to last year’s 

levels and continue to grow. 

• New Zealand From 1 July 2002, Qantas added nine return services per week between Australia 

and New Zealand, increasing the total number of trans-Tasman services to more than 100 return 

flights each week. 

Qantas began domestic New Zealand services in April 2001, flying between the major centres 

of Auckland, Wellington and Christchurch and has built a codeshare relationship with local airline, 

Origin Pacific, to service a number of regional destinations. 

• South America From 1 July 2002, following political and economic turmoil in Argentina, Qantas 

replaced two flights a week to Buenos Aires with three flights per week between Sydney and 

Santiago, Chile with oneworld partner, LanChile. 

AUSTRALIAN AIRLINES During the year, Qantas announced it will launch a new wholly owned, 

full-service, single-class international carrier that will commence operations on 27 October 2002. 

Australian Airlines is independently managed and will not compete with Qantas. It will operate on 

routes from which Qantas has withdrawn and on routes where Qantas has been unable to extract 

a satisfactory return. 

Australian Airlines will initially offer services between Cairns and Osaka, Fukuoka, Nagoya, 

Singapore, Taipei and Hong Kong. The airline will operate Boeing 767-300 aircraft on all routes, 

beginning with a fleet of four and building to a potential fleet of 12 aircraft. 

ALLIANCES AND PARTNERSHIPS Qantas has entered into a number of strategic alliances to create 

scale and scope for its operations and deliver enhanced customer service. 

Qantas is a founding member of the oneworld alliance, which features eight of the world’s leading 

airlines – Qantas, Aer Lingus, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia and 

LanChile – as well as 23 regional affiliates. 

Qantas also has separate bilateral alliances with British Airways, American Airlines, Japan Airlines and 

Air Pacific as well as codeshare arrangements with numerous other airlines including Air Calin, 

Air Niugini, Air Tahiti Nui, Air Vanuatu, Alaska Airlines, Alitalia, Asiana, China Eastern, Eva Air, Gulf Air, 

Origin Pacific, Polynesian Airlines, South African Airways and Vietnam Airlines. 

These alliances and codeshare arrangements allow Qantas to offer customers an expanded global 

network, increased ease of transfer, greater choice and flexibility and provide increased rewards and 

recognition for frequent flyers. 

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domestic operations 

The core domestic airline of Qantas operates an average of 373 flights each day. During the year, 

Ansett – the major domestic competitor of Qantas – collapsed. As a result, Qantas significantly 

increased the number of scheduled flights operated by its core domestic airline. 

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CITYFLYER The inaugural Qantas Cityflyer service took off on the airline’s busiest route, 

Sydney–Melbourne, on 1 July 2001. 

The service, that offers flights every half hour on weekdays, quickly established itself as the best 

domestic product in the market for the business traveller. 

In February 2002, the service was extended to Sydney–Brisbane, offering flights every half hour 

during peak times and every hour at other times, and Melbourne–Brisbane, offering hourly flights. 

The service will soon be extended to Adelaide and Perth. 

Cityflyer streamlines the airport process for business travellers and includes: 

• priority departure gates nearest to airport security screening and the Qantas Club; 

• complimentary newspapers for early morning flights; 

• dedicated baggage carousels; and 

• free bar service after 4.00 pm. 

LOUNGE UPGRADE Qantas is investing $50 million to upgrade its domestic Qantas Club Lounges 

around the country. Work has already commenced on the lounges at Sydney, Melbourne and 

Brisbane domestic terminals, with these projects scheduled for completion in September 2002. 

There are also plans to expand and improve the domestic Qantas Club Lounges in Perth, Gold 

Coast, Darwin, Adelaide and other ports. 

A highlight of the upgrade program is enhanced business facilities featuring the latest technology. 

This includes upgrading communications capabilities to allow customers to plug in laptops, charge 

mobile phones and access email from the comfort of an armchair. 

QUICKCHECK Qantas introduced QuickCheck kiosks at Sydney and Melbourne Domestic Airports 

in August 2002, allowing customers to check themselves in at state-of-the-art, self-service 

QuickCheck kiosks. 

QuickCheck provides real customer benefits by reducing check-in times to less than one minute. 

The kiosks are easily accessible in terminal departure areas, in Qantas Club Lounges and close to 

Cityflyer departure gates. 

In a first for Australia, QuickCheck will soon be available for customers with baggage. 

TOURISM Qantas has continued its strong support for the Australian domestic and inbound tourism 

industry, working closely with the major national and state and territory tourist organisations and 

travel agents. 

Our support for the Federal Government’s See Australia domestic tourism initiative continued the 

effort to encourage Australians to holiday in their own country. At the same time, Qantas was 

involved in tactical marketing efforts with state and territory tourist bodies in early 2002 to help 

boost the recovery of the domestic market. 

The Australian Tourism Exchange, held in Brisbane in May 2002, and the Dreamtime incentive 

travel market event in July 2001 were the cornerstone elements of Qantas’ excellent working 

relationship with the Australian Tourist Commission (ATC). 

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QANTAS CITYFLYER MEETS THE NEEDS OF AUSTRALIAN BUSINESS TRAVELLERS 

KEITH BALES, Businessman. Keith lives in Sydney and commutes to 

and from Melbourne each week for work. With peak period flights 

between Sydney and Melbourne every 30 minutes, the frequency 

and business travel focus of Qantas’ new Cityflyer services suit 

corporate customers large, medium and small. 


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QANTAS’ CORE DOMESTIC AIRLINE OPERATES AN AVERAGE OF 373 FLIGHTS EACH DAY 

MATTHEW ARCIDIACONO and family. The Canberra 

optometrist welcomes wife, Lee, and daughters Hayley and Livvy, 

home from a school holiday trip to the Gold Coast. Qantas’ 

extensive schedule of flights and range of discounted fares make 

it easy for families to enjoy everything Australia has to offer the 

domestic traveller. 

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domestic operations 

An ongoing global marketing agreement sees Qantas and the ATC working together across the 

world to promote and develop leisure and business tourism to Australia. 

Qantas also supports other key tourism organisations such as the Australian Tourism Export Council 

and the Tourism Task Force, works closely with the Australian Federation of Travel Agents and has 

taken a lead role with special events such as Year of the Outback 2002 and a number of state and 

territory tourism awards. 

NEW AND INCREASED SERVICES In a major boost for Australian tourism, Qantas introduced 

a number of non-stop services on popular tourist routes including: 

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• Adelaide–Gold Coast; 

• Brisbane–Alice Springs; 

• Cairns–Darwin; 

• Melbourne–Darwin; 

• Melbourne–Alice Springs; 

• Melbourne–Maroochydore; 

• Melbourne–Hamilton Island; 

• Perth–Darwin; 

• Sydney–Proserpine; and 

• Sydney–Rockhampton. 

Other domestic services introduced include: 

• additional weekly services between Adelaide and Sydney, Melbourne and Brisbane; 

• additional weekly services between state capital cities and Canberra; 

• additional Sydney–Townsville services; 

• additional services between Sydney, Brisbane and Hamilton Island; 

• additional Sydney–Ayers Rock services; 

• additional Melbourne–Alice Springs services; and 

• additional services between Sydney, Melbourne, Brisbane and Cairns. 

TAXES, CHARGES AND LEVIES Costs of safety, security and airport usage rose during the year. 

New charges included the Ansett staff entitlements levy ($10 per ticket, collected by Qantas on 

behalf of the Federal Government) and a $6 per sector insurance levy flowing from the catastrophic 

events in the United States. 

Qantas continues to seek ways of reducing the impost represented by taxes, levies and charges, 

while meeting market needs for transparency and openness on the total cost of airline tickets. 

Qantas has revised its fare and holiday package advertising to show prices on an all-inclusive basis. 

Customers have reacted positively to the change, and Qantas is now the industry leader in relation 

to fare transparency, simplicity and fairness. 

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QANTASLINK OPERATES MORE THAN 2,700 FLIGHTS ACROSS REGIONAL AUSTRALIA EACH WEEK 

regional operations 

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QANTAS’ REGIONAL OPERATIONS have been flying under one brand name – QantasLink – since May 2001. 

QantasLink operates more than 2,700 flights each week to 55 destinations within Australia. QantasLink provides 

important transport services for regional Australia and connections to Qantas domestic and international 

networks. QantasLink employs approximately 1,600 people and has: 

• operational bases in Hobart, Cairns and Mildura; 

• a Dash 8 line maintenance facility in Mildura; 

• a Boeing 717 heavy maintenance facility in Newcastle; and 

• a Dash 8 heavy maintenance facility and administration centre in Tamworth. 

Following the collapse of Ansett, QantasLink operated hundreds of additional services to regional Australia and 

provided and arranged for services to 22 regional destinations previously served only by Ansett and its subsidiaries. 

QantasLink has grown significantly since September 2001. In January 2002, five Dash 8-300 aircraft were added 

to the QantasLink fleet, boosting services and creating more than 90 jobs. Three months later, six Boeing 717 

aircraft were added, resulting in more non-stop services and creating more than 150 jobs for pilots, flight 

attendants, engineers and operational staff. 

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QANTASLINK PROVIDES EMPLOYMENT FOR APPROXIMATELY 1,600 PEOPLE 

RENE SUTHERLAND, Director Dubbo Regional Gallery. QantasLink 

is an integral part of life in regional Australia. Rene Sutherland, Director 

of the Dubbo Regional Gallery in central western NSW, is a regular 

QantasLink traveller between Sydney and her home town. QantasLink 

is a major sponsor of the Gallery, exemplifying the way Qantas supports 

cultural development in regional centres such as Dubbo. 

QantasLink introduced a number of new regional destinations to its network during the year, including 

Longreach, Mt Isa and Weipa in Queensland, and Port Hedland and Newman in Western Australia. 

QantasLink is also a strong supporter of regional tourism and is involved extensively in the sponsorship 

and promotion of rural and regional events and organisations, including: 

• Australian Wool Fashion Awards, Armidale; 

• Dubbo Regional Gallery; 

• Flying Fruit Fly Circus, Albury-Wodonga; 

• Qantas Founders Outback Museum, Longreach; 

• QantasLink Newcastle Knights; 

• QantasLink Northern Tasmania Football League; 

• QantasLink Squad (Western Australian Cricket Association initiative in the Pilbara); and 

• Riverina Theatre Company, Wagga Wagga. 


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SNAP FRESH WILL PRODUCE UP TO 20 MILLION MEALS FOR QANTAS EACH YEAR 

MATTHEW SNARE, Research and Development Chef, Snap 

Fresh. At Qantas subsidiary Snap Fresh, Matthew takes quality 

produce and designs flavour-driven dishes for Qantas customers. 

Snap Fresh will be able to produce up to 20 million snap frozen 

meals per year for Qantas, other airlines and, ultimately, 

businesses in the hospitality, health care and mining industries. 

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subsidiary businesses 

QANTAS has a number of non-flying, airline-related subsidiary businesses, including Qantas Flight 

Catering, Qantas Holidays and Qantas Freight. Qantas subsidiary businesses, including QantasLink, 

contributed 26 per cent of the Qantas Group’s earnings before interest and tax in the 2002 financial 

year. By shaping and growing these key businesses so that they contribute about one third of future 

profits, Qantas hopes to boost the airline’s overall profitability. 

CATERING Qantas operates three catering businesses within the Qantas Catering Group – Qantas 

Flight Catering Limited (QFCL), Caterair Airport Services and Snap Fresh. These three businesses 

collectively employ more than 3,800 Australians. 

The Qantas Catering Group operates seven catering centres in Sydney, Melbourne, Brisbane, 

Cairns, Adelaide and Perth. 

During the year, Qantas Catering Group provided nearly 38 million meals to Qantas and other 

airlines as well as non-airline clients including railways and hospitals. 

On 1 February 2002, Qantas Chairman Margaret Jackson and Queensland Premier Peter Beattie 

opened Snap Fresh – a wholly owned Qantas subsidiary located at Crestmead on the outskirts 

of Brisbane. 

Snap Fresh is one of the most modern meal production centres in the world, using rapid freezing 

technology to produce meals that retain all the goodness and flavour of their natural ingredients. 

Snap Fresh has a team of about 70 people and will grow to produce up to 20 million meals each 

year for Qantas, other airlines and businesses in the hospitality, health care and mining industries. 

QANTAS HOLIDAYS is Australia’s largest travel wholesaler of both international and domestic 

holidays designed for independent travellers and small groups. Qantas Holidays caters to more than 

one million customers a year and employs more than 1,000 people across the world, including 

nearly 700 within Australia. 

