Good afternoon. Thank you for joining us at the Qantas Financial Year 2022 Investor and Analyst Results briefing. My name is Filip Kidon, and I am the head of investor relations for the Qantas Group. I'd like to begin today's session by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation, and pay our respects to elders past, present, and emerging. I'd like to now introduce our Chief Executive Officer, Alan Joyce, and our Chief Financial Officer, Vanessa Hudson, who will take you through the results. Thanks, Phil. Can I also acknowledge the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to elders past, present, and emerging. As Phil said, we're joined by Vanessa, who's gonna help me with all of the difficult financial questions. Any of the easier ones, I'll take them. Thank you. Okay, Vanessa? Sure. We've also got all the members of the GMC. Andrew David, who's the CEO of Qantas Domestic and International. Gareth Evans, who's the CEO of the Jetstar Group. Andrew Parker, who's our Chief Sustainability Officer in a role that we've created over the last year. Andrew Finch, who's the head of the Office of the CEO and Legal Counsel and Company Secretary. Andrew McGinness, who's Corporate Affairs and Government Affairs. Stephanie Tully, who's in charge of our customer area, the Chief Customer Officer. John Gissing, who I keep forgetting what he's in charge of, but it's a variety of things, including QantasLink. We've got Olivia Wirth, who's the CEO of Qantas Loyalty. Thank you very much for everybody for joining us today. Today we're gonna cover the analyst briefing for our 2022 financial results. I'll be using the GMC also to answer some of the questions when it relates to those individual business. The format that we're taking this year is very similar to last year, so it's not the very long presentations that we did in the past and going through the slides. I'll give some opening remarks, and we'll take most of the time to answer questions. We will say at the time, we're trying to ask everybody to ask one question. I think we have 14 analysts that are covering us, so if people ask multiple questions, we'll be here all night, and we've got to go and do a staff roadshow. Today, the Qantas Group announced an underlying loss before tax of AUD 1.86 billion for the financial year 2022. The statutory loss before tax was AUD 1.19 billion and included a one-off gain of AUD 686 million from the sale of surplus land in Mascot. At an underlying EBIT level, the result was a positive AUD 281 million. This included AUD 526 million in the H2, in the top half of the guidance range we provided the market back in June. The numbers we report today includes the full impact of the Delta and the Omicron lockdowns, as well as the cost of restarting the airlines. This is our fifth consecutive statutory half-year loss and takes our total losses from the start of the pandemic to well over AUD 7 billion. It's been AUD 25 billion loss in revenue since the start of the pandemic. It's fair to say that the last 12 months have been challenging for the Qantas Group, for our people, and unfortunately for our customers. This time last year, almost all of Australian borders were closed. Most of us were stuck at home, and our A380 fleet was parked in the desert. Fast-forward to today, borders are open, flights are full, and those A380s can't return fast enough. In the H2 of the year, we also had to deal with the emerging challenge of record high fuel prices. Our disciplined hedging program bought us time to adjust capacity settings. However, fares will inevitably rise. Average flying for the year was at 33%. Whoever gets me to say 33s all the time is gonna kill. That'd be me. 33%—that was you. 33% of pre-COVID levels, but this was very much a tale of two halves. Total group capacity went from just 13% in September to 68% in June. This rapid return of travel brought with it some difficulties, as many of you, our customers, have experienced. With all of our Australian-based workforce stood up from December, training underway, and our parked fleet coming back, we planned for the recovery. What we didn't plan for and we weren't ready for is that after 18 months of COVID being suppressed was the high levels of community transmission and the isolation and sick leave that followed. The rebound in travel also coincided with the tightest labor market in almost 50 years. This resulted in recruitment challenges for some of our partners as they also ramped up operations. All of this led to some well-publicized problems across all airlines and airports, long queues, delayed flights, and mishandled bags. It has been incredibly tough for our people and deeply frustrating for our passengers. Despite the underlying reasons for the disruptions, our performance simply hasn't been good enough, and for that, we have apologized. We've announced a range of initiatives to thank our customers for their patience during this trying times. This include the flight discounts, status extension, and a big increase in classic reward seats for our frequent flyers. Importantly, there's a lot of work happening to get Qantas back to its best. We're temporarily reducing domestic flying. We've increased minimum connection times. We've hired more people, and we're investing in technology to improve the check-in experience. We've already seen big improvements in baggage handling and reduced cancellations during August on the way to pre-COVID level standards, and we expect on-time performance to get there in September. As we navigate these challenges, our focus on our three-year recovery plan has remained. Net debt ended the year at AUD 3.9 billion. This is now below the bottom end of our target range and the lowest level in over a decade. Cash flow has also been restored with three-quarters of positive net free cash flows supporting the balance sheet repair. Our AUD 1 billion restructuring program continues to track ahead of schedule with AUD 920 million delivered and 90% of the initiatives now completed. With COVID-related deferrals behind us, we've also commenced investing in our fleet. Just last month, the first of the Group's new narrow body aircraft arrived in Jetstar, the A321neo. These next-generation aircraft fly further, carry more people, generate less noise, and burn less fuel. In fact, on its first flight from Melbourne to