Qantas Airways Stock

Good morning, and welcome to the FY '26 Annual Results Investor and Analyst Call. My name is Filip Kidon, Group Head of Investor Relations at Qantas. I'd like to now hand over to Vanessa Hudson, our CEO, to take you through the results pack and introduce our group leadership team. Thanks, Vanessa.

Thank you, Fill, and good morning to everyone. Thanks for joining us here today on our Group full year '26 analyst briefing. I'm joined by Rob Marcolina, our Chief Financial Officer, who will help me in presenting our results here in Sydney, but we are also joined today by the group leadership team as well. Today's briefing is going to be in audio format only. And Rob and I will take you through several of the key slides from the materials that we lodged earlier today. And also Cam Wallace, who's the CEO of Qantas International, will take you through a separate update on Qantas International, and then we are looking forward to opening up to questions.

So we'll start on Slide 4, if you can turn to that. This has been another year of great progress across all of our metrics while responding to what has been a materially higher fuel cost environment in quarter 4. In the backdrop of the Middle East conflict, we came through it with a strong result, which is what allows us to continue to invest in our fleet and deliver more for our customers, people and for shareholders.

The key takeaway from FY '26 is that our strategy continues to work. We delivered our highest customer satisfaction in a decade, world-leading operational performance and demonstrated the strength of our integrated portfolio and dual brand strategy in changing market conditions. So in summary, underlying profit before tax for the full year was $2.064 billion, down $330 million on last year, but that includes $420 million of net impact from the Middle East in quarter 4. Underlying earnings per share were $0.96, down 13% on last year, and cash flow was strong at $3.9 billion. We are also delighted today to announce that the Board has approved a final dividend of $300 million. This is in addition to the $300 million interim base dividend that was announced in February.

But the $150 million on-market share buyback announced in the first half has been paused and will not proceed. And this does reflect our ongoing commitment to prioritize investment in the business while maintaining a sustainable base dividend. This year was defined by 2 very different operating environments. The first half and through to the end of February, Qantas and Jetstar were both performing strongly with demand growing across all customer segments on both domestic and international networks.

The final 4 months of the year saw the impact of the Middle East flow through to higher fuel prices for the industry and impacted local business and consumer confidence. Prior to the Middle East, the group was on track to deliver earnings growth for the year. And the 4 key factors that supported this and continues to support this. First was continued strong demand for travel across domestic and international markets, particularly from leisure and premium travelers. Second, the benefits of new fleet. New aircraft continue to improve our customer experience and our experience for our people and support stronger financial returns through lower operating costs and greater flexibility and network growth. Third, disciplined cost focus, driving transformation through both cost and revenue initiatives to offset CPI. And finally, and probably most importantly, the benefit of our integrated portfolio.

The diversity of the group allowed us to respond to evolving market conditions with our dual brand strategy and flexible fleet, allowing us to redeploy assets to match capacity with demand. And Qantas Loyalty continued to grow strongly and also did freight, which provided a valuable diversifier in the year. The renewal of the Qantas Group fleet is continuing. Jetstar has now almost 50% of narrow-body capacity in the new fleet. The renewal of the Qantas domestic fleet is also well underway. Qantas International has started its fleet transition, and our first Project Sunrise A350-1000 ULR will arrive in April and 4 new 787-900s are on the horizon.

Over this year, we invested $4 billion across the group and 29 aircraft joined the fleet. More than half of the new aircraft -- more than half were new aircraft, including 6 A321 XLRs for Qantas, 5 A220s for Qantas Link, 5 A321 LRs and 1 A320neo for Jetstar. This investment is a key driver of future earnings through improved fuel efficiency, lower maintenance cost, higher customer satisfaction and additional network opportunities. Jetstar's new fleet has now reached scale, and it is delivering benefits. This gives us the confidence in the benefits that will flow once the Qantas fleet renewal reaches scale.

As part of that renewal this morning, we announced that the A380 will start to retire from mid-2028. I want to recognize the importance that the A380 aircraft has played and continues to play for our people and our customers. And I will pass to Cam in a minute to speak more about this part of the Qantas International update. If we turn to Slide 6, starting with our people. None of this would have been possible without the dedication and the professionalism of all of our team members across the group. Our people have played a critical role in delivering continued improvement in operational performance and customer satisfaction and employee engagement increased again during the year.

We invested over $100 million in new training facilities this year, including A350, A220 and A320 flight simulators and a new state-of-the-art emergency training center in Sydney and Perth, where more than 10,000 Qantas and Jesttop pilots and cabin crew will be trained every year. Under our employee share program, eligible employees will receive another $1,000 in Qantas shares later this year. We always will remain focused on customers, and it is very pleasing to see that this has been reflected in our operational and reputation scores. Customer satisfaction reached its highest level in a decade.