With nearly 30 years’ experience, Qantas Holidays continues to offer customers an unsurpassed 

range of holiday packages and product. 

The 2001–2002 product range encompassed 37 brochures covering Australia, Asia, Africa, Europe, 

Canada, the Pacific and North and South America. 

As a travel industry leader, Qantas Holidays was recognised with a number of highly regarded 

awards, including the National Travel Industry Award for Wholesaler of the Year for the fifth 

consecutive year. 

In August 2001, Qantas and Qantas Holidays created a new website exclusively for Australia-based 

travel agents, giving them quick and easy access to on-line information to help them help their 

customers. Information available on-line includes flyers that can be emailed directly to customers 

and Federal Government travel advisories. 

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freight 

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QANTAS FREIGHT is the specialised air freight division of Qantas and has been operating since the 

inaugural Qantas scheduled service in November 1922. 

Qantas Freight employs more than 700 people and offers a varied and flexible range of services 

through three primary products – Cargo, Mail and Express Service – on all international sectors 

of Qantas flights. 

Domestic freight is marketed by Australian air Express (AaE), a 50 per cent joint venture company 

with Australia Post. AaE is the largest domestic airline-haul company in Australia. 

Qantas Freight carries letters and lettuces, parcels and pets, frozen seafood and prime breeding 

stock. Special facilities include coolrooms and freezers for perishable goods, warmrooms for tropical 

fish and other live animals and strongrooms and safes for valuables. 

Early this year, Qantas Freight coordinated the movement of the Relics of St Therese of Lisieux 

during a three-month tour of Australia. The Relics attracted huge crowds across the country and 

the tour was described by the Catholic Church as the largest Catholic event in Australia since the 

visit of the Pope. 

During the year, significant investment was made in upgrading security at Qantas freight terminals 

to ensure safer handling and more secure transport of all air freight. 

Qantas Freight is part of the oneworld global route network of 135 countries and territories – 

and growing. During this year, for example, Qantas joined forces with US-based freighter, Polar Air 

Cargo, to provide customers with a full range of all-cargo services across the South Pacific. 

Qantas Freight is an industry leader in e-commerce with 80 per cent of bookings now made on-line 

and a range of services that provide fast and easy access to accurate information on worldwide 

freight movements round the clock. Indeed, Qantas Freight was selected as a finalist in the 2002 

Ericsson Innovation Awards for Follow Me Tracking, an internet-based tracking application which 

informs customers of the status of their freight as it moves from origin to destination. 

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QANTAS FREIGHT OFFERS A COMPREHENSIVE RANGE OF CARGO, MAIL AND EXPRESS SERVICES 

PETER FRASER, Managing Director Lobster Australia. A leader 

in the Australian seafood industry, Fremantle’s Lobster Australia 

handles more than 2,000 tonnes of lobster and other seafood 

each year and exports across the country and into Asia. Managing 

Director Peter Fraser relies heavily on Qantas freight services to get 

the company’s produce to where it needs to be. 


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QANTAS OPERATES A FLEET OF 187 AIRCRAFT 

fleet 

QANTAS FLEET Qantas continues to be a world leader in the selection of new aircraft types. 

Highlights of the year included: 

• delivery of 15 Next Generation Boeing 737-800s between February and August 2002; 

• the ordering of an additional four Boeing 737-800s for delivery from May 2003; 

• delivery of six Boeing 717s between April and June 2002; 

• finalising preparations for the delivery in November 2002 of the first of six Boeing 747-400ER aircraft; 

• finalising preparations for the delivery in November 2002 of the first of 13 Airbus A330 aircraft; and 

• continuing preparations for the delivery of 12 Airbus A380 aircraft between 2006 and 2011. 

The new Boeing 737-800s are more fuel efficient and cost effective and offer more spacious cabins, 

more headroom and larger windows than the Boeing 737-300. 

The speed with which Qantas selected and acquired these aircraft was unprecedented in the airline’s history. 

The first new aircraft entered service just three months after a contract was signed with Boeing and all 15 were 

operating six months later. 

p 

20 


QANTAS IS A WORLD LEADER IN THE SELECTION OF NEW AIRCRAFT TYPES 

QF 

20 

02 

YANANYI DREAMING. The third Qantas plane to become a 

flying work of art, Yananyi Dreaming was used to launch 

Qantas’ fleet of 15 new Boeing 737-800 aircraft. The 

spectacular aircraft is a collaborative design between 

Sydney's Balarinji Studio and Uluru indigenous artist, 

Rene Kulitja. The new 737-800s feature the latest Boeing 

technology and design, including distinctive 2.5 metre 

‘winglets’ that give the aircraft greater range and more 

fuel-efficient and cost-effective operation. They have already 

become the single-aisle flagship aircraft of the Qantas 

domestic fleet, flying routes serving Sydney, Melbourne, 

Brisbane, the Gold Coast, Adelaide, Cairns and Ayers Rock. 

OPERATIONAL AIRCRAFT FLEET (as at 30 June 2002)* 

Aircraft Type Owned, HP Other Total in 

& Finance Operating Service 

Leases 

Leases 

Boeing 747-400 18 7 25 

Boeing 747-300 6 – 6 

Boeing 747-200** 3 – 2 

Boeing 767-300ER 17 12 29 

Boeing 767-200ER 7 – 7 

Boeing 737-800*** 9 – 9 

Boeing 737-400 21 1 22 

Boeing 737-300 16 1 17 

Total Core Fleet 97 21 117 

Aircraft Type Owned, HP Other Total in 

& Finance Operating Service 

Leases 

Leases 

British Aerospace 146 – 17 17 

De Havilland Dash 8 28 4 32 

Shorts 360 1 – 1 

Beechcraft 1900*** 12 – 12 

Boeing 717-200 – 14 14 

Total QantasLink Fleet 41 35 76 

Total Qantas Fleet 138 56 193 

* excludes two Boeing 767s, six Boeing 737s and one Dash 8 currently 

operating under short-term lease agreement 

** one Boeing 747-200 on lease to Air Pacific 

*** at 20 August 2002, an additional six Boeing 737-800 aircraft had joined the 

fleet and the 12 Beechcraft 1900 aircraft had been retired 

p 

21

community 

QF 

20 

02 

QANTAS continues to play a vital role in supporting 

cultural, sporting and community organisations across 

Australia. The company also has well established 

programs for indigenous Australian employees and 

communities. 

COMMUNITY SUPPORT Every day of the year, Qantas 

helps people who are disadvantaged, chronically ill or 

in need of urgent assistance. Qantas’ support for 

major community organisations includes: 

• Bobby Goldsmith Foundation 

• CanTeen 

• CARE Australia 

• Clean Up Australia and Clean Up the World 

• Mission Australia 

• National Breast Cancer Foundation 

• National Australia Day Council Australian 

of the Year Awards 

• Starlight Children’s Foundation of Australia 

• UNICEF Change for Good 

• World Vision. 

THE ARTS During the year, Qantas entered 

into new sponsorship agreements with: 

• Australian Ballet 

• Australian Chamber Orchestra. 

These new partnerships complemented 

the company’s long-term relationships with: 

• Art Gallery of NSW 

• Australian Brandenburg Orchestra 

• Australia Business Arts Foundation 

• Australian Youth Orchestra 

• Bangarra Dance Theatre 

• Bell Shakespeare Company 

• Melbourne Festival 

• Musica Viva 

• Opera Australia 

• Sydney Dance Company. 

SPORT Qantas was a major sponsor of 

the 2001 Goodwill Games in Brisbane and 

this year entered into new agreements with: 

• Australian Cricket Board 

• Australian Football League 

• National Rugby League. 

Qantas also continued its partnerships with: 

• Australian Formula One Grand Prix 

• Australian Rugby Union 

• Australian Swimming 

• One Basketball 

• Netball Australia 

• Soccer Australia 

• Tennis Australia. 

INDIGENOUS PROGRAMS Qantas is committed to 

working in partnership with Aboriginal and Torres 

Strait Islander communities through a range of 

initiatives, including employment and training 

programs, community involvement and sponsorships. 

Through the Qantas Indigenous Employment 

Program, 180 indigenous Australians are employed 

in areas including catering, engineering and 

maintenance, airports, flight operations, ramp services, 

cabin crew, human resources, sales and freight. 

Qantas is a signatory to the Federal Government’s 

Corporate Leaders for Indigenous Employment Project, 

which aims to generate more jobs in the private sector 

for indigenous people. 

ENVIRONMENT Qantas is committed to promoting 

processes and work practices that minimise the 

environmental impact of its operations and the airline 

is a long-time supporter of Clean Up Australia and 

Clean Up the World. 

Qantas and Visy Closed Loop were recognised at the 

prestigious 2002 Banksia Environmental Awards for the 

environmental benefits flowing from the boxed meals 

introduced on Qantas domestic services in 2001. The 

boxes substantially reduce waste – about 250 tonnes 

of materials are recycled every month that may 

otherwise have gone to landfill – and deliver energy 

savings when compared with the traditional tray service. 

Qantas will also be presented with a Bronze Award 

at the Sustainable Energy Development Authority’s 

Globe Awards in October 2002 because the 

introduction of lighting and air-conditioning 

improvements and the use of solar energy have 

reduced Qantas’ greenhouse gas emissions by 

almost 10,000 tonnes per year. 

p 

22

QANTAS PLAYS A VITAL ROLE IN THE COMMUNITY, CULTURAL AND SPORTING LIFE OF AUSTRALIA 

STARLIGHT CHILDREN’S FOUNDATION OF AUSTRALIA Elevenyear-old 

Debbie Thake and Captain Starbright enjoy the fun 

and games of the Starlight Room at Sydney Children’s 

Hospital, Randwick. Qantas supports dozens of charitable, 

cultural and sporting institutions and organisations each year, 

including the Starlight Children’s Foundation which 

brightens the lives of seriously ill children and their families, 

by the granting of wishes and providing entertainment both 

in and out of hospitals throughout Australia. Qantas staff are 

also very active when it comes to their own fundraising 

efforts. One unique program is Teams for Dreams where staff 

work with the Foundation to raise funds and then personally 

deliver dreams and wishes to children. 


p 

23

oard of directors 

Margaret Jackson 

Chairman 

Geoff Dixon 

Chief Executive Officer 

Peter Gregg 

Chief Financial Officer 

Paul Anderson 

Non-Executive Director 

Mike Codd, AC 


Trevor Eastwood, AM 


Jim Kennedy, AO, CBE 


Trevor Kennedy, AM 


Roger Maynard 


Dr John Schubert 


Nick Tait 


p 

24 



Chairman, Age 49 

• Appointed to the Board in July 1992 and as 

Chairman in August 2000 

• Chairperson of Methodist Ladies College, 

Melbourne 

• Director of Australia and New Zealand 

Banking Group Limited and Billabong 

International Limited 

• Fellow of the Institute of Chartered 

Accountants in Australia 

• Member of the Business Council of Australia 

Chairman’s Panel 

• Council Member of the Asialink Centre 

Geoff Dixon 

Chief Executive Officer, Age 62 

• Appointed to the Board in August 2000 and 

as Chief Executive Officer in March 2001 

• Member of the Safety, Environment & 

Security Committee and Chairman of a 

number of controlled entities of Qantas 

• Director of Leighton Holdings Limited and 

Air Pacific Limited 

• Member of the International Marketing 

Institute of Australia 

• Member of the Boards of Mission Australia 

and the Starlight Foundation of Australia 

Peter Gregg 

Chief Financial Officer, Age 47 

• Appointed to the Board in September 2000 

• Director of a number of controlled entities 

of Qantas 

• Director of Air Pacific Limited 

• Fellow of the Finance and Treasury 

Association 

• Member of the Australian Institute of 

Company Directors 

Paul Anderson 

Non-Executive Director, Age 57 

• Appointed to the Board in September 2002 

• Non-Executive Director of BHP Billiton 

Limited, BHP Billiton Plc and Temple-Inland 

Inc 

• Board of the Business Council of Australia 

• Member of the Advisory Board of Stanford 

University Graduate School of Business 

• Global Counsellor for The Conference Board 

Mike Codd, AC 


• Appointed to the Board in January 1992 

• Chairman of the Safety, Environment & 

Security Committee 

• Member of the Audit, Risk & Compliance 

Committee 

• Chancellor, University of Wollongong 

• Chairman of National Australia Asset 

Management Limited and National 

Corporate Investment Services Limited 

• Director of National Wealth Management 

Holdings Limited, National Australia 

Financial Management Limited, National 

Australia Fund Management Limited, MLC 

Limited, MLC Investments Limited and 

Toogoolawa Consulting Pty Limited 

• Member of the Advisory Boards of Spencer 

Stuart and Blake Dawson Waldron 



• Appointed to the Board in October 1995 


Committee and the Chairman’s Committee 

• Chairman of Gresham Partners Holdings 

Limited and Gresham Rabo Management 

Limited 

• Director of Wesfarmers Limited 

• Fellow of Curtin University, the Australian 

Institute of Management and the Australian 

Institute of Company Directors 




• Chairman of the Audit, Risk & Compliance 

Committee 

• Member of the Chairman’s Committee 

• Deputy Chairman of GWA International 

Limited 

• Director of the Australian Stock Exchange 

Limited, Macquarie Goodman Management 

Limited, Macquarie Goodman Funds 

Management Limited and Suncorp-Metway 

Limited 

• Member of the Advisory Board of Blake 

Dawson Waldron and the Prime Minister’s 

"Community Business Partnership" 