Cairns, our new Jetstar 321neo burned 25% less fuel than the older technology aircraft they replaced. That is 2.5 tons less fuel, exceeding our expectations. The investment of fleet also comes with new investments for our customers, including upgrades to lounges in Auckland, Adelaide, Port Hedland, and Rockhampton. We're also investing heavily in our people. Our training pipeline has never been busier, and today we officially opened our new cabin crew training center right here in Mascot. If you haven't had a chance to see it for those people in the room, it's right next door, and it's spectacular. Yeah, it's amazing. We know that the pandemic has been tough on our people. Many of them were stood down for months, and they have done an incredible job through a challenging restart. I sincerely thank them for that. Now that we're moving back to profit, we are sharing the benefits of that recovery. We've already set aside AUD 200 million to give non-executive staff a AUD 5,000 recovery boost and 1,000 Qantas share rights, which is worth roughly AUD 5,000 at today's share price. Today, we also announced enhancements to improve the value of staff travel, and we know that is something our people really care about. Got a great reaction in this room with that, didn't I? Turning now to the segment performance, Qantas Freight and Qantas Loyalty continue to be valuable contributors. Freight posted another record performance of financial year 2022, supported by structural growth in e-commerce and the benefit of high international yields, which will moderate for Freight as international capacity returns. Qantas Loyalty also performed well, having provided the Group with three years of strong cash receipts, earnings, and now rapidly recovering. Loyalty EBIT returned to double-digit growth in the H2. This strong momentum gave us confidence to expect earnings in financial year 2023 will be above the record results in financial year 2019. Now Domestic Flying was deeply impacted by COVID for much of the year. However, Q4 performance provided good insights into the recovery ahead. Underlying EBIT from the Group's domestic business was positive for the Q4, with business purpose bookings back at pre-COVID levels and leisure bookings significantly above that. Qantas International also saw emerging strength, with both Qantas and Jetstar achieving strong double-digit RASK growth by the end of the quarter. With fuel remaining elevated, this momentum is clearly needed. New routes remained a feature of both groups, with Qantas Domestic now flying 30 more routes compared to pre-COVID, and Qantas International announcing new routes, including Delhi, Rome, Bangalore, and today's news of Auckland to New York. The group enters financial year 2023 with its balance sheet repair effectively complete and a clear path to improving COVID-related operational challenges. We know the market is wondering what impact higher interest rates will have on our consumers. Our research and that of the major banks indicate that travel intentions and spending on travel will continue to remain a priority even as other discretionary spending may be constrained. This gives us confidence in domestic travel demand. International travel is also expected to remain strong, with market demand again expected to exceed supply throughout financial year 2023, and we think financial year 2024, and probably even into financial year 2025. We have the settings in place to fully recover the impact of record fuel prices. Our transformation program will be complete in financial year 2023, and we have additional initiatives in train to offset CPI increases and ensure the benefits of the program hit the bottom line. Throughout COVID, our shareholders have shown strong support, providing AUD 1.4 billion in new capital to fund our recovery and to get us through the crisis. With net debt below our target range, we're now in a position to return some of that capital. In particular, I'm pleased to say the board has approved an on-market buyback of up to AUD 400 million in line with our financial framework. Recommencing distributions demonstrates the confidence we see in our financial position, and in particular, in our outlook. There's no doubt the past few years have been incredibly tough for our industry and our business. I want to thank you again for your support through the most challenging times and your patience as we restart and ramp up our operations. With our performance improving and the signs of strong travel rebound being sustained, there's a lot to be optimistic about. Thank you, and we'll open it for questions. First question. Thank you. Your first question comes from Matt Ryan from Barrenjoey. Please go ahead. Hey, Matt. Hi, Alan. I just wanted to follow on with those comments that you just made about, I guess, the consumer patterns. Obviously, unit revenue is a pretty key feature in a number of things within your forward-looking guide. Just interested in whether you're seeing any pushback at all on price in the July or August period, and if you just make some comments more generally of what you're seeing on the ground to date. I might open and get Andrew David just to talk about what we're seeing in demand for domestic and international as well. What's very clear is that even though we've had these operational issues that we're fixing, demand hasn't been impacted. If anything, it's gone stronger and stronger during this period of time. We're seeing at the domestic level, over 125% of pre-COVID levels of demand and revenue coming in. We're seeing a rapid improvement in the business market, up to 90% of pre-COVID levels. That is actually a really good number when you consider there are a lot of businesses with people not going to the office, a lot of people staying at home because of this COVID and flu wave. We expect that to improve and to get back to pre-COVID levels, which would even enhance what we're seeing today. What we are also seeing is that all of the carriers domestically are taking capacity down 'cause everybody has to recover fuel price. Yeah, we're seeing the market at roughly 90% of pre-COVID levels in order for us to get an improvement in RASK. I'll get Vanessa to talk a bit about what we need to get in terms of RASK improvement to cover the elevated fuel price and where we stand on that. I might ask Andrew to