Net Promoter Score lifted by 7 points for Qantas Domestic and also 5 points for Qantas International. Jetstar domestic NPS remained stable and Jetstar International NPS increased 6 points compared to the prior year. Operational performance continued to improve, including Qantas, achieving 85% on-time departures in June, making it the best-performing major global airline for that month. Our customers have more to look forward to over the next 12 months with up to 31 new aircraft deliveries, including our first Project Sunrise aircraft. significant cabin refresh programs on our Qantas A330s and Jetstar 787s, opening of the Qantas Sydney International Business Class Lounge and rollout of WiFi across the international fleet and progressive rollout and expanded Qantas frequent fly benefits, including Jetstar upgrades, status credit rollover and enhanced reward seat access.

Finally, on sustainability, we remain focused on our long-term targets and have made further progress this year. In FY '26, our SAF procurement increased to 1.1% of total fuel. And we have also committed $30 million towards carbon removal projects, working with our partners to target native species planting. Today, we are also releasing our next sustainability report, which, for the first time, encompasses climate reporting, providing more detail on climate impact analysis and transition plan.

I'd like to pause on Slide 7 to briefly reflect on the ongoing conflict in the Middle East. The group continues to actively manage the impact of higher fuel prices. In response, we took decisive actions, both adjusting fares and capacity. We also redeployed aircraft across our network to support customers and captured demand to Europe as Middle Eastern hubs effectively closed. These actions, along with other mitigations, limited the net impact on earnings to $420 million for the period. Heading into FY '27, we have also increased our liquidity to secure much of our funding task for the coming year. Shocks like this are not new to aviation, and it's why we prioritize our balance sheet strength. The group will continue to monitor developments and to adapt to conditions as needed.

Turning to Slide 17. The strength of today's result reflects the deeply integrated value across the group. I'll now provide an overview of business performance, and the CEOs of each segment will also give their perspective during the Q&A. Group Domestic delivered a strong EBIT result of $1.44 billion with an EBIT margin of 13%. Overall, domestic brand demand remained resilient with strong leisure travel across both Qantas and Jetstar as customers continue to prioritize travel spending.

Resource sector travel was supported by ongoing investment in Western Australia despite some impact to demand from mine closures in Queensland. SME performance remains solid, underpinned by the need for face-to-face engagement. Larger corporates and government customers heightened their focus on cost management amid ongoing economic uncertainty. Qantas Domestic delivered a strong result prior to the Middle East conflict with the last quarter impacted by higher fuel price and impact on corporate demand. As fuel prices rose during the final 4 months of the year, Qantas Domestic acted quickly through a combination of pricing, capacity and network adjustments, helping to drive a 5% increase in unit revenue.

Jetstar Domestic delivered another outstanding performance with revenue growing by 11% on 4% capacity. Demand remained particularly resilient in the fourth quarter as value-conscious customers continue to seek affordable travel options closer to home. Group International delivered capacity growth across the year. Pre-conflict, international demand was strong and broad-based, supported by new Jetstar fleet deliveries, the return of the final A380 and ongoing premium cabin demand. As conflict began, both Qantas and Jetstar responded quickly to the circumstances. Qantas optimized the network, redeployed capacity from domestic to international to capture displaced demand to Europe while managing capacity in response to high fuel prices. Combined seat factors on Qantas London, Paris and Rome connections grew to over 90% during the period. This enabled Qantas International to deliver a $371 million EBIT with revenue growing by 8% on 7% capacity for the year.

Similar to Qantas, Jetstar made fare and capacity adjustments to optimize earnings and also attract displaced demand as other airlines reduced capacity to leisure markets. As a result, Jetstar Australia International business performed strongly for the year with an EBIT of $279 million and an operating margin of 11%. Both Qantas and Jetstar continue to see strong demand internationally. Now to Qantas Loyalty.

Loyalty continues to demonstrate the value of resilience of the group's integrated portfolio. It delivered 12% EBIT growth to $625 million while continuing to expand engagement across retail, financial services and SMEs with 1 in 4 Australian SMEs within the Qantas Business Rewards membership base. The program delivered record rewards seat booking, increased member engagement and continued growth in both points earned and points redeemed, both increasing at 9%. Now I'll hand to Rob.

Thanks, Vanessa. So we'll now turn to Slide 10 for a more detailed look at our financial metrics. Underlying profit before tax for the full year was $2.064 billion, down $330 million versus FY '25, and this included the net $420 million impact from the Middle East conflict.

Statutory profit after tax was $1.289 billion, down $360 million versus FY '25. Statutory profit included the impact of Jetstar Asia closure costs and legal provisions and related costs relating to Qantas' class action settlement. Underlying earnings per share was $0.96, and the group's operating margin was 9.2%.

For the full year, operating cash flow was strong at $3.9 billion. Net debt ended the year at $6.2 billion at the middle of our FY '26 target net debt range of $5.5 billion to $6.9 billion, in line with our guidance provided in April. Net capital expenditure was $4 billion, again, in line with guidance provided in April. There were $700 million of dividends returned to shareholders. Our total unit revenue or TRASK increased by 3.6% and total unit cost ex fuel or TCAS increased by 4.1%. This was driven by several factors, which I'll explain as part of the group profit bridge.