• Appointed to the Board in April 1994 

• Director of Qantas Superannuation Limited 

• Chairman of Oil Search Limited, Commsoft 

Group Limited and Cypress Lakes Group 

Limited 

• Deputy Chairman of CTI Logistics Limited 

• Director of several other public and private 

companies including Downer EDI Limited, 

FTR Holdings Limited and RG Capital Radio 

Limited 

Roger Maynard 


• Appointed to the Board by British Airways 

Plc in March 1993 


Committee 

• Director of Alliances, Investments and Joint 

Ventures for British Airways Plc 

• Chairman of British Airways Citi Express 

and Deutsche BA Luftfahrtgesellschaft mbH 

• Director of Iberia, Lineas Aereas 

de Espana 

Dr John Schubert 




Security Committee 

• Deputy Chairman of Commonwealth Bank 

of Australia 

• Director of BHP Billiton Limited, BHP Billiton 

Plc and Hanson Plc 

• President of the Business Council of Australia 

• Chairman of the Advisory Board of Worley 

Limited 

• Chairman of G2 Therapies Limited 

• Director of the Australian Graduate School 

of Management Limited, the Great Barrier 

Reef Research Foundation, the Salvation 

Army Advisory Board and the Opera 

Australia National Foundation 

Nick Tait 


• Appointed to the Board by British Airways 

Plc in March 1993 


Security Committee and the Chairman’s 

Committee 

• Director of Concorde International Travel 

Services Pty Limited and the Garvan 

Research Foundation 

• Fellow of the Australian Institute of 

Company Directors 

QF 

20 

02 

executive committee 

Geoff Dixon 


Peter Gregg 


Denis Adams 


Australian Airlines 

Fiona Balfour 

Executive General Manager 

and Chief Information Officer 

John Borghetti 


Sales and Marketing 

Kevin Brown 


Human Resources 

Paul Edwards 


Airline Strategy and Network 

Grant Fenn 


Finance and Deputy Chief 

Financial Officer 

David Forsyth 


Aircraft Operations 

David Hawes 

Group General Manager, 

Government and 

International Relations 

Brett Johnson 

General Counsel and 

Company Secretary 

Narendra Kumar 


Subsidiary Businesses 

Michael Sharp 

Group General Manager 

Public Affairs 

p 

25

corporate governance statement 

BOARD RESPONSIBILITIES 

In preparing this Statement, the Qantas Board has focussed on 

the structure and values which it has in place to ensure that the 

Board protects and enhances shareholder value. 

The Board maintains, and ensures that Qantas management 

maintains, the highest level of corporate ethics. The Board 

comprises a majority of independent Non-Executive Directors 

who, together with the BA Directors and Executive Directors, 

have extensive commercial experience and bring independence, 

accountability and judgement to the Board’s deliberations to 

ensure maximum benefit to shareholders, employees and the 

wider community. 

In particular, the Board: 

• ensures compliance with laws and all appropriate 

accounting standards 

• sets and reviews strategic direction 

• monitors the operating and financial performance of the 

Qantas Group 

• monitors the performance of the Chief Executive Officer, 

Chief Financial Officer and executive management 

• monitors risk management 

• ensures that the market and shareholders are fully informed 

of material developments 

BOARD STRUCTURE 

• 11 Directors 

• seven independent Non-Executive Directors elected by 

shareholders other than British Airways – no substantial 

shareholder/supplier/customer relationship nor previous 

executive roles within Qantas 

• Chairman is an independent Non-Executive Director 

• maximum 12 year term for independent Non-Executive 

Directors and six year term for the Chairman 

• two Non-Executive Directors are appointed by British Airways 

(a right acquired from the Australian Government in 1993 

when British Airways purchased its shareholding) 

• two Executive Directors – Chief Executive Officer and 


• new independent Non-Executive Directors are nominated by 

the Chairman’s Committee, appointed by the other independent 

Non-Executive Directors and elected by shareholders 

• details of the Directors and their qualifications are on page 25 

• at the 2000 Annual General Meeting, shareholders approved 

the entering of Director Protection Deeds with each Director 

AUSTRALIAN PROVISIONS 

• the Constitution contains provisions to ensure the 

independence of the Qantas Board and to protect the 

airline’s position as the Australian flag carrier 

• head office must be in Australia 

• two-thirds of the Directors must be Australian citizens 

• Chairman must be an Australian citizen 

• British Airways cannot vote in any election of independent 

Non-Executive Directors 

• quorum for a Directors’ meeting must include a majority 

of non-BA Directors who are Australian citizens and at least 

one BA Director 

• maximum 49 per cent aggregate foreign ownership 

• maximum 35 per cent aggregate foreign airline ownership 

• maximum 25 per cent ownership by one foreign person 

BOARD MEETINGS 

• eight formal meetings a year 

• additional meetings held as required (eg during the aviation 

crisis resulting from the combination of the 11 September 

2001 terrorist attacks and the 14 September 2001 collapse 

of Ansett) 

• two-day meeting held each year to review and approve the 

strategy and financial plan for the next financial year 

COMMITTEES 

• Board does not delegate major decisions to Committees 

• Committees are responsible for considering detailed issues 

and making recommendations to the Board 

• Audit, Risk & Compliance Committee – assists the Board 

in fulfilling its audit, accounting and reporting obligations, 

monitors internal and external auditors (including the 

independence of the external auditors), monitors business 

risk management and compliance with legal and statutory 

obligations 

• Safety, Environment & Security Committee – receives detailed 

reports on all safety (including occupational health and 

safety), environment and security aspects of the airline and 

ensures that the appropriate risk management procedures are 

in place to protect the airline, its passengers, employees and 

the community 

• Chairman’s Committee – review Board’s performance and 

remuneration, nomination of new Directors, recommends 

remuneration for Chief Executive Officer and senior 

executives and monitors succession planning 

• Nominations Committee – approval of Chairman and any 

Alternate Directors 

• the Audit, Risk & Compliance Committee, Safety, Environment 

& Security Committee and Chairman’s Committee operate 

under formal Terms of Reference which are updated regularly 

• Non-Executive Directors are a majority on and hold the Chair 

of all Committees 

• Chairman of the Audit, Risk & Compliance Committee has 

appropriate financial experience 

• membership of and attendance at 2002 Board and 

Committee meetings are detailed on page 30 

STANDARDS 

• annual formal review of Board performance 

• active participation by all Directors at all meetings 

• open access to information 

• regular management presentations and visits to interstate/ 

offshore operations 

• Chief Executive Officer and Chief Financial Officer certify the 

accuracy and completeness of financial information provided 

to the Board 

• independent professional advice is available to the Directors 

• formal Code of Conduct – including conflict of interest 

• formal share trading policy 

• formal Continuous Disclosure Policy – ensures compliance 

with the Listing Rules and Corporations Act and that all 

shareholders have equal access to material information 

EXTERNAL AUDITOR INDEPENDENCE 

• the Board closely monitors the independence of the 

external auditors 

• regularly reviews the independence safeguards put in place 

by the external auditors 

• requires the rotation of the audit partner every seven years 

• policies to restrict the type of non-audit services which can 

be provided by the external auditors 

• undertakes a detailed monthly review of non-audit fees paid 

to the external auditor 

• imposes restrictions on the employment of ex-employees 

of the external auditor 

• the Audit, Risk & Compliance Committee meets regularly 

with management without the external auditors and with 

the external auditors without management 

p 

26 

2002 QANTAS ANNUAL REPORT

performance summary 

for the year ended 30 June 2002 


Increase/ 

2002 2001 (Decrease) 

$M $M % 

Financial results 

Sales and operating revenue 

Net passenger revenue 9,027.5 7,941.8 13.7 

Net freight revenue 563.6 596.3 (5.5) 

Tours and travel revenue 674.4 604.3 11.6 

Contract work revenue 479.1 457.3 4.8 

Other sources* 578.0 588.5 (1.8) 

Sales and operating revenue 11,322.6 10,188.2 11.1 

Expenditure 

Manpower and staff related 2,689.2 2,549.9 5.5 

Selling and marketing 1,158.7 1,141.6 1.5 

Aircraft operating – variable 2,200.9 2,023.0 8.8 

Fuel and oil 1,570.0 1,329.8 18.1 

Property 264.3 246.9 7.0 

Computer and communication 408.4 365.0 11.9 

Depreciation and amortisation 693.5 706.7 (1.9) 

Non-cancellable operating lease rentals 255.7 181.8 40.6 

Tours and travel 584.4 525.7 11.2 

Capacity hire 499.9 220.2 127.0 

Other 354.4 201.8 75.6 

Share of net profit of associates (36.1) – n/a 

Expenditure 10,643.3 9,492.4 12.1 

Earnings before interest and tax 679.3 695.8 (2.4) 

Net borrowing costs (48.3) (98.7) (51.1) 

Profit from ordinary activities 

before related income tax expense 631.0 597.1 5.7 

Income tax expense relating to ordinary activities (201.7) (177.4) 13.7 

Net profit 429.3 419.7 2.3 

Outside equity interests in net profit (1.3) (4.3) (69.8) 

Net profit attributable to members of the company 428.0 415.4 3.0 

Financial position 

Total assets 14,801.5 12,513.6 18.3 

Total liabilities 10,548.0 9,197.7 14.7 

Total equity 4,253.5 3,315.9 28.3 

Cash flows 

Net cash provided by operating activities 1,143.3 1,100.7 3.9 

Net cash used in investing activities (2,306.1) (871.3) 164.7 

Net cash provided by/(used in) financing activities 1,688.8 (659.0) 356.3 

Net increase/(decrease) in cash held 526.0 (429.6) 222.4 

Performance ratios 

Net debt to net debt plus equity (ratio) 31:69 28:72 n/a 

Net debt to net debt plus equity including off balance sheet debt (ratio) 50:50 55:45 n/a 

Net debt to net debt plus equity including off balance sheet debt 

and revenue hedge receivables (ratio) 49:51 53:47 n/a 

Earnings per share (cents per share) 29.1 33.0 (11.8) 

Return on shareholders’ equity (percentage) 10.1 12.6 (2.5) points 

Return on shareholders’ equity including the notional capitalisation 

of non-cancellable operating leases on a hedged basis (percentage) 12.0 10.6 1.4 points 

Profit from ordinary activities before income tax expense as a percentage 

of sales and operating revenue (percentage) 5.6 5.9 (0.3) points 

Earnings before interest and tax as a percentage of sales 

and operating revenue (percentage) 6.0 6.8 (0.8) points 

* Excludes proceeds on sale (and on sale and leaseback) of non-current assets of $52.0 million (2001: $163.9 million), and interest revenue 

of $69.3 million (2001: $69.0 million) which is included in net borrowing costs. 


p 

27

contents 

page 

Directors’ Report 29 

Statement of financial performance 34 

Discussion and analysis of the statement 

of financial performance 35 

Statement of financial position 37 


of financial position 38 

Statement of cash flows 39 


of cash flows 40 

Notes to the financial statements 41 

1. Basis of the preparation of the 

concise financial report 41 

2. Change in accounting policy 41 

3. Revenue from ordinary activities 42 

4. Individually significant items included 

in profit from ordinary activities 

before income tax expense 42 

5. Individually significant income tax item 42 

6. Retained profits 42 

7. Dividends 43 

8. Total equity reconciliation 43 

9. Segment information 44 

10. Contingent liabilities 46 

11. Capital expenditure commitments 47 

12. Events subsequent to balance date 47 

Directors’ declaration 48 

Independent audit report on the concise financial report 48 

Shareholder information 49 

Qantas Group five-year summary 50 

Glossary 52 

Financial calendar 52 

Corporate directory 

IBC 

Information for shareholders is provided in this Annual Report and in a separate Financial Report. 