talk a little bit about what we're seeing across the different segments and the different industries, what we're seeing across domestic and international. Andrew? Yeah, thanks, Alan. Hi, Matt. Let me start with international. What we're seeing is that intent to travel over the next 12 months is 60% higher for international travel than it was pre-COVID. It gives us a very strong indication that the demand will continue. From a supply capacity perspective, Alan went through these numbers this morning. This is Qantas International. We'll be at 72% of our capacity for FY 2023. The market will be at about 62%. For FY 2024, our forecast is we'll be back to 100%. We expect the market to be about 80%. It's not until FY 2025 that we expect the market in full to recover 100% against pre-COVID numbers. The demand is there. The demand exceeds what we were seeing in FY 19, and the supply is gonna take a few years to come back. By the time we get to FY 25, Matt, we will be then taking delivery of both the Sunrise aircraft, the A350s, and we will also have the A321s in our fleet. Both those aircraft will allow us to do more, more point-to-point flying, and we'll have a greater premium mix, which we believe gives us a strategic advantage over our competitors. We continue to grow the international routes we're flying, as Alan said. We've announced eight we're flying to, the most recent being this morning's announcement. We're gonna start flying Auckland, New York, direct from June of next year. That's the international. Building on domestic, as Alan said, there's rational capacity settings in the market. We've seen the return of both leisure and business travel. What we are also seeing is that there is an 80% intent to travel. Intent to travel over the next twelve months domestically is up 80% against pre-COVID levels. The demand is there. The demand indications are that it's here for the next twelve months. The supply settings are right. The other factors I'll just add to the domestic position is between Qantas and Jetstar, we now have a larger share of the market. We were low 60s%, we're now high 60s%. We have a greater share of the SME market. We're now mid-50% share of the SME market, and we've got a greater share of the corporate market. We're low 80s%. Settings are right. We continue to invest in our domestic business. We're now flying 132 routes. Pre-COVID, we were 101 routes. We've taken 12 Embraers through our arrangement with Alliance. We've got 12 Embraers now flying in our fleet. That opens up the opportunity to service new markets. Our intent is to acquire 100% of that business. We've got 11 A320s in the West now as part of Network Aviation, which gives us greater access to both RPT and charter flying in the West. The resource demand has continued throughout COVID. I think we're very, very well positioned, both domestically and internationally, and the market conditions are set right as well. Vanessa, do you want to talk a bit, yeah? Yeah, absolutely. The fuel outlook, which you would all know is pretty high. It's much higher than it was in FY 2019. Actually, in the quarter that we're in, our fuel price is 80% higher, and it's the highest fuel price that the group has ever seen. As Alan said, all airlines will be suffering from that. It actually has a forward curve that tapers off over the year. We really hope that happens because that's gonna be good for consumers as much as it's gonna be good for our fuel cost. Given that curve, we need to, and we've always said that, recovering the cost of fuel through fares is absolutely an important part of recovering that cost. For domestic, as Andrew was saying there, with the strong demand environment and with disciplined capacity, we need a 10% RASK improvement across the year to cover fuel. We're feeling very confident that we're seeing that. With international, because we consume more, it's a bit larger. It's 20% across the year. Also given that strong demand and that lower supply environment because of the capacity taking long to come back on, that needs to be 20%. It is. We feel very confident that we're in a good position to be able to recover fuel. Thanks to next question. Thank you. Your next question comes from Jakob Cakarnis from Jarden Australia. Hey, Jacob. Go ahead. Hi, Alan. Hi, Vanessa. Just one for you, Vanessa. Can you just step us through please the rebalances, where you are in terms of the COVID cancellation credits and how they're exhausting and maybe the run rate that you guys are expecting for that and working capital into FY 2023, please? Yeah, absolutely. I might start with an overall comment about our working capital rebuild. You will see there that we've called out in our presentation the credit balance, and I'll talk about that in a minute. I think what is fantastic is that our working capital has rebuilt now to what it was pre-COVID for passenger revenue. That was always a permanent part of our balance sheet pre-COVID, and we always said that when capacity was gonna come back, that would rebuild. I think it's really pleasing to now see that, but also that loyalty is maintaining a permanent increase in its working capital value, which will be a key part of the strategy of how loyalty manages going forward. If we just step back and have a look at credits, we had a reported peak of credits at AUD 1.6 billion, and we're now saying that our credit balance is AUD 1.3 billion. That might sound counterintuitive because we're also saying that we've got a burn rate of around AUD 80 million credits per month. I think we've just got to reflect on the two years that we've had. We have actually seen our credit balance increase from five separate lockdowns over two years. The original lockdown, when all borders were closed in March 2020, then in July 2020, we saw Victoria, Melbourne and New South Wales go into the long lockdown period off the back of capacity having been built back up. We're all chasing those elusive donut days. Capacity then came back for that Christmas. We then had the Northern Beaches lockdown, which caused us to bring capacity down again. We had Delta, and then we had Omicron. We've actually seen that over that period of time, the total credits associated with COVID that we issued was AUD 2 billion over that period of time. We have given credit vouchers used AUD 1 billion. 