Performance against our Financial Framework

Reporting on the financial performance of the Qantas Group.

The Qantas Group aims to achieve top quartile Total Shareholder Returns (TSR) relative to the ASX100 and global airline peers. In line with this objective and the Group’s Financial Framework, we report on a number of metrics over time. Where appropriate, the Group reports on both the statutory and underlying metrics. Underlying Profit Before Tax is a non-statutory measure and is the primary reporting measure used by the Chief Operating Decision-Making bodies, being the Chief Executive Officer, Group Management Committee, and the Board of Directors, for the purpose of assessing the performance of the Qantas Group. ESG metrics have also been incorporated into the Financial Framework. The COVID-19 pandemic has had an extensive impact on the Qantas Group which is reflected in our financial performance.

Financial framework aligned with shareholder objectives

Qantas' Financial Framework aligns our objectives with those of our shareholders with the aim of achieving top-quartile shareholder returns by targeting maintainable Earnings Per Share (EPS) growth over the cycle with industry-leading ESG credentials. The Financial Framework is built on three clear priorities and associated long-term targets:

Infographic explaining the Qantas Financial Framework. More details below
  1. Maintaining an optimal capital structure: Minimise the cost of capital by targeting a Net Debt range of 2.0-2.5x EBITDA where ROIC is 10 per cent, and deliver against Climate Action Plan targets.
  2. ROIC > WACC through the cycle: Deliver ROIC greater than 10 per cent, ESG included in business decisions.
  3. Disciplined allocation of capital: Grow Invested Capital with disciplined investment and return surplus capital, and prioritise projects that exceed both ESG and ROIC targets.

Net debt

FY23 net debt decreased compared to June 2022. Cash generation continued to improve with increased flying activity through the financial year, particularly with the strong return of international operations. As at 30 June 2023, net debt under the Financial Framework was $2.9 billion, below the Group’s target range of $3.7 billion to $4.6 billion.

Infographic explaining the net bebt profile graph

Net debt includes on balance sheet debt and aircraft operating lease liabilities under the Group’s Financial Framework.

Group Return on Invested Capital

Return on Invested Capital (ROIC) is the primary financial return measure for the Group. Our target is to achieve ROIC greater than our Weighted Average Cost of Capital (WACC) through the cycle. Our threshold of 10 per cent ROIC allows ROIC to be greater than pre-tax WACC through the cycle. Since our turnaround in 2015 and prior to the COVID-19 pandemic the Group had been consistently delivering ROIC well in excess of this threshold. As a result of the impact of COVID-19, ROIC did not met the threshold of 10 per cent in FY20, FY21 and FY22. In FY23 however, as a result of stronger cash generation and lower average invested capital, ROIC increased to above target. The Group ROIC is expected to moderate in future periods as Invested Capital rebuilds, however structural changes in earnings, and working capital benefits are expected to deliver Group ROIC in excess of pre-COVID levels.

Infographic explaining the return on invested capital graph

Calculated as ROIC EBIT for the 12 months ended for the reporting period, divided by 12 months average Invested Capital.

Net free cash flow

Targeting an optimal capital structure and measuring ROIC performance provides a platform for making disciplined decisions regarding shareholder distributions, reinvestment in our business and net debt reduction. We will invest prudently in capital expenditure from operating cash flow to increase future returns, with surplus capital returned to shareholders. Like other financial metrics, net free cash flow has been impacted by the COVID-19 pandemic, made a strong recovery in FY22 as flying activity resumed, continuing into FY23.

Infographic explaining the net free cash flow graph

Net Free Cash Flow is net cash from operating activities less net cash used in investing activities (excluding aircraft operating lease refinancing).

Shareholder returns

Since FY15 and prior to the COVID-19 pandemic the Group had strong history of generating surplus capital and returning this to shareholders. To preserve balance sheet strength, under its Financial Framework, there were no shareholder distributions in FY22. In FY23 $1b in share buy-backs were completed during the financial year.

Infographic explaining the shareholder returns graph

Earnings per share

The Group tracks Earnings Per Share (EPS) on a statutory basis. Earnings per share for FY22 was less than zero due to the impact of the COVID-19 pandemic. Earnings Per Share was 96 cents per share for the financial year 2022/23. The increase from financial year 2021/22 was driven by a significant increase in the Statutory Profit After Tax coupled with the EPS accretion from completion of the $1 billion on-market buy-back in FY23.

Infographic explaining the earnings per share graph

Underlying Earnings Per Share calculated as Underlying Profit Before Tax less tax benefit/expense (based on the Group's effective tax rate for the period) divided by weighted average number of shares during the year.

See further details on the Group’s history of capital management.

Delivering today


Refer to the Review of Operations section in the Qantas Annual Report 2023 for definitions and explanations of non–statutory measures. Unless otherwise stated, amounts are reported on an underlying basis.

  1. Disclaimer: Environmental, Social and Governance
  2. Disclaimer: Weighted Average Cost of Capital, calculated on a pre-tax basis
  3. Disclaimer: 10 per cent ROIC allows ROIC to be greater than pre-tax WACC through the cycle