This Report is a Concise Financial Report which contains key financial information about Qantas in a concise format. 

The Financial Report provides more detailed financial information. The Concise Financial Report, whilst derived from the 

Financial Report, cannot be expected to provide as full an understanding of the financial performance, financial position 

and financing and investing activities of Qantas and its controlled entities as the Financial Report. 

A copy of the Financial Report, including the Independent Audit Report thereon, is available to all shareholders, free 

of charge, upon request. The Financial Report can be requested by telephone (toll free within Australia 1800 177 747, 

overseas 61 2 8234 5470). 

p 

28 


directors’ report 


The Directors of Qantas Airways Limited (Qantas) present their report together with the Concise Financial Report of the 

consolidated entity, being Qantas and its controlled entities (Qantas Group), for the financial year ended 30 June 2002 

and the Audit Report thereon. 

Directors 

The Directors of Qantas at any time during or since the end of the financial year are: 


Geoff Dixon 

Peter Gregg Paul Anderson (appointed 2 September 2002) 

Mike Codd, AC 


Rod Eddington # (resigned 23 November 2001) 



Roger Maynard 

John Rishton ~ (ceased to be an alternate Director 

John Schubert 

23 November 2001) Nick Tait. 

Details of Directors, their experience and any special responsibilities are set out on pages 24 and 25. 

# Rod Eddington is the Chief Executive Officer of British Airways Plc. When it was not possible for him to attend Qantas 

Board Meetings, he was represented by an alternate, Roger Maynard. 

~ John Rishton was an alternate for Rod Eddington. 

Principal activities 

The principal activities of the Qantas Group during the course of the financial year were the operation of international and 

domestic air transportation services, the sale of worldwide and domestic holiday tours and associated support activities 

including information technology, catering, ground handling and engineering and maintenance. There were no significant 

changes in the nature of the activities of the Qantas Group during the financial year. 

Dividends 

The Directors declared a final dividend of $140.7 million (final ordinary dividend of 9.0 cents per share) for the year ended 

30 June 2002 (2001: final ordinary dividend of 9.0 cents per share). The final dividend will be fully franked and follows a fully 

franked interim ordinary dividend of $124.1 million (8.0 cents per share), which was paid during the financial year. 

Review of operations and state of affairs 

A review of the Qantas Group’s operations, including the results of those operations, and changes in the state of affairs of the 

Qantas Group during the financial year is contained on pages 6 to 23. In the opinion of the Directors, there were no other 

significant changes in the state of affairs of the Qantas Group that occurred during the financial year under review not 

otherwise disclosed in this Annual Report. 

Events subsequent to balance date 

On 21 August 2002, Qantas announced its intention to raise up to $800 million of ordinary equity through an entitlement 

offer to existing shareholders to support its capital expenditure program and help fund other potential investment 

opportunities that may arise. 

The funds will be raised by way of a non-renounceable entitlement offer made in two parts, an institutional entitlement 

offer of $600 million and a retail entitlement offer of $200 million. Qualifying shareholders will be entitled to subscribe 

for a pro-rata entitlement of 1 ordinary share for every 8.2 ordinary shares held, at an issue price of $4.20 per share. 

The institutional component and $100 million of the retail component of the offer have been underwritten. 

The institutional entitlement offer was successfully completed on 23 August 2002. Qantas will allocate shares to participating 

institutions on 5 September 2002. 

A prospectus for the retail entitlement offer is scheduled to be dispatched to qualifying shareholders by 6 September 2002 

to allow those shareholders to subscribe for ordinary shares. The retail entitlement offer is scheduled to open on 9 September 

2002 and close on 27 September 2002. 

Other than the abovementioned, there has not arisen in the interval between the end of the financial year and the date of this 

Report, any item, transaction or event of a material and unusual nature that, in the opinion of the Directors, has significantly 

affected, or may significantly affect, the operations of the Qantas Group, the results of those operations, or the state of affairs 

of the Qantas Group, in this financial year or in future financial years. 

Likely developments 

Pages 6 to 23 of this report include information on developments likely to affect the operations of the Qantas Group. 

2002 QANTAS ANNUAL REPORT 

p 

29

directors’ report continued 


Further information about likely developments in the operations of the Qantas Group and the expected results of those 

operations in future financial years has not been included in this Directors’ Report because disclosure of the information could 

be unreasonably prejudicial to the Qantas Group. 

Directors’ meetings 

The number of Directors’ meetings held (including meetings of Committees of Directors) and number of meetings attended 

by each of the Directors of Qantas during the financial year are as follows: 

Audit, 

Safety, 

Risk & 

Environment 

Compliance & Security Chairman’s 

Qantas Board Committee Committee Committee 

Directors Attended Held 1 Attended Held 1 Attended Held 1 Attended Held 1 

Margaret Jackson 11 11 3 2 3 4 2 4 2 2 

Geoff Dixon 11 11 3 2 3 2 4 2 2 2 

Peter Gregg 11 11 3 2 3 1 2 4 

Mike Codd 9 11 3 3 4 4 

Trevor Eastwood 11 11 3 3 2 2 

Rod Eddington 3 3 6 

Jim Kennedy 11 11 3 3 2 2 

Trevor Kennedy 11 11 

Roger Maynard 11 11 3 3 1 2 2 

John Schubert 11 11 4 4 

Nick Tait 11 11 4 4 2 2 

1 Reflects the number of meetings held during the time that the Director held office during the financial year. 

2 Attended meetings in an ex-officio capacity. 

3 When not present in person, represented by his alternate Roger Maynard. 

Directors’ interests and benefits 

Particulars of Directors’ interests in the share capital of Qantas at the date of this Report are as follows: 

2002 2001 

Directors’ Ordinary Shares Number Number 

Margaret Jackson 117,284 110,022 

Geoff Dixon 14,504 13,718 

Peter Gregg 4,292 3,974 

Paul Anderson 25,000 – 

Mike Codd 9,376 8,000 

Trevor Eastwood 11,857 10,366 

Jim Kennedy 1,975 1,000 

Trevor Kennedy 122,750 120,800 

John Schubert 30,975 30,000 

Directors’ and executive officers’ emoluments 

The Board of Directors determines the overall remuneration policy and packages applicable to Board members and senior 

executives of the Qantas Group. The broad remuneration policy is to ensure that each remuneration package properly reflects 

the duties and responsibilities of the relevant individual and that remuneration is competitive in attracting, motivating and 

retaining people of the highest calibre. 

Directors’ and executives’ remuneration includes fees or salaries (as appropriate), superannuation contributions, performance 

bonuses, other benefits and retirement and resignation payments. 

Short-term incentives 

Executive Directors and other executives participate in an annual performance-based reward scheme introduced for all 

executives in the 1995/96 financial year. This scheme provides for cash performance bonuses to be paid where predetermined 

objectives are met. Performance objectives include the achievement of a predetermined level of annual profit and annual profit 

enhancement targets. 

Long-term incentives 

Executive Directors and certain senior executives participate in a Long-Term Incentive Plan introduced in the 1996/97 financial 

year, which provides for a bonus payable at the expiry of the relevant senior executive’s service contract, based on the financial 

performance of the Qantas Group. Performance is determined on a range of criteria including the Qantas Total Shareholder 

p 

30 


Return (TSR) ranking amongst the top 100 listed Australian companies and also against the TSRs of a predetermined basket of 

international airlines. The incentives which vest under this Plan are not included in remuneration until they become payable. 

Entitlements over unissued ordinary shares in Qantas are also issued to Executive Directors and other senior executives under the 

Qantas Long-Term Executive Incentive Plan introduced in the 1999/2000 financial year (refer “Share Entitlements” on page 32). 

In addition, the service contracts of certain Executive Directors and senior executives provide for the payment of a bonus 

on the completion of five years’ service. This bonus is payable when the Executive Director or senior executive ceases 

employment with the Qantas Group and is included in remuneration at that time. 

Non-Executive Directors do not receive any performance-related remuneration. 

Details of the nature and amount of each major element of the emoluments of each Director of Qantas and each of the 

five named current officers of Qantas and the Qantas Group receiving the highest emoluments are set out below. Details 

of executives who departed during the year and whose remuneration fell in the top five highest paid executives have also 

been disclosed. 

Non-Cash Superannuation Retirement 

Fees 1 Benefits 2 Contributions Benefits Total 

Non-Executive Directors $ $ $ $ $ 

Margaret Jackson 280,000 73,684 8,803 – 362,487 

Mike Codd 98,000 46,838 7,840 – 152,678 

Trevor Eastwood 91,000 19,113 7,280 – 117,393 

Rod Eddington 3 27,821 – 2,226 – 30,047 

Jim Kennedy 98,000 13,070 7,840 – 118,910 

Trevor Kennedy 70,000 37,318 5,600 – 112,918 

Roger Maynard 3 80,500 539 6,440 – 87,479 

John Rishton 3 – – – – – 

John Schubert 80,500 10,894 6,440 – 97,834 

Nick Tait 3 91,000 5,598 7,280 – 103,878 

Fixed Annual Performance Non-Cash Termination 

Remuneration 4 Bonus Benefit 2, 6 Payments Total 

Executive Directors $ $ $ $ $ 

Geoff Dixon 1,426,500 1,000,000 30,405 – 2,456,905 

Peter Gregg 720,000 672,000 28,778 – 1,420,778 

Executive Officers (excluding Directors) 

Qantas and Qantas Group 

Current executives 

Paul Edwards 546,014 431,000 47,206 – 1,024,220 

John Borghetti 546,014 431,000 40,923 – 1,017,937 

David Forsyth 575,000 431,000 6,143 – 1,012,143 

Grant Fenn 477,452 398,000 46,565 – 922,017 

Denis Adams 460,000 345,000 27,000 – 832,000 

Former executives 

James Strong 5 118,875 – 57,298 3,479,065 3,655,238 

David Burden 191,666 – 64,092 1,630,379 1,886,137 

Stephen Mann 248,008 188,000 67,823 842,102 1,345,933 

George Elsey 116,068 – 32,134 1,024,217 1,172,419 

1 Fees comprise both Directors’ fees and Committee fees. 

2 Non-cash benefits include car parking, and travel and accommodation discounts obtained from time to time by Directors and executives, some of 

which are through agreements entered into by the Qantas Group. Travel benefits are available on similar terms and conditions as those offered to 

other senior executives and employees of the Qantas Group. The amount of non-cash benefits disclosed above has been determined on a “cost to 

the company” basis. 

3 Directors’ fees for British Airways Directors of Qantas are paid directly to British Airways Plc except for Nick Tait, whose Director’s fees were paid 

directly to him from 18 August 2001. 

4 Fixed annual remuneration includes base salary, motor vehicle allowance and salary sacrifice superannuation contributions. 

5 James Strong retired as a Director on 5 March 2001. As Mr Strong remained an employee of Qantas until 31 July 2001, the remuneration disclosed 

above represents the total amount paid to Mr Strong for the full financial year ended 30 June 2002. 

6 The amounts disclosed above do not include bonus shares or share entitlements awarded to Qantas employees as described on page 32. 


p 

31

directors’ report continued 


Share entitlements 

On 6 December 2001, Qantas awarded 350,000 entitlements to be issued shares in Qantas to a number of senior executives 

under the Qantas Long-Term Executive Incentive Plan. These entitlements may vest and be convertible to shares between three 

and five years following award date, conditional on the executive remaining a Qantas Group employee and on the 

achievement of specific performance hurdles set by the Board. These hurdles are set by reference to the percentile 

performance of Qantas (based upon average relative total shareholder return) within a modified S&P ASX 200 Index and 

within an international airline “peer group”. 

To the extent that any entitlements vest, they may be converted into shares within eight years of award in proportion to the 

gain in share price from the date the entitlements are awarded to the date they are converted to shares. Entitlements not 

converted to shares within eight years of the vesting date will expire. 

No entitlements have vested or expired (other than by way of eligible employees leaving Qantas) as yet under the Plan, nor 

have any shares been issued. Entitlements will be included in remuneration once they have vested. 

None of the entitlements awarded under the Plan during the year were granted to Executive Directors or the five most highly 

remunerated executive officers of Qantas and the Qantas Group. 