50% over the period of time of COVID, we have enabled fifty percent of credit redeemed. We feel really confident that customers are using their credits. There's easy access to that. We're improving the access to credits because we want every customer between now and December 2023 to use their credits. We'll be communicating to them, we'll be reminding them, and we'll be providing them new ways of accessing that online. Also in the coming weeks, we'll be putting on a dedicated concierge phone number, where customers can call a dedicated team in our contact centers for help if they need it. Yeah, great answer, Vanessa. I would add to this, I mean, we are getting AUD 80 million being burnt every month in credits. If that run rate keeps up, we'll easily have them all used by the time we get to the end of 2023. We want this to be elevated, so we're going to, as Vanessa said, the concierge service. Our call centers are performing unbelievably well, better than pre-COVID times, so we can dedicate a dedicated team in order to do this and make it easier for everybody. I think it will be a really good news story. I will point out that we're one of the only airlines that has done this. A lot of airlines out there haven't made this easy. A lot of our competitors, people have lost their abilities to have these flights going. This is a great customer service initiative Qantas put in, and we're pretty proud that we're making it easy for people to use, and it will get easier. Next question. Thank you. Your next question comes from Justin Barratt from CLSA. Hi, Alan. Hi, Vanessa. Hey, Justin. Hi, team. Thanks for your time today. Just wanted to ask about your, I guess your strong RASK performance in the Q4 of 2022. I was just wondering, particularly domestically, I was just wondering if you could sort of break that out between improvements in load factors, and price improvements or price increases, and I guess where we've seen RASK growth so far in FY 2023. Yeah, I might get Gareth to answer this one. Yeah. Hello, everybody. We've talked. Andrew gave a very specific answer. Alan's talked about the RASK improvements we're seeing, and certainly that is very much the case. The double-digit RASK improvements as we went through the final quarter of last year and into the Q1 of this year, and obviously that's necessary given the high level of fuel prices. It isn't all coming from price increases. There have been some price increases. Price increases have gone into certain markets, and certain markets they've gone in and come out again. Overall, there's been a level of price increases, but it's also being managed in a number of other ways. From a Jetstar point of view, we've seen significant strengthening of load factors as well. Just to give you an example, last weekend, which, you know, August is not a peak month for travel, but we were operating at 95% load factors last weekend. Right across the board now we're seeing load factor improvement. That's a way of getting RASK up. We're also seeing very, very strong ancillary revenue growth as well. Partly that's consumer choice. Consumers are choosing to buy those ancillary products, and partly that's some of the tools that we've put in place along the way to make it easier for customers to select and buy ancillary revenue. Right across both airlines as well, we're revenue managing actively too. It's not just about price increases, but it's about how much inventory you sell in the various price buckets along the way. It's a combination of all of those things across both Jetstar and Qantas that are driving those RASK improvements. It's certainly not just about price increases, though they are an element to it. I will say from the consumer point of view, there is actually a really good story out there as well. We were saying that Jetstar is likely to carry 13-14 million passengers this year. Nearly 5 million of them will travel for under AUD 100, 10 million for under AUD 200. While the airfares have gone up to cover fuel, it's still an amazingly cheap airfares out there. You think if you go back 20 years before we started Jetstar, when it was Ansett and Qantas, the airfares would never have gotten to those levels, even with 20 years of inflation and record high fuel prices. The consumers are still being given very attractive airfares to get them to travel. The fact that we can do both, recover oil and still deliver those airfares and make money is a really good thing. Next question. Thank you. Your next question comes from Anthony Longo from JP Morgan. Hey, Anthony. Hi, Alan. Hi, Vanessa. Hi, team. Just a quick one from me. We appreciate just mainly focusing on the cost piece. Appreciate you have made some changes, sort of made some hires to address some of the industry-wide challenges that the industry is facing. How should we be thinking about maybe a step change in cost such that you can still deliver that premium service? And I guess a follow on from that, we have spoken about RASK already. But at what point do RASK increases become prohibitive and detrimental to demand? And how should we ultimately be thinking about that premium to your peers? On the cost front, Anthony, I think that in the investor presentation, we have outlined that there is direct operational costs from the disruption that we have been experiencing, including the cost of recovering customers, including the cost of overtime, and we value that at around AUD 35 million. We don't see that is a permanent part of our cost structure because we are doing everything that we can that brings the operation back to its pre-COVID level. We're there on a number of metrics, including lost bags, call centers, for instance, and call wait times. We're heading in the right direction on OTP and we're really confident that we'll be very close to getting back to pre-COVID levels by September. Given that we have in this period a unit cost impact of a lower level of capacity. That is actually really a function of the fact that we've got overheads, a lower level of capacity than we had prior to COVID. We've got depreciation on those assets as well. A purpose of a lower level of capacity was to enable us to have a sufficient amount of reserves to be able to respond when we have spikes in sick leave. We will see that that's gonna translate into a unit cost impact when we report at the half. Once again, we don't see