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QANTAS GROUP ANNOUNCES DEBT REDUCTION, SHARE BUY-BACK

Sydney, 15 November 2012

The Qantas Group today announced it will repay $650 million in debt ahead of schedule and invest up to $100 million in an on-market share buy-back. The share buy-back represents up to approximately 4 per cent of Qantas shares on issue1 and is expected to begin in December 2012.

Qantas Chairman Leigh Clifford said the Group was well positioned in terms of its portfolio of businesses, its balance sheet and its strategy to deliver long term shareholder value.

“The Board believes the current Qantas share price does not reflect fair value of the Group, particularly considering the underlying strength of its domestic, loyalty and Jetstar businesses and the proposed partnership with Emirates,” said Mr Clifford.

“Our continued progress towards the turnaround strategy for Qantas International, plus cash inflows from recent transactions, gives the Board confidence to approve these capital management measures.

“The share buy-back and accelerated debt reduction reflect the Board’s goal of returning value to shareholders and maintaining a strong balance sheet, as well as retaining the flexibility to pursue current growth initiatives,” Mr Clifford added.

The accelerated debt reduction involves repayment of all outstanding 5.125 per cent notes originally due in June 2013. This repayment will be completed five months ahead of schedule in January 2013 and will form part of a program of $1 billion in debt reduction for the Qantas Group in FY13.

The measures will be funded by the recently-completed sale of Qantas’ stake in road freight company StarTrack and the settlement from Boeing in relation to the Group’s B787 order. These two transactions will deliver combined net proceeds of $750 million in FY13. As these transactions are outside normal operating cash flows, the debt reduction and share buy-back will have no impact on the Group’s current BBB-/Baa3 (stable outlook) credit ratings. Citigroup Global Markets Australia will act as broker for the buy-back.

Following the recent refinancing of the Group’s $400 million undrawn loan facility, together with its strong cash balance, the Group will retain a strong liquidity position on an ongoing basis.

The Qantas Group continues to invest, adding 24 unencumbered aircraft to the balance sheet since July 2010, including six in FY13. The Group continues to maintain access to a broad range of funding sources including cash, structured leases, sale and leaseback, bank and ECA loans.

In line with ASX Listing Rules for a share buy-back, Qantas has today provided additional information to the market, including an outlook for the first half of FY13, detail on the proposed partnership with Emirates and a pending Fair Work Australia determination.

Issued by Qantas Corporate Communication (5470)
Email: qantasmedia@qantas.com.au