Total entitlements outstanding at 30 June 2002 under the Plan are as follows: 

Exercise Number of Entitlements 2,3 Value per Entitlement 4 

Price 2002 2001 2002 2001 

Expiry Date $ $ $ 

17 November 2007 4.99 5,901,500 8,115,500 1.32 0.48 

24 November 2008 3.44 30,590,000 35,250,000 1.85 0.89 

24 November 2008 3.62 760,000 760,000 1.79 0.84 

6 December 2009 1 3.25 350,000 – 1.93 – 

1 These entitlements were granted during the financial year. No entitlements have been granted since the end of the financial year. 

2 These entitlements do not allow the holder to participate in any share issue of Qantas or the Qantas Group. 

3 The market price of Qantas shares at 30 June 2002 was $4.60 (30 June 2001: $3.50). 

4 The estimated value per entitlement disclosed above is calculated at 30 June 2002 using an actuarial simulation methodology, taking into account the 

performance hurdles and the possibility of conversion of vested entitlements before the expiry date. 

In addition to the amounts noted above, $500 of Qantas shares were issued on 7 December 2001 for nil consideration under 

the Qantas Profitshare Scheme to each eligible employee (excluding Non-Executive Directors). This equated to 126 shares per 

eligible employee at an average price at date of issue of $3.95. 

Environmental obligations 

The Qantas Group’s operations are subject to a range of Commonwealth, State, Territory and international environmental 

legislation. The Qantas Group is committed to a high standard of environmental performance and the Board places particular 

focus on the environmental aspects of its operations through the Safety, Environment & Security Committee, which is 

responsible for monitoring compliance with these regulations and reporting to the Board. 

The Directors are satisfied that adequate systems are in place for the management of the Qantas Group’s environmental 

exposures and environmental performance. The Directors are also satisfied that all relevant licences and permits are held 

and that appropriate monitoring procedures are in place to ensure that those licences and permits are complied with. Any 

significant environmental incidents are reported to the Board. 

The Directors are not aware of any breaches of any environmental legislation or of any significant environmental incidents during 

the financial year which are material in nature. 

Derivatives and other financial instruments 

The Qantas Group’s activities expose it to changes in interest rates, foreign exchange rates and fuel prices. It is also exposed 

to credit risks from its operations. The Qantas Group manages these risk exposures using various financial instruments, based 

upon a set of policies approved by the Board. Compliance with these policies is strictly monitored by management and 

reported to the Board. 

It is the Qantas Group’s policy not to enter, issue or hold derivative financial instruments for speculative trading purposes. 

p 

32 


Indemnities and insurance 

Under clause 12.1 of the Qantas Constitution, Qantas is required to indemnify, to the extent permitted by law, each officer of 

Qantas (subject to certain qualifications) against: 

• liability to third parties (other than related Qantas Group companies) arising out of conduct undertaken in his or her 

capacity as a Qantas officer, unless the liability arises out of conduct involving a lack of good faith, wilful misconduct or 

reckless behaviour; and 

• the costs and expenses of successfully defending legal proceedings arising out of conduct undertaken in his or her capacity 

as a Qantas officer. 

The Directors listed on page 29 and the secretaries of Qantas, being Brett Johnson and Steve Heesh, have the benefit of the 

indemnity in clauses 12.1 to 12.4 of the Qantas Constitution, which also applies to all executive officers of Qantas. Qantas has 

insured against amounts which it may be liable to pay on behalf of officers pursuant to clauses 12.1 to 12.4 of the Qantas 

Constitution or which it otherwise agrees to pay by way of indemnity. 

During the financial year, Qantas paid a premium for Directors’ and Officers’ liability insurance policies, which cover all 

Directors and officers of the Qantas Group. 

Details of the nature of the liabilities covered, and the amount of the premium paid in respect of, the Directors’ and Officers’ 

insurance policies are not disclosed, as such disclosure is prohibited under the terms of the contracts. 

Rounding 

Qantas is a company of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with 

that Class Order, amounts in the Concise Financial Report, Financial Report and Directors’ Report have been rounded 

off to the nearest one hundred thousand dollars unless otherwise indicated. 

Signed pursuant to a Resolution of the Directors: 


Chairman 

Sydney, 2 September 2002 

Geoff Dixon 



p 

33

statement of financial performance 




Notes $M $M 


Net passenger revenue 9,027.5 7,941.8 

Net freight revenue 563.6 596.3 

Tours and travel revenue 674.4 604.3 

Contract work revenue 479.1 457.3 

Other sources* 578.0 588.5 

Sales and operating revenue 3 11,322.6 10,188.2 

Expenditure 

Manpower and staff related 2,689.2 2,549.9 

Selling and marketing 1,158.7 1,141.6 

Aircraft operating – variable 2,200.9 2,023.0 

Fuel and oil 1,570.0 1,329.8 

Property 264.3 246.9 

Computer and communication 408.4 365.0 

Depreciation and amortisation 693.5 706.7 

Non-cancellable operating lease rentals 255.7 181.8 

Tours and travel 584.4 525.7 

Capacity hire 499.9 220.2 

Other 354.4 201.8 

Share of net profit of associates (36.1) – 

Expenditure 10,643.3 9,492.4 

Earnings before interest and tax 679.3 695.8 

Borrowing costs (117.6) (167.7) 

Interest revenue 3 69.3 69.0 

Net borrowing costs (48.3) (98.7) 

Profit from ordinary activities before related income tax expense 4 631.0 597.1 

Income tax expense relating to ordinary activities 5 (201.7) (177.4) 

Net profit 429.3 419.7 

Outside equity interests in net profit (1.3) (4.3) 

Net profit attributable to members of the company 428.0 415.4 

Non-owner transaction changes in equity 

Increase in asset revaluation reserve on using the equity method 

for investments in associates 2.9 – 

Net exchange differences relating to self-sustaining foreign operations (0.9) 0.3 

Total changes in equity from non-owner related transactions 

attributable to members of the company 430.0 415.7 

Basic earnings per share 29.1 cents 33.0 cents 

Diluted earnings per share 28.9 cents 32.6 cents 

* Excludes proceeds on sale (and on sale and leaseback) of non-current assets of $52.0 million (2001: $163.9 million), and interest revenue 

of $69.3 million (2001: $69.0 million) which is included in net borrowing costs. 

The Statement of Financial Performance should be read in conjunction with the Discussion and Analysis on pages 35 and 36 and the Notes to the 

Financial Statements on pages 41 to 47. 

p 

34 


discussion and analysis of the statement of financial performance 


Increase/ 

(Decrease) 

Unit 2002 2001 % 

Qantas Group operational statistics 

and performance indicators* 

Passengers carried 000 27,128 22,147 22.5 

Revenue passenger kilometres (RPK) M 75,134 70,540 6.5 

Available seat kilometres (ASK) M 95,944 92,943 3.2 

Revenue seat factor % 78.3 75.9 2.4 points 

Passenger yield (passenger revenue per RPK) cents 12.02 11.26 6.7 

Average full-time equivalent employees # 33,044 31,632 4.5 

Aircraft in service at balance date # 193 178 15 units 

Return on total revenue % 3.8 4.1 (0.3) points 

Return on total assets % 2.9 3.3 (0.4) points 

Return on shareholders’ equity % 10.1 12.6 (2.5) points 

* A glossary of terms appears on page 52. 

Review of financial performance 

• Profit from ordinary activities before income tax of $631.0 million increased by 5.7 per cent on the prior year. 

• Profit from ordinary activities included the following individually significant items: 

– a profit on the sale of an investment in EQUANT NV of $31.2 million; and 

– a provision for redundancy costs of $41.5 million. 

• Profit from ordinary activities before tax in the prior year included a benefit of $127.3 million relating to a number 

of individually significant items. 

• Net profit attributable to members of the company of $428.0 million increased by 3.0 per cent on the prior year. 

• The fully franked final ordinary dividend of 9.0 cents per share brings fully franked ordinary dividends for the year 

to 17.0 cents per share, 3.0 cents lower than the prior year. 

• Basic earnings per share decreased by 11.8 per cent on the prior year to 29.1 cents. 

• Return on shareholders’ equity decreased by 2.5 percentage points to 10.1 per cent whilst return on total gross assets 

decreased by 1.7 percentage points to 12.0 per cent. 

Review of sales and operating revenue 

• Sales and operating revenue increased by 11.1 per cent to $11,322.6 million due to: 

– an increase in net passenger revenue of 13.7 per cent to $9,027.5 million due to growth in revenue passenger kilometres 

of 6.5 per cent together with the improvement in passenger yield of 6.7 per cent. The passenger yield improvement was 

partly due to a substantial increase in the proportion of flying that operated on the shorter sector, higher yielding 

domestic network. Overall capacity grew by 3.2 per cent for the year ended 30 June 2002 compared with the prior year; 

– international capacity decreased by 5.6 per cent compared with the prior year, 1.1 per cent down in the first half, and 

10.1 per cent down in the second half. This was as a result of aircraft being redeployed to the domestic network 

following the events of 11 September and the collapse of Ansett in September 2001. The revenue seat factor on the 

international network was 0.2 percentage points down on the prior year during the first half, but 6.2 percentage points 

higher in the second half. Passenger yield, excluding movements in foreign exchange, was 2.1 per cent lower than the 

prior year but up by 1.7 per cent in the second half as the global economy recovered and international capacity was 

reduced; 

– domestic capacity increased by 35.7 per cent for the year ended 30 June 2002 as a whole, up 28.6 per cent in the first 

half and 42.7 per cent in the second half as long-haul aircraft from international operations were redeployed on domestic 

sectors, short-term leased capacity was brought in to cope with increased domestic demand and new Boeing 737-800 

aircraft were acquired. The revenue seat factor was down 0.8 percentage points on the prior year in the first half and up 

1.6 percentage points in the second half. Passenger yield, excluding movements in foreign exchange, was up 5.7 per 

cent and 7.7 per cent half on half respectively; and 

– a net increase in non-passenger revenue of 2.2 per cent to $2,295.1 million primarily due to increases in tours and 

travel revenue and contract work revenue. 


p 

35

discussion and analysis of the statement of financial performance continued 


Review of expenditure 

• Total expenditure increased by 12.1 per cent on capacity growth of 3.2 per cent and a higher proportion of more 

expensive domestic flying. 

– higher manpower and staff-related expenditure, of 5.5 per cent was due to the increase in full-time employees as a 

result of greater activity and the provision of an incentive bonus to all staff, partially offset by efficiency gains; 

– aircraft operating variable expenditure, which includes maintenance material costs, crew expenses, route navigation 

and landing fees, increased by 8.8 per cent, primarily due to additional activity, the ageing of the aircraft fleet and the 

adverse impact of foreign exchange rate movements; 

– increases in fuel and oil expenditure, of 18.1 per cent were a direct result of additional flying, the weaker 

Australian dollar relative to the US dollar and a reduction in fuel hedging benefits partially offset by the lower average 

price of jet fuel; 

– computer and communication costs increased by 11.9 per cent as a result of additional reservation fees driven by 

increased passenger numbers; 

– increased non-cancellable operating lease rentals of 40.6 per cent were mainly due to leasing of additional aircraft; and 

– increased capacity hire of 127.0 per cent was due to short-term leases entered into to cover capacity requirements 

following the collapse of Ansett. 

Review of other statement of financial performance items 

• Net borrowing costs decreased by 51.1 per cent. Although average net debt was higher than the prior year, $77.0 million 

of interest was capitalised into aircraft progress payments and other infrastructure projects. 

• Income tax expense relating to ordinary activities increased by 13.7 per cent in line with increased profitability. The 

effective tax rate increased by 2.3 percentage points to 32.0 per cent due to the impact of an individually significant tax 

benefit recognised in the prior year partially offset by the favourable movement as a result of a reduction in the corporate 

tax rate to 30 per cent in the current financial year. 

Impact of exchange rates on the statement of financial performance 

The Qantas Group is exposed to foreign exchange rate fluctuations on the Australian dollar value of foreign currency 

dominated revenue and expenditure. The Qantas Group earns revenue in approximately 80 different countries, reflecting 

its route structure and location of ticket sales. The Qantas Group’s foreign currency costs are primarily denominated in United 

States dollars and relate largely to fuel, engineering and maintenance materials, and lease rentals. 