that that's a permanent part of our cost structure because we are very confident in managing to the current operational metrics that we've set. Over the coming period, we will just add the capacity back in as we feel confident in those settings, and build into the forward part of next year. We see that RASK is, as we said before, covering fuel, but it's also covering the unit cost of that impact and also the disruption cost. We've spoken about the strong demand that we're actually seeing as well. We have not seen any impact on demand at the moment with RASK where it is. Over the forward curve, as I said, it's a declining forward curve. We will see that RASK over time eases as fuel price falls and also as capacity comes back online. We feel really confident in that demand environment, the capacity environment, very confident that RASK will be sustained. Just to reiterate, the last part to that, I think Andrew mentioned that we're seeing the propensity to travel nearly double what it was before COVID, with people having that desire. Some of the banks have published reports, as I mentioned in my opening statement, that says in priorities, travel has a higher priority than other discretionary expenditure. It's probably going to be the last one to be squeezed, which is a really good sign that we think this demand environment will last for some time. Probably not a surprise, everybody has lost over two years of travel. Everybody wants their holiday, visiting those family and friends to make those important business trips that they missed out on. We don't see that changing. As Andrew mentioned again on the stats, we see capacity. We are trying to get as many aircraft in as we can, but we just do not see supply meeting demand 'cause internationally, those stats, again, is that the market, the competitors in and out of Australia are going to be at 62% of pre-COVID capacity this year, financial year. They're gonna get to 80%, we think, next year and 100% the year after. Now, that's 100% of pre-COVID levels. We've had five years of growth in the economy since then. That's still underserving the market. Now, if we could get more A380s in the air, if Boeing hadn't delayed the 787s till next year, they'd be flying now. We, we're stuck like every airline in the world stuck. We're having this limited capacity, which is gonna mean there's a lot more demand than there is supply, and that does result in higher RASK. That's just the nature of it. Next question. Thank you. Your next question comes from Andre Fromyhr from UBS. Hi, everyone. My question is about guidance on CapEx. It looks like the statements around CapEx next year have come down a little bit. It'd be great to understand some of the drivers of that change and potentially expanding on how much of that is committed versus flexible and how you line up your CapEx intentions with the capacity growth. Yeah. The first answer to the first question is really simple. Our guidance has fallen because we actually had an early payment, actually one day early to Airbus of a PDP payment that we had budgeted for next year that is now in the CapEx guidance or the actual CapEx we reported for this year. We've adjusted the CapEx guidance accordingly. The second question was, there is still flexibility in our capital pipeline. In terms of the aircraft deliveries, that's probably less flexible. We do have CapEx in that pipeline for non-aircraft investments. We will, as we have in the past, managed through the financial framework to ensure that our CapEx is in balance with the cash flows that the business is gonna produce. We are very confident in the outlook of this next financial year and feel that the cash flows of this business will be able to not just afford the CapEx that we have guided in 2023, but also for the surplus and distribution that we have declared for the buyback of AUD 400 million. Next question. Thank you. Your next question comes from Niraj Shah from Goldman Sachs. Good afternoon. Good afternoon. Firstly, I just wanted to be crystal clear on sort of one point. Are you guys saying that for both domestic and international, current unit revenues versus pre-COVID are at or above the levels, the 10% and 20% you quoted to recover fuel? Sort of just separate to that, I just wanted to ask on loyalty. It's a pretty substantial uplift from 2023 into 2024. I'm just wondering outside of the KPIs you present there, what else needs to sort of fall in place to get to sort of the middle or top of that range? On the first question, the simplest answer I'll have given all day, it's just yes. On the second question. I don't think a yes will cut my answer, Alan. Look, you're right. Let me, I guess, unpack the result today for loyalty. You will have seen that we actually provided a guidance for the year for FY 2023 between AUD 425-AUD 450, and we did that for a reason. Firstly, to demonstrate that we have confidence in not only delivering the FY 2023 but also achieving the FY 2024. That's predicated on a few things. If you look at the result in the H2, and actually, if you look at the Q4 and the performance in that quarter, so that was double Q3, it shows the strong momentum in our business, and that's driven by a number of factors. Firstly, obviously, consumer spend coming back to pre-COVID, which is obviously critical for revenue coming into our business. Equally, the acquisition of Qantas points and income from credit cards is getting back to pre-COVID levels as well, and we're seeing a return to travel. Strong consumer spend is driving the result for Loyalty. Equally, we've put two new numbers in the results in addition to the FY 2023 result, which is trying to give greater transparency on the core drivers for this business. It looks at membership and the engagement and additional members required to drive this flywheel. Then the two equal parts, which are about the number of points required to earn and the number of points required to burn to achieve FY 2024. We give you some estimates there on the growth required across these three core drivers for our business. Underlying all of this is the ongoing diversification for earnings for our Loyalty business, including financial services. We're well established, obviously, in the credit card market. We've still got 35% of that sector, but we have intentions to continue to grow that and our exposure to financial services products in the next couple of years. Obviously, program strength in terms of growing membership. We've got 1 million additional members inside the frequent flyer business compared to pre-COVID, which shows that we can continue to grow even in a very challenging environment with the airline on the ground. We're seeing strong growth in member engagement and ongoing additional members into our business, so that's obviously a positive as well. Importantly, we've spent a lot of time really getting under the hood of redemptions. The burn aspect of our program is equally as important as our earn. We spent considerable time working out how we really drive obviously flight redemptions, but importantly, the non-flight redemptions, and there's been significant shift in our consumer behavior. We changed the value or improved the value, for example, in hotels and holidays. We reduced that by 35%-40%, and we've seen the number of members redeeming points basically double compared to pre-COVID. That's a significant shift at a sustained level, which gives us the confidence that not only we drive revenue through existing partners and new partners, but we can also equally continue to build out that non-flight redemption. Hopefully the transparency around those three drivers, the fact that we've provided FY 2023 target, which we're confident in hitting, which then gives you the right trajectory to hit FY 2024. Brilliant. Thanks, Liv. Next question. Thank you. Your next question comes from Owen Birrell from RBC. Please go ahead. Hello. Hey, good afternoon, guys. Just a question from me, I guess on cost inflation and sort of presenting a major headwind to a lot of different sectors in the economy as we move through FY 2023. Now, I know you've covered off on fuel costs that have been covered by RASK improvement. I really just wanna turn my attention to things like labor and the operating costs, so your ex-fuel costs, which, if I recall historically, you'd sort of put out targets of around about sort of AUD 200 million of cost savings to cover off that each year sort of pre-COVID. Now, that was when inflation was running at sort of 2%-3%. Now, we've obviously got a much sort of steeper rise into FY 2023. I'm just wondering if you can give us a sense of, I guess, what are these additional cost reduction targets that you've set out in the pack, for FY 2023? Whether you can give us a number or a marker that we can sort of look to. Also what some of the strategies and initiatives are behind that target? Our run rate prior to COVID for the general level of inflation was around AUD 250 million. Over the three years, even though we've been in lockdown and our aircraft have been grounded, we have kept an eye on what the underlying level of inflation has been running through our business. We've estimated that at around AUD 180 million over the three years with a higher level in 2023 of around AUD 200 million, which does recognize the fact that inflation has ticked up and that is actually flowing through parts of our business. To give you a flavor though of how that breaks down, as you said, it's wages which is around AUD 70 million this financial year. That's on the assumption of our wages policy of two years at zero and then two years 2% thereafter. That is about not embedding what is probably going to be a transitory impact of inflation in our business 'cause we know that the RBA is using the levers, the monetary levers that they have, to return to long-term inflation of around 2%-3%. Having said that as well, there are other parts of our business that have inflation. To give you a flavor of that, 95% of our contracted supplier cost, which represents around 40% of our total cost, has inflation clauses in those contracts. 30% we have no inflation embedded in those contracts. Another 30% we do have inflation, but it is at a lower level, and it's also therefore very clear and very known, what that cost is. So if we add that all up, as I said for FY 2023, that's around AUD 200 million. What we are doing, and this has been a discipline at Qantas, for as long as I can remember in the last ten years, that every year we have tasked the business to look to additional cost savings, both also revenue initiatives to offset that. Pre-COVID, that was around AUD 400 million a year, and that was split between 60% cost and 40% revenue. What are some of those initiatives? I can't go through them all, but three that I'll give you a flavor of, both Qantas and Jetstar are investing in digital teams to unlock value through ancillary revenue, as Gareth mentioned. We believe that there are great opportunities to add value to the ancillary pipeline, but also to add value to the customer, so this is not mutually exclusive in terms of customer benefit. Other cost initiatives are using technology as well, digitizing, for example, the newspapers on our domestic flights. We used to provide a newspaper at cost, but now given that we've got Wi-Fi on most of our aircraft, we're delivering that digitally, which is delivering a saving. Our engineering team have worked incredibly hard during COVID to renegotiate contracts. One highlight has been a renegotiation of the cost of the A380 engines, which is gonna deliver as well substantial value. We feel really confident that the business is back in that normal mode and DNA of continuous transformation, and that's just gonna be ongoing, and it's just a part of business life. Great answer. Next question. Thank you. Your next question comes from Paul Butler from Credit Suisse. Paul? Hi. Thanks very much for taking my question. I just wonder if you could give us an update on your negotiation with in regard to labor deals? the risk of any industrial action. Just in particular, I mean, given that we're seeing very high levels of CPI in the economy and the labor market is clearly quite tight, and I think you're looking for, you know, wage deals of two years of flat wages followed by 2% increases. Is that sort of realistic in the market context? You know, what's the response you're finding? Yeah. Our logic has been that we've had three years now of significant losses. For that period of time, we haven't paid and don't pay anybody wage increases, and that we have offered 2% post that. In addition to that, we've also, as Vanessa talked about earlier, put on the