The Qantas Group manages its foreign currency exposures by using a variety of long-term and short-term financial 

instruments, in accordance with its risk management policies. The overall economic impact of exchange rate movements 

on the profit result in comparison to last year was $51.0 million adverse. 

p 

36 


statement of financial position 

as at 30 June 2002 



Notes $M $M 

Current assets 

Cash 112.5 145.5 

Receivables 2,386.6 1,496.2 

Net receivables under hedge/swap contracts 697.7 241.5 

Inventories 385.4 332.9 

Other 173.5 142.7 

Total current assets 3,755.7 2,358.8 

Non-current assets 

Receivables 240.0 569.9 

Net receivables under hedge/swap contracts 1,398.0 2,135.3 

Investments accounted for using the equity method 58.7 42.4 

Other investments 15.6 14.0 

Property, plant and equipment 9,109.5 7,324.4 

Intangible assets 161.0 21.5 

Deferred tax assets 34.7 30.9 

Other 28.3 16.4 

Total non-current assets 11,045.8 10,154.8 

Total assets 14,801.5 12,513.6 

Current liabilities 

Payables 2,382.3 2,049.1 

Interest-bearing liabilities 837.0 974.7 

Net payables under hedge/swap contracts 430.8 257.9 

Provisions 525.8 512.8 

Current tax liabilities 77.9 (8.8) 

Revenue received in advance 1,285.2 1,187.8 

Deferred lease benefits/income 42.4 39.8 

Total current liabilities 5,581.4 5,013.3 

Non-current liabilities 

Payables 33.7 – 

Interest-bearing liabilities 3,569.9 2,355.6 

Net payables under hedge/swap contracts 150.8 576.7 

Provisions 351.0 360.4 

Deferred tax liabilities 524.7 496.1 

Deferred lease benefits/income 329.0 381.6 

Other 7.5 14.0 

Total non-current liabilities 4,966.6 4,184.4 

Total liabilities 10,548.0 9,197.7 

Net assets 4,253.5 3,315.9 

Equity 

Contributed equity 8 2,946.6 2,173.0 

Reserves 56.3 54.3 

Retained profits 6 1,239.1 1,078.0 

Equity attributable to members of the company 4,242.0 3,305.3 

Outside equity interests in controlled entities 11.5 10.6 

Total equity 8 4,253.5 3,315.9 

The Statement of Financial Position should be read in conjunction with the Discussion and Analysis on page 38 and the Notes to the Financial 

Statements on pages 41 to 47. 


p 

37

discussion and analysis of the statement of financial position 


The net assets of the Qantas Group increased by 28.3 per cent to $4,253.5 million during the past financial year. The major 

items are discussed below. 

Review of assets 

• Current receivables increased by 59.5 per cent due to an increase in aircraft security deposits, short-term money market 

securities and term deposits maturing in the next 12 months and a growth in trade debtors in line with increased 

operational activity. 

• Net receivables/payables under hedge/swap contracts remained consistent with the prior financial year, decreasing 

by 1.8 per cent to $1,514.1 million. Net receivables/payables under hedge/swap contracts represent: 

– deferred gains/losses on cross-currency swaps used to hedge long-term foreign currency borrowings; 

– deferred gains/losses on forward foreign exchange contracts used to hedge capital expenditure; and 

– net deferred losses associated with hedges of foreign currency revenue relating to future transportation services 

designated to service long-term debt. 

• Inventory levels increased by 15.8 per cent due to the growth in the level of inventory required to support the increased 

fleet size, reconfiguration of aircraft and maintenance. 

• Property, plant and equipment increased by 24.4 per cent due to progress payments under the aircraft fleet plan, the 

acquisition of additional aircraft (15 Boeing 737-800s) due to opportunities in the domestic market, and additional 

spare parts. 

• Intangible assets increased due to $150.8 million of goodwill recognised on the acquisition of Impulse Airlines on 

21 November 2001. 

Review of liabilities 

• The growth in total payables and total interest-bearing liabilities of 26.8 per cent reflects the increase in operational activity 

and the drawdown of the syndicated bank loan facility to finance the new aircraft fleet. 

• An increase in total current and deferred tax liabilities of 23.7 per cent is a result of the higher taxable profit and the 

timing of tax payments. 

Review of equity 

• Contributed equity increased by $773.6 million as a result of the issue of 149.5 million shares as part of the Institutional 

Equity Placement, 68.2 million shares as part of the Shareholder Equity Placement, 34.1 million shares as part of the 

Qantas Dividend Reinvestment Plan and 3.5 million shares under the Qantas Profitshare Scheme. 

Gearing 

Qantas Group gearing (including the notional capitalisation of non-cancellable operating leases) on a hedged basis at 30 June 

2002 was 49:51 compared to 48:52 at 31 December 2001 and 53:47 at 30 June 2001. The decrease in gearing is principally 

a result of the increase in contributed equity during the past financial year. 

Gearing is determined by dividing the book value of the Qantas Group’s net debt (short and long term plus the present value 

of non-cancellable operating leases less related hedge receivables and cash and cash equivalents) by the same amount plus the 

book value of total equity. 

p 

38 


statement of cash flows 




$M $M 

Cash flows from operating activities 

Cash receipts in the course of operations 12,043.9 10,527.8 

Cash payments in the course of operations (10,647.7) (9,145.5) 

Interest received 69.1 69.9 

Borrowing costs paid (169.2) (151.8) 

Dividends received 13.1 43.8 

Income taxes paid (165.9) (243.5) 

Net cash provided by operating activities 1,143.3 1,100.7 

Cash flows from investing activities 

Payments for property, plant and equipment (2,463.4) (995.5) 

Receipts for aircraft security deposits 124.6 44.4 

Total payments for purchases of property, plant, equipment 

and aircraft security deposits (2,338.8) (951.1) 

Proceeds from sale of property, plant and equipment 12.7 16.4 

Proceeds from sale and leaseback of property, plant and equipment – 147.5 

Proceeds from sale of investments 39.3 – 

Payments for investments, net of cash acquired (19.3) (17.1) 

Loans to associates – (67.0) 

Net cash (used in) investing activities (2,306.1) (871.3) 

Cash flows from financing activities 

Repayments of borrowings/swaps (1,109.7) (1,028.0) 

Proceeds from borrowings 2,269.9 804.8 

Proceeds from the issue of shares 652.7 19.0 

Dividends paid (124.1) (454.8) 

Net cash provided by/(used in) financing activities 1,688.8 (659.0) 

Reconciliation of cash provided by/(used in): 

Operating activities 1,143.3 1,100.7 

Investing activities (2,306.1) (871.3) 

Financing activities 1,688.8 (659.0) 

Net increase/(decrease) in cash held 526.0 (429.6) 

Cash at the beginning of the financial year 259.2 688.8 

Cash at the end of the financial year 785.2 259.2 

The Statement of Cash Flows is to be read in conjunction with the Discussion and Analysis on page 40 and the Notes to the Financial 

Statements on pages 41 to 47. 


p 

39

discussion and analysis of the statement of cash flows 


For the purposes of the Statement of Cash Flows, cash includes cash at bank and on hand, bank overdrafts, cash at call, 

short-term money market securities and term deposits. 

Review of cash flows from operating activities 

• Cash flows from operations increased by 3.9 per cent to $1,143.3 million due to higher profitability. 

• Income taxes paid were lower due to the change in corporate tax rates and timing of cash payments. 

• Borrowing costs paid increased by 11.5 per cent due to higher average net debt. 

Review of cash flows from investing activities 

• Cash flows used in investing activities increased by $1,434.8 million to $2,306.1 million. The prior year included the 

sale and leaseback of the Mascot Head Office land and buildings, which generated proceeds of $147.5 million. 

• Total capital expenditure of $2,463.4 million for the year predominantly related to aircraft progress payments for 

new aircraft, engines and spare parts made under the new aircraft fleet plan as well as the acquisition of additional aircraft 

(15 Boeing 737-800s) as a result of opportunities in the domestic market following the collapse of Ansett. 

• Payments for investments made during the year for $19.3 million comprised investments in Impulse Airlines, Airport 

Infrastructure Finance, Travel Exchange Asia and Air Pacific. 

• Proceeds on the sale of investments of $39.3 million represented the proceeds on the sale of the Qantas Group’s 

investment in EQUANT NV. 

Review of cash flows from financing activities 

• Cash flows from financing activities increased by $2,347.8 million from cash outflows of $659.0 million in the prior 

financial year to cash inflows of $1,688.8 million in the current year. 

• Repayments of borrowings/swaps of $1,109.7 million comprises repayments of short-term borrowings, swaps, loans 

and leases. 

• Proceeds from borrowings of $2,269.9 million include the drawdown of a syndicated bank loan facility, secured funding, 

the issue of a medium-term note and the issue of other short-term commercial paper. 

• Proceeds from the issue of shares of $652.7 million reflects the proceeds received from the Institutional and Shareholder 

Equity Placements. The prior year reflects proceeds received from the underwriters as part of the Dividend Reinvestment Plan. 

• Dividend payments represent total dividends paid, net of $120.9 million which was converted directly to shares via the 

Dividend Reinvestment Plan. 

p 

40 


notes to the financial statements 


1. Basis of the preparation of the concise financial report 

The Concise Financial Report has been prepared in accordance with the Corporations Act 2001, Accounting Standard AASB 1039 

Concise Financial Reports and applicable Urgent Issues Group Consensus Views. The Concise Financial Statements and specific 

disclosures required by AASB 1039 have been derived from the Qantas Group’s Financial Report for the financial year. Other 

information included in the Concise Financial Report is consistent with the Qantas Group’s full Financial Report. The Concise 

Financial Report does not, and cannot be expected to, provide as full an understanding of the financial performance, financial 

position and financing and investing activities of the Qantas Group as the full Financial Report. 

This Report has been prepared on the basis of historical costs and, except where stated, does not take into account changing 

money values or current valuations of non-current assets. 

These accounting policies have been consistently applied by each entity in the Qantas Group and, except where there is a change 

in accounting policy, are consistent with those of the prior year. 

A full description of the accounting policies adopted by the Qantas Group may be found in the Qantas Group Financial Report for 

the financial year. 

2. Change in accounting policy 

Earnings per share 

The Qantas Group has applied AASB 1027 Earnings Per Share (issued June 2001) for the first time from 1 July 2001. 

The basic earnings per share (EPS) earnings are now calculated using net profit or loss, rather than excluding extraordinary 

items. The diluted EPS weighted average number of shares now includes the number of ordinary shares assumed to be issued 

for nil consideration in relation to dilutive potential ordinary shares. The number of ordinary shares assumed to be issued for 

no consideration represents the difference between the number that would have been issued at the exercise price and the 

number that would have been issued at the average market price. 

The change in accounting policy has not affected the EPS in the current or prior financial years. 

Segment reporting 

The Qantas Group has applied the revised AASB 1005 Segment Reporting (issued in August 2000) for the first time from 

1 July 2001. 

Individual business segments have been identified on the basis of grouping individual products or services subject to similar 

risks and returns. The new business segments reported are Aircraft Operations, Tours and Travel, and Catering. 

Foreign currency translation 

The Qantas Group has applied the revised AASB 1012 Foreign Currency Translation (issued in November 2000) for the first 

time from 1 July 2001. This had no financial effect in the current or prior financial years. 


p 

41

notes to the financial statements continued 


3. Revenue from ordinary activities 

Revenue 



$M $M 

Revenue from operating activities 


Related parties 

– associates 84.8 77.1 

– other related parties 31.9 26.8 

Other parties 11,205.6 10,023.4 

Dividend revenue 


– associates – 60.9 

Other parties 0.3 – 

Sales and operating revenue 11,322.6 10,188.2 

Revenue from outside operating activities 

Interest revenue 

Other parties 69.3 69.0 




Total revenue 11,443.9 10,421.1 

4. Individually significant items included in profit 

from ordinary activities before income tax expense 

Profit on the sale of an investment in EQUANT NV 31.2 – 

Provision for redundancy costs (41.5) (35.0) 

Profit on sale of Mascot Head Office land and buildings – 41.2 

Revenue relating to assets sold by an associated company – 43.3 

Dividends received related to assets sold by an associated company – 31.8 

Change in accounting policy for software development costs – 46.0 

5. Individually significant income tax item 

Restatement of deferred tax balances due to the change 

in the company tax rate – 20.0 

6. Retained profits 

Retained profits at the beginning of the year 1,078.0 926.8 

Net profit attributable to members of the company 428.0 415.4 

Dividends* (266.9) (264.2) 

Retained profits at the end of the year 1,239.1 1,078.0 

* Includes dividends paid to outside equity interests. 

p 

42 


7. Dividends 

Dividends paid or proposed by Qantas are: 

Cents Total Franked Percentage 

per Amount Tax Rate Franked 

Type Share $M Date of Payment % % 

2002 

Interim ordinary 8.0 124.1 10 April 2002 30 100 

Final ordinary 9.0 140.7 2 October 2002 30 100 

17.0 264.8 

2001 

Interim ordinary 11.0 141.5 4 April 2001 34 100 

Final ordinary 9.0 117.8 3 October 2001 30 100 

20.0 259.3 



$M $M 

Total franking account balance at 30.0 per cent (2001: 30.0 per cent) 407.1 241.4 

The above amount represents the balance of the franking accounts as at year end, after taking into account adjustments for: 

(a) franking credits that will arise from the payment of income tax payable for the current financial year; 

(b) franking debits that will arise from the payment of the final dividends for the current financial year; 

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the year end; and 

(d) franking credits that may be prevented from being distributed in subsequent years. 