table for all 17,000 non-executive employees, a AUD 5,000 boost to help get through this current transitory inflation, as the RBA has called it. On top of that, we've offered 1,000 shares for the recovery plan, which will be worth AUD 5,000 now, hopefully a lot more than that by the time the shares are issued at the end of next year, if certain targets are met across the company. What we are finding is that for the vast majority of our employees and our agreements, that's been received really positively. We've now signed up 13 different agreements, 5,000 employees to those new arrangements. We are in dialogue with multiple other agreements that are making really good progress. There is one group, which is the engineers, that have said that they want a 12% annual pay increase. Obviously, that's not viable. That's a claim that we can't agree to nor will agree to. What's pleasing, what the union has said, which is that they have no intent to harm the traveling public. They have no attempt to disrupt the traveling public. They had today taken a one-minute stoppage at the start of the day across the network as part of their industrial action. We saw no impact in the operation. In fact, this morning was the best first wave departures I've seen in months. We were over 92% on time for the first wave. They have lived up to that promise. We'll make sure that the union leader honors that promise and doesn't impact on the traveling public going forward. We are in dialogue with them, and we're hoping that we can get good conclusions out of that. They realize the restrictions that are on us, and there are other things that come into those negotiations with shifts with how the shifts work in some of the individual ports that we're working through. We're investing very heavily in our people in those individual areas. I think Andrew David was up meeting them just last week and had a very productive dialogue with a lot of our engineers on the ground. So our belief is that we will be successful with this pay policy. We are in a position where we are continually rewarding our people when the company does well. Before COVID, outside of the EBAs, we also gave over AUD 200 million in bonuses that weren't in the EBA, and our philosophy has always been when the company does well, we do reward our people. Today, we also announced a significant improvement in staff travel, which has had amazing reaction from our people across the network. So Paul, I'm still very comfortable and confident that we will get those agreements in place. I take deep comfort with the union leaders saying that they will not disrupt the traveling public after two years of the traveling public going through the pain that they've gone through. Our colleagues having to deal with the disruptions over the last few months, I think it'd be unfair to the traveling public and our colleagues if any action more than what's been outlined takes place, and their commitment is not to do that. Next question. Thank you. Your next question comes from Cameron McDonald from AMP. Cameron. Hi, Alan. Chris, just a quick question on international, please. With 75%, you know, expected capacity back by FY 2023 full year, what routes, you know, and you know, how much flexibility have you got to bring back that capacity faster? You know, noting that you said early in your presentation that you couldn't bring back capacity fast enough. Secondly, you know, what are the routes that you're not currently flying that either you would like to be flying, or secondly, are there any routes internationally that you don't think you will fly again? Maybe I'll start, and I'll get Andrew David to cover this as well. The issue is that it is all about supply of aircraft as the big driver because the Boeing delay, as you're probably aware of, affected 100, I think 37 787s around the globe. We were not the only ones impacted by it. They needed to get the FAA to certify some work. There was a backlog on that. We finally have seen those aircraft starting to move now after two years, but we will not get them absolutely till the last quarter of the financial year. At least we now have a date 'cause that could have been later. We can't get them any earlier. They were part of our original plan to get back to 100% and replace the 747s. The A380s similarly. We, like a lot of airlines, assumed, and I think it was probably some of the forecasts out there from a lot of the analysts, that international demand wouldn't recover back till 2025 or even beyond that. We were assuming those aircraft would be parked in the desert for a long time. There's lots of maintenance needed on them, including this big 12C check, which takes three months. Every airline in the world is out there trying to maintain and get their aircraft back. What Andrew outlined earlier, we're ahead of where every other airline is into Australia. In terms of that capacity, there isn't much options to bring it forward. Similarly with Jetstar's activating as many of their 787s. It's a bit ahead of Qantas at the moment. The big issue for Jetstar is the full opening of Japan, which we're still waiting for a final decision to be made on that. When that happens, Jetstar can get back to the pre-COVID capacity levels they had there. I'll let Andrew talk about some of the other markets that might be complex, that we're still looking at and seeing when they will open and what our views on that are. Yeah. Thanks, Alan. Just finishing up on what Alan was saying about supply, not only do we have the engineering challenges to deal with, we've also obviously got to make sure everybody's crewed and the complexity similarly everybody's trained, and the complexity there is considerable when you're talking about pilots, cabin crew, airport staff, engineering staff, et cetera. We just gotta work through that. Unfortunately, as Alan said, we really don't have the option to bring those 787-9s forward, and we're managing the 380s very carefully. They have to go through a 12-year check. They're going through a full reconfiguration of the cabin, and they also have to have a landing gear overhaul. Currently got 5 back in the operation. We'll have seven back by end of financial year. In terms of markets, the three markets that we haven't gone into as yet are the three markets that are still have border restrictions in place, Japan, Hong Kong, and China. We start flying Japan from next month. We start flying Hong Kong from start of northern winter. We're not intending to fly into China until the start of northern summer. The markets that have performed particularly well for us are the U.S. and the U.K. What is also very pleasing is the new markets we've entered into have gone really, really well. Delhi has performed very well. We start operating into Bangalore next month. Our Rome service that we ran over the northern summer period was very, very popular. We will be bringing that back next year. We start operating Perth to Joburg and Perth to Jakarta. Both those markets are going well. We start operating into Incheon at the end of the year, and we're very, very encouraged with the booking levels we're seeing on that market. Of course, this morning we announced Auckland JFK, which we are very, very positive about. The demand out of this market for New York, the demand out of the New Zealand market for New York, direct services we think will be very, very strong. As Alan was saying earlier this morning, a lot of Americans coming to this part of the world are dual destination, so they intend to visit both New Zealand and Australia. We think that's gonna be a great service. We feel we're in a strong position internationally. We're seeing growth, and we're responding to that growth. Where border restrictions are still in place, we're managing our capacity very carefully in line with the demand. Thanks, Andrew. Next question. Thank you. Your next question comes from Anthony Moulder from Jefferies Australia. You get a second question, Anthony. I thought it was only one each. No, no. That's some other person called Anthony, so this is- Oh. Very strong loyalty results in H2 of 2022, which I expected was supported by market share gains in both corporate and SMEs. It sounds like SME share at mid-50s% and corporate at low 80s% would suggest there still remains a lot of further upside to market share gains. Are you expecting to see further market share gains through 2023 into 2024 in both of those segments, in particular for the benefit of flying and loyalty? Yeah. I might get Andrew David to do this one as well. Did you hear the question? Yes, I did. Okay. Do you wanna go for it? I don't know what you were like at school, Anthony, but I knew if I got an A-minus, it was hard to get an A-plus. If you're at low 80s%, to gain much more share in the corporate market will be challenging. We do see further upside potential in the SME market. As we said, we're in the low 50s%. With the network we now have in place, with the investments we're making in our systems, with the investments that have been made in our loyalty program, in our Qantas Business Rewards program, we have seen great response to that. I mean, the stronger our loyalty program gets, the more the offer strengthens for the SME market and indeed the corporate market, but particularly for SME market. We do see growth opportunities in the SME market. As I said with corporate, there is a ceiling on this. We're very strongly positioned with resource, with government, and with the construction markets. Those markets are coming back to pre-COVID levels very, very quickly. Indeed, with the resource market, never went away, it's just grown. We've grown our share of the charter market. That is treated separate from what we report in terms of RPT. I think that's the overall position. Opportunity certainly in the SME market. Thanks, Anthony. We've got one last question online. Last question. Thank you. Your final question comes from Samuel Seow from Citi. Well, morning, all. Glad to see you profitable again. It's just a simple one for me, hoping to get some more clarity about the commentary this morning about recovering all your costs through price. I mean, if domestic is at 100% capacity in FY 2023, should we be expecting 100% profitability, if not more, given the cost out? I get, you know, taking price and market share go hand in hand. Just wondering how you're tracking on your 70% guidance, or is that not relevant anymore, Judy? I missed the last part. I'll do the second one about the 70%. Okay, you're right. Sam, look, I think that absolutely domestic capacity being back at 70% with the assumption that we're covering. 100%? Oh, sorry. What did I say? 70. 70. Sorry. I'm getting tired I think. That's what I like. Back at 100% for the year. With the assumption that, yes, you can interpret that versus FY 2019, if we are covering the cost of fuel at 10% versus RASK in 2019, that we are returning to a profitability run rate that is comparable. You need to though pay regard to the transitory costs that we've outlined, plus also that we're very confident that we're gonna hit our billion-dollar cost program in 2023. We feel very confident that the domestic businesses are returning to strong profitability. And with the backdrop of the demand outlook and that intent to travel that Andrew talked about, we're very optimistic about the outlook for domestic and international. On the 70%, when we look at the market research, nothing's changed on that. The preference for Qantas and Jetstar gives us a natural market share of 70%. In the current environment, our biggest focus is to get reliability back to the schedule, and that's what we're doing, and to recover oil prices and to recover the cost that COVID is actually generating for the business. The market share will be what the market share is 'cause our priority is to do that. We are deliberately making sure that we have enough crew in reserve, enough aircraft in reserve to cope with COVID. That means that would be aircraft that you would have used to get your natural market share that we're using to get this reliability and the customer satisfaction up. That'll be our intent until we can see what happens with COVID, and hopefully we see the back of it. We've been sitting here for two years thinking it's all over, and it gives us surprises. We're gonna be cautious with this for a while until we know exactly what's gonna happen. At the end of the day, we think our natural share is around the 70% mark, but in the current environment, we have higher priorities. Thank you, everybody. Thank you. It's been fantastic. Thank you for all the questions. Thanks for the audience. You all paid attention. I've got questions later. Thank you.