The ability to utilise franking credits is dependent upon there being sufficient available profits to declare dividends. 

From 1 July 2002, the New Business Tax System (Imputation) Act 2002 requires measurement of franking credits based on the 

amount of income tax paid, rather than on after tax profits. 

As a result, the “franking credits available” for the Qantas Group were converted from $407.1 million to $174.5 million as at 

1 July 2002. 

This change in the basis of measurement does not change the value of franking credits to shareholders who may be entitled to 

franking credit benefits. 

8. Total equity reconciliation 



$M $M 

Total equity at the beginning of the year 3,315.9 2,864.4 

Total changes in equity recognised in the 

Statement of Financial Performance 430.0 415.7 

Contributions of equity 773.6 291.0 

Dividends (266.9) (264.2) 

Total changes in outside equity interests 0.9 9.0 

Total equity at the end of the year 4,253.5 3,315.9 

Contributed equity 

1,563,858,757 (2001: 1,308,612,512) ordinary shares, fully paid 2,946.6 2,173.0 


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9. Segment information 

Qantas operates predominantly in three business segments, being Aircraft Operations, Tours and Travel, and Catering. 

Aircraft Operations – operation of aircraft for passenger and freight services. 

Tours and Travel – sale of packaged holidays. 

Catering – production and distribution of meals. 

Aircraft 

Tours 

Operations and Travel Catering Eliminations Consolidated 

Jun 02 Jun 01 Jun 02 Jun 01 Jun 02 Jun 01 Jun 02 Jun 01 Jun 02 Jun 01 

$M $M $M $M $M $M $M $M $M $M 

Analysis by business 

segments 

Revenue 

External segment revenue 10,494.1 9,436.5 674.4 604.3 154.1 147.4 – – 11,322.6 10,188.2 

Inter-segment revenue 29.1 271.1 451.7 424.3 335.9 306.4 (816.7) (1,001.8) – – 

Total segment revenue 10,523.2 9,707.6 1,126.1 1,028.6 490.0 453.8 (816.7) (1,001.8) 11,322.6 10,188.2 

Segment result 477.1 490.1 49.2 44.5 68.6 62.5 – – 594.9 597.1 

Share of net profit of associates 35.4 – 0.7 – – – – – 36.1 – 

Profit from ordinary activities 

before related income 

tax expense 631.0 597.1 

Income tax expense relating to 

ordinary activities (201.7) (177.4) 

Net profit 429.3 419.7 

Depreciation and amortisation 680.7 696.5 1.8 1.9 11.0 8.3 – – 693.5 706.7 

Non-cash items (45.8) 68.7 (1.6) 0.2 (1.8) (19.0) – – (49.2) 49.9 

Individually significant items 

Profit on the sale of an 

investment in EQUANT NV 31.2 – – – – – – – 31.2 – 

Provision for redundancy costs (41.5) (35.0) – – – – – – (41.5) (35.0) 

Profit on sale of Mascot Head 

Office land and buildings – 41.2 – – – – – – – 41.2 

Revenue relating to assets sold 

by an associated company – 43.3 – – – – – – – 43.3 

Dividends received related 

to assets sold by an associated 

company – 31.8 – – – – – – – 31.8 

Change in accounting policy for 

software development costs – 46.0 – – – – – – – 46.0 

Assets 

Segment assets 14,342.9 12,166.8 307.7 227.9 176.7 131.9 (84.5) (55.4) 14,742.8 12,471.2 

Equity accounted investments 57.6 42.1 1.1 0.3 – – – – 58.7 42.4 

Consolidated total assets 14,400.5 12,208.9 308.8 228.2 176.7 131.9 (84.5) (55.4) 14,801.5 12,513.6 

Liabilities 

Consolidated total liabilities 10,442.0 9,014.7 254.4 207.7 117.2 124.4 (265.6) (149.1) 10,548.0 9,197.7 

Acquisition of 

non-current assets 2,445.8 984.8 2.3 2.6 15.3 8.1 – – 2,463.4 995.5 

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9. Segment information continued 

Passenger, freight and other services revenue from domestic services within Australia is attributed to the Australian area. 

Passenger, freight and other services revenue from inbound and outbound services between Australia and overseas is allocated 

proportionately to the area in which the sale was made. Other operating revenue is not allocated to a geographic area as it is 

impractical to do so. 



$M $M 

Analysis of total revenue by geographic region 

Passenger, freight and other services revenue 

Australia 6,232.8 4,788.9 

United Kingdom and Europe 942.6 1,003.3 

Japan 735.3 761.6 

South-East Asia/North-East Asia 736.9 830.8 

The Americas and the Pacific 901.1 989.9 

Other regions 462.1 392.6 

10,010.8 8,767.1 

Other operating revenue 

Tours and travel revenue 674.4 604.3 

Other unallocated revenue 637.4 816.8 

Sales and operating revenue 11,322.6 10,188.2 

Revenue from outside operating activities 

Interest revenue 69.3 69.0 




Total revenue from outside operating activities 121.3 232.9 

Total revenue 11,443.9 10,421.1 

Segmental analysis of net assets and profit contribution 

For the financial year ended 30 June 2002, the principal assets of the Qantas Group comprised the aircraft fleet, all, except one, 

of which were registered and domiciled in Australia. These assets are used flexibly across the Qantas Group’s worldwide route 

network. Accordingly, there is no suitable basis for allocating such assets and the related liabilities between geographic areas. 

Operating profit resulting from turnover generated in each geographic area according to origin of sale is not disclosed as it is 

neither practical nor meaningful to allocate the Qantas Group’s operating expenditure on that basis. 

Disclosure is made of a more appropriate measure of profit contributions in accordance with the Qantas Group’s internal 

reporting system, being the earnings before interest and tax contributed by the international and domestic airline operations 

and subsidiary operations. 



$M $M 

Segmental analysis of earnings before interest and tax 

Earnings before interest and tax 

International airline operations 202.8 458.7 

Domestic airline operations 298.2 127.4 

501.0 586.1 

Subsidiary operations 

Qantas Holidays Group 42.4 33.5 

QantasLink Group 42.5 6.4 

Qantas Flight Catering Group 69.6 54.3 

Other subsidiaries 23.8 15.5 

Total subsidiary operations 178.3 109.7 

Earnings before interest and tax 679.3 695.8 

Inter-segment pricing is determined on an arm’s-length commercial basis. 


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10. Contingent liabilities 




$M $M 

Guarantees and letters of comfort to support operating lease commitments 

and other arrangements entered into with other parties by controlled entities 24.8 24.4 

Guarantees and letters of comfort to support leveraged and operating lease 

commitments to other parties on behalf of associated companies 0.1 0.1 

Other parties 

24.9 24.5 

General guarantees in the normal course of business 134.2 137.1 

Contingent liabilities relating to current and threatened litigation 49.8 36.0 

Terminal fuel facilities 

184.0 173.1 

208.9 197.6 

The Qantas Group, together with other airlines, has entered into various agreements in order to facilitate the funding and 

installation of jet turbine fuel hydrant systems and terminal equipment facilities at Los Angeles and Hawaii airports. The airlines 

have jointly and severally agreed to repay any unpaid balance (including interest) of the loans totalling $294.1 million 

(2001: $315.9 million) in the event the agreements are terminated prior to expiry of the loans. 

Aircraft financing 

As part of the financing arrangements for the acquisition of aircraft, the Qantas Group has provided certain guarantees 

and indemnities to various lenders and equity participants in leveraged lease transactions. Only in exceptional circumstances, 

including the insolvency of major international banks, will the Qantas Group be required to make any payments under 

these guarantees. The Qantas Group has guaranteed that the lessors will receive all of the funds due to them under the 

lease arrangements. 

Qantas and certain controlled entities have entered into asset value underwriting arrangements with lenders under certain 

aircraft secured financings. These arrangements protect the value of the aircraft security to the lenders to a predetermined 

level. This is reflected by the balance of aircraft security deposits held with certain financial institutions. 

The Qantas Group has provided standard tax indemnities to the equity investors in certain leveraged leases. The indemnities 

effectively guarantee the after tax rate of return of the investors and the Qantas Group may be subject to additional financing 

costs on future lease payments if certain assumptions made at the time of entering the transactions, including assumptions as 

to the rate of income tax, subsequently become invalid. 

Unrealised losses – back-to-back hedges 

Where long-term foreign currency borrowings have been denominated in surplus net revenue currencies, offsetting forward 

foreign exchange contracts have been used to match the cash flows arising under the borrowings with the expected revenue 

surpluses used to hedge the borrowings. To the extent a gain or loss is incurred, this is deferred until the net revenue is 

realised. As at 30 June 2002, total unrealised exchange losses on hedges of net revenue designated to service long-term debt 

were $206.2 million (2001: $329.6 million). 

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11. Capital expenditure commitments 



$M $M 

Capital expenditure commitments contracted but 

not provided for in the financial statements: 

Aircraft 8,750.0 10,234.6 

Building works 203.7 86.8 

Other 516.2 177.9 

9,469.9 10,499.3 

Payable 

Not later than one year 2,986.7 1,386.7 

Later than one year but not later than five years 4,362.1 4,241.3 

Later than five years 2,121.1 4,871.3 

12. Events subsequent to balance date 

9,469.9 10,499.3 

On 21 August 2002, Qantas announced its intention to raise up to $800 million of ordinary equity through an entitlement 

offer to existing shareholders to support its capital expenditure program and help fund other potential investment 

opportunities that may arise. 

The funds will be raised by way of a non-renounceable entitlement offer made in two parts, an institutional entitlement 

offer of $600 million and a retail entitlement offer of $200 million. Qualifying shareholders will be entitled to subscribe 

for a pro-rata entitlement of 1 ordinary share for every 8.2 ordinary shares held, at an issue price of $4.20 per share. 

The institutional component and $100 million of the retail component of the offer have been underwritten. 

The institutional entitlement offer was successfully completed on 23 August 2002. Qantas will allocate shares to participating 

institutions on 5 September 2002. 

A prospectus for the retail entitlement offer is scheduled to be dispatched to qualifying shareholders by 6 September 2002 

to allow those shareholders to subscribe for ordinary shares. The retail entitlement offer is scheduled to open on 9 September 

2002 and close on 27 September 2002. 

Other than the abovementioned, there has not arisen in the interval between the end of the financial year and the date of this 

Report, any item, transaction or event of a material and unusual nature that, in the opinion of the Directors, has significantly 

affected, or may significantly affect, the operations of the Qantas Group, the results of those operations, or the state of affairs 

of the Qantas Group, in this financial year or in future financial years. 


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47

directors’ declaration 

In the opinion of the Directors of Qantas Airways Limited, the accompanying Concise Financial Report of the consolidated 

entity, comprising Qantas Airways Limited and its controlled entities for the year ended 30 June 2002, set out on pages 27 

to 47: 

(a) has been derived from or is consistent with the full Financial Report for the financial year; and 

(b) complies with Accounting Standard AASB 1039 Concise Financial Reports. 

Signed pursuant to a Resolution of the Directors: 


Chairman 


Geoff Dixon 


independent audit report on the concise financial report 

to the members of qantas airways limited 

Scope 

We have audited the Concise Financial Report of Qantas Airways Limited (“the Company”) and its controlled entities for the 

financial year ended 30 June 2002, consisting of the Statement of Financial Performance, Statement of Financial Position, 

Statement of Cash Flows, accompanying notes, and the accompanying discussion and analysis on the Statement of Financial 

Performance, Statement of Financial Position and Statement of Cash Flows (set out on pages 27 to 47) in order to express an 

opinion on it to the members of the Company. The Company’s Directors are responsible for the Concise Financial Report. 

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the 

Concise Financial Report is free of material misstatement. We have also performed an independent audit of the full Financial 

Report of Qantas Airways Limited and its controlled entities for the year ended 30 June 2002. Our audit report on the full 

Financial Report was signed on 2 September 2002, and was not subject to any qualification. 

Our procedures in respect of the audit of the Concise Financial Report included testing that the information in the Concise 

Financial Report is consistent with the full Financial Report and examination, on a test basis, of evidence supporting the 

amounts, discussion and analysis, and other disclosures which were not directly derived from the full Financial Report. These 

procedures have been undertaken to form an opinion whether, in all material respects, the Concise Financial Report is 

presented fairly in accordance with Accounting Standard AASB 1039 Concise Financial Reports issued in Australia. 

The audit opinion expressed in this report has been formed on the above basis. 

Audit opinion 

In our opinion, the Concise Financial Report of Qantas Airways Limited and its controlled entities for the year ended 

30 June 2002 complies with Accounting Standard AASB 1039 Concise Financial Reports issued in Australia. 

KPMG 

Mark Epper 

Partner 


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shareholder information 

The shareholder information set out below was applicable as at 27 August 2002. 

Distribution of ordinary shares 

Analysis of ordinary shareholders by size of shareholding: 

Ordinary Number of % of 

Number of Shares Shares Held Shareholders Issued Shares 

1–1,000* 19,255,045 37,152 1.23 

1,001–5,000 223,031,514 100,978 14.26 

5,001–10,000 63,804,786 9,291 4.08 

10,001–100,000 76,007,202 3,986 4.86 

100,001 and over 1,181,760,210 202 75.57 

* 3,869 shareholders hold less than a marketable parcel of shares in Qantas Airways Limited. 

On-market buy-backs 

There is no current on-market buy-back. 

Twenty largest shareholders 

1,563,858,757 151,609 100.00 

Ordinary 

% of 

Shareholder Shares Held Issued Shares 

British Airways Investments (Australia) Pty Limited 332,588,055 21.27 

J P Morgan Nominees Australia Limited 229,481,429 14.67 

National Nominees Limited 126,597,806 8.09 

Westpac Custodian Nominees Limited 95,595,989 6.11 

RBC Global Services Australia Nominees Pty Limited 40,551,932 2.59 

Commonwealth Custodial Services Limited 37,163,252 2.38 

Queensland Investment Corporation 34,652,807 2.22 

Citicorp Nominees Pty Limited 33,985,324 2.17 

AMP Life Limited 32,524,531 2.08 

NRMA Nominees Pty Limited 23,259,568 1.49 

ANZ Nominees Limited 23,235,963 1.49 

Cogent Nominees Pty Limited 17,875,089 1.14 

ING Life Limited 13,544,052 0.87 

The National Mutual Life Association of Australasia Limited 11,609,002 0.74 

MLC Limited 8,606,850 0.55 

HSBC Custody Nominees (Aust) Limited 8,326,634 0.53 

Government Superannuation Office 5,610,382 0.36 

Suncorp General Insurance Limited 5,219,079 0.33 

Bond Street Custodians Limited 5,108,739 0.33 

Zurich Australia Limited 4,623,238 0.30 

1,090,159,721 69.71 

Substantial shareholders 

The following shareholders have notified that they are substantial shareholders of Qantas Airways Limited: 

Ordinary 

% of 

Shareholder Shares Held Issued Shares 

British Airways Investments (Australia) Pty Limited 332,588,055 21.27 

Principal Mutual Holding Company 73,105,994 5.59 


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49

qantas group five-year summary 

for the year ended 30 June 

Unit 2002 2001 2000 1999 1998 

Statement of financial performance 

Sales and operating revenue* $M 11,322.6 10,188.2 9,106.8 8,448.7 8,131.5 

Expenditure $M (10,643.3) (9,492.4) (8,232.8) (7,686.1) (7,549.8) 

Earnings before interest and tax $M 679.3 695.8 874.0 762.6 581.7 

Net borrowing costs $M (48.3) (98.7) (111.2) (100.1) (103.7) 

Profit from ordinary activities before tax $M 631.0 597.1 762.8 662.5 478.0 

Income tax expense $M (201.7) (177.4) (244.9) (241.6) (173.0) 

Net profit $M 429.3 419.7 517.9 420.9 305.0 

Outside equity interests in net (profit)/loss $M (1.3) (4.3) (0.6) 0.7 (0.2) 

Net profit attributable to members of the company 

for the year $M 428.0 415.4 517.3 421.6 304.8 


for the six months to 31 December $M 153.5 262.9 337.8 222.9 165.8 


for the six months to 30 June $M 274.5 152.5 179.5 198.7 139.0 

Share information 

Earnings per share cents 29.1 33.0 42.8 35.4 26.8 

Dividends per share cents 17.0 20.0 59.0 32.5 13.5 

Dividend payout ratio % 58.4 60.6 137.9 91.8 50.4 

Share price – high $ 4.92 4.25 5.28 5.00 3.21 

Share price – low $ 2.60 2.36 3.12 2.27 2.13 

Share price – closing $ 4.60 3.50 3.38 4.99 2.43 

Weighted average number of ordinary shares M 1,469.4 1,258.5 1,209.3 1,189.7 1,138.6 

Net tangible asset backing per share $ 2.61 2.51 2.34 2.52 2.49 

Earnings before interest and tax 

International airline operations $M 202.8 458.7 374.8 308.3 271.9 

Domestic airline operations $M 298.2 127.4 272.0 256.8 213.4 

Subsidiary operations $M 178.3 109.7 169.4 136.7 96.4 

Items previously shown as abnormal $M – – 57.8 60.8 – 

Earnings before interest and tax $M 679.3 695.8 874.0 762.6 581.7 

Performance indicators 

Interest cover times 14.1 7.0 7.9 7.6 5.6 

Return on shareholders’ equity (excl. operating leases) % 10.1 12.6 18.1 13.8 10.3 

Return on shareholders’ equity (incl. operating leases) % 12.0 10.6 18.3 14.6 10.8 

Statement of cash flows 

Net cash provided by operating activities $M 1,143.3 1,100.7 1,599.8 1,208.3 1,218.4 

Net cash (used in) investing activities $M (2,306.1) (871.3) (262.7) (628.9) (668.0) 

Net cash provided by/(used in) financing activities $M 1,688.8 (659.0) (1,542.0) (396.4) (592.3) 

Net increase/(decrease) in cash held $M 526.0 (429.6) (204.9) 183.0 (41.9) 

Capital expenditure $M 2,463.4 995.5 1,141.8 1,233.3 673.0 

Statement of financial position 

Total assets $M 14,801.5 12,513.6 12,007.1 11,226.6 10,358.8 

Total liabilities $M 10,548.0 9,197.7 9,142.7 8,166.7 7,396.4 

Net assets $M 4,253.5 3,315.9 2,864.4 3,059.9 2,962.4 

Contributed equity $M 2,946.6 2,173.0 1,882.0 1,882.0 1,177.3 

Reserves $M 56.3 54.3 54.0 52.8 689.0 

Retained profits $M 1,239.1 1,078.0 926.8 1,124.1 1,094.1 

Outside equity interests in controlled entities $M 11.5 10.6 1.6 1.0 2.0 

Total shareholders’ equity $M 4,253.5 3,315.9 2,864.4 3,059.9 2,962.4 

Statement of financial position statistics 

Net debt on balance sheet $M 1,904.6 1,316.4 925.8 782.8 737.4 

Net debt including off balance sheet debt $M 4,110.0 3,793.9 2,503.6 2,134.7 2,226.8 

Net debt including off balance sheet debt 

and revenue hedge receivables $M 3,903.8 3,464.3 2,128.9 1,862.5 1,856.8 

Net debt to net debt plus equity ratio 31:69 28:72 24:76 20:80 20:80 

Net debt to net debt plus equity 

including off balance sheet debt ratio 50:50 55:45 48:52 42:58 44:56 

Net debt to net debt plus equity including off 

balance sheet debt and revenue hedge receivables ratio 49:51 53:47 44:56 39:61 40:60 

* Excludes proceeds on sale (and on sale and leaseback) of non-current assets, and interest revenue which is included in net borrowing costs. 

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Unit 2002 2001 2000 1999 1998 

Operational statistics 

Domestic – scheduled services 

Traffic and capacity 

Passengers carried 000 15,063 11,218 10,646 10,111 9,738 

Revenue passenger kilometres (RPK) M 20,168 14,790 13,959 12,956 12,415 

Available seat kilometres (ASK) M 25,373 18,695 17,369 16,554 15,952 

Revenue seat factor % 79.5 79.1 80.4 78.3 77.8 

International – scheduled services 



Revenue passenger kilometres M 52,609 53,682 48,236 45,178 44,511 

Available seat kilometres M 67,237 71,247 64,879 62,679 63,034 


Revenue freight tonne kilometres (RFTK) M 1,607 1,859 1,718 1,783 1,829 

Available freight tonne kilometres (AFTK) M 2,451 2,617 2,398 2,565 3,085 

Core airline performance statistics 






Average passenger journey length km 3,099 3,607 3,534 3,483 3,479 

Available tonne kilometres (ATK) M 12,317 12,187 11,117 10,928 11,151 

Financial 

Passenger yield (per RPK) cents 11.49 10.84 10.42 10.34 10.16 

Productivity 

Average full-time employee strength # 26,768 25,604 24,304 23,411 23,749 

RPK per employee 000 2,719 2,674 2,559 2,483 2,397 

ASK per employee 000 3,460 3,513 3,384 3,384 3,326 

Aircraft utilisation (average per day) hrs 11.3 11.5 11.6 11.6 11.7 

Qantas group performance statistics 






Aircraft in service at balance date # 193 178 147 135 146 

Financial 

Passenger yield (per RPK) cents 12.02 11.26 10.87 10.75 10.56 

Productivity 

Average full-time equivalent employees # 33,044 31,632 29,217 28,226 28,934 

RPK per employee 000 2,274 2,230 2,196 2,121 2,026 

ASK per employee 000 2,904 2,938 2,910 2,897 2,818 


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glossary 

Revenue passenger kilometres (RPK) 

Number of paying passengers carried, multiplied by the 

number of kilometres flown. 

Available seat kilometres (ASK) 

Total number of seats available for passengers, multiplied 

by the number of kilometres flown. 

Revenue freight tonne kilometres (RFTK) 

Number of tonnes of paying freight carried, multiplied by 

the number of kilometres flown. 

Available freight tonne kilometres (AFTK) 

Total freight tonnage capacity available, multiplied by the 

number of kilometres flown. 

Revenue seat factor 

Percentage of total passenger capacity actually utilised by 

paying passengers. 

Available tonne kilometres (ATK) 

Total number of tonnes of capacity available for carriage of 

passengers, freight and mail, multiplied by the number of 

kilometres flown. 

financial calendar 

2002 

21 February Half-year result announcement 

13 March Record date for interim dividend 

10 April Interim dividend payable 

30 June Year end 

21 August Preliminary final result announcement 

4 September Record date for final dividend 

2 October Final dividend payable 

17 October Annual General Meeting, Perth 

2003 

20 February Half-year result announcement 

12 March Record date for interim dividend 

9 April Interim dividend payable 

30 June Year end 

21 August Preliminary final result announcement 

3 September Record date for final dividend 

1 October Final dividend payable 

16 October Annual General Meeting, Adelaide 

Notice of meeting 

The Annual General Meeting of Qantas Airways Limited will be held at 2.00 pm on Thursday, 17 October 2002 

in the Grand Ballroom of the Burswood Convention Centre, Perth. 

Financial report 

Shareholders seeking a copy of the Financial Report, which will be provided free of charge, should contact 

the Qantas Share Registry. 

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corporate directory 

Registered Office 

Qantas Airways Limited 

ABN 16 009 661 901 

Qantas Centre 

Level 9 Building A 

203 Coward Street 

Mascot NSW 2020 

Australia 

Telephone 61 2 9691 3636 

Facsimile 61 2 9691 3339 

Website 

www.qantas.com 

Qantas Share Registry 

Level 8 

580 George Street 

Sydney NSW 2000 

Australia 

or 

Locked Bag A14 

Sydney South NSW 1232 

Australia 

Free call 1800 177 747 

International 61 2 8280 7390 

Facsimile 61 2 9261 8489 

Email 

registry@qantas.com 

Website 

www.qantas.com 

Stock Exchange 

Australian Stock Exchange 

20 Bridge Street 

Sydney NSW 2000 

Australia 

Depositary for American 

Depositary Receipts 

The Bank of New York 

ADR Division 

22nd Floor 

101 Barclay Street 

New York NY 10286 

USA 

Telephone 1 212 815 2218 

Facsimile 1 212 815 3050 

General Counsel 

and Company Secretary 

Brett Johnson 

Designed and produced by Armstrong Miller+McLaren, Sydney – Melbourne. Photography by Bob Armstrong.

2002 Qantas Annual Report

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