So moving to Slide 11, the group profit bridge. On this slide, I'll walk through the key drivers in our underlying profit from FY '25 to FY '26. For the full year, group capacity increased 3.4% with new fleet deliveries and the return of the final A380 contributing $143 million in earnings. The increase in fuel costs in FY '26 was $492 million, which included $26 million of additional gross carbon costs and was predominantly as a result of the Middle East conflict. Group RAS grew by 5% with group domestic at 4% and Group International at 5%.

In the second half, RAS grew by 5% and 7%, respectively, at or better than guidance we provided in April 2026. Our transformation program for FY '26 was above prior guidance, delivering $455 million for the full year, more than offsetting CPI with a mixture of cost and revenue initiatives. For FY '26, depreciation and amortization increased $236 million, reflecting the acceleration of our investment in fleet. The ramp-up in fleet renewals saw the business incur fleet-related EIS entry into service costs, while a net increase in industry costs was $95 million.

Turning to Slide 26. Our long-standing financial framework is core to our strategy. It's designed to structurally maintain financial strength, including low leverage, strong liquidity and an investment-grade credit rating. It also guides capital allocation, including opportunities for capital recycling to maximize group value through the cycle.

As Vanessa mentioned earlier, our balance sheet strength has allowed us to navigate the current conditions, maintaining investment in fleet and base dividends for shareholders. Capital expenditure, as I mentioned, for FY '26 was $4 billion, in line with guidance provided in April. We are also today providing an update guidance for FY '27 for CapEx, which is now expected to be $4.3 billion to $4.6 billion.

On shareholder distributions, we are committed to a base dividend that is sustainable through the cycle. And again, as Vanessa mentioned, we are delighted to share that the Board has approved a final FY '26 shareholder distribution, a fully franked base dividend of $300 million or $0.198 per share. This takes the total FY '26 base dividend to $600 million, $0.396 per share fully franked. As evidenced by the decision to divest our stake in Jetstar Japan, we remain focused on ensuring optimal capital allocation across the group. I'll now hand back to Vanessa.

Thanks, Rob. We are on Slide 29, the outlook for the first half of FY '27. Travel intentions remain resilient and customers continue to prioritize travel spending. Ongoing conflict in the Middle East continues to influence the economic environment through higher jet fuel prices and industry capacity settings. Internationally, demand for both brands remain strong.

Domestically, we see trends stabilizing and consistent with what we saw in quarter 4 of 2026. Ongoing forward, we will be moving to TRAS. So this is total revenue over ASK guidance for our airline segment, which includes ancillary revenue streams, and we hope will simplify guidance for the market. We expect group total unit revenue or TRAS to increase for both the group domestic and group international businesses, also equally in the range of 8% to 10% over the same period. TRAS guidance is inclusive of the impact of capacity from tables provided on Slide 30.

And given the ongoing impact of the Middle East, TRAF guidance is aligned with the outlook provided on fuel. Fuel cost for the first half '27 is approximately $3.6 billion, referencing a market jet fuel price of AUD 197 a barrel. The group remains highly hedged in Brent at 85% for the first half and maintain significant levels of participation should fuel price revert lower.

For the Qantas Loyalty underlying EBIT is expected to grow between 5% to 7% for the full year of '27 and will remain on track to our target of $800 million to $1 billion for FY '30 in underlying EBIT. Our outlook slides provide further detail on specific line items, including fuel, depreciation and transformation on Slide 29. We also have our latest capacity guidance on Slide 30 for investor materials. I'll now pass to Cam to provide a short update on Qantas International and its fleet strategy.

Thank you, Vanessa. Thanks, Rob, and good morning, everyone. Today, I want to take you through an update on Qantas International, why we think this is an inflection point for the business and for our future financial performance. Qantas International is going through an important fleet transformation. We started this in 2017 with our first 787, launching ultra-long-haul routes like Perth to London, Perth to Rome and Perth to Paris as well as Auckland to New York. The 787s deliver the highest customer satisfaction and the highest margin on our international network.

What you'll hear today is the next phase of the fleet strategy and our pathway for Qantas International to reach 10% EBIT margin by financial year '31. I'll take you through a small number of the select slides in the Qantas International investor presentation. So if we move to Slide 5, and let's talk about the fleet. Our future fleet is critical to delivering a sustainable uplift in both quantity and importantly, quality of earnings. And this is driven by 3 key factors.

Firstly, flexibility. The new fleet means more network options, diversifying our revenue and covering more routes direct, the way our customers want to fly. Two, premiumization. Part of the fleet and network strategy is making sure we're driving growth in the cabins in which our customers want to travel. That means the new fleet has higher premium cabin density, growing the cabin mix of premium from 19% of our flying today to just under 30% by the financial year '31. And three, cost and operational efficiency. This is what we get from new generation technology, simplification of our fleet and the opportunities for future transformation, which is enabled by the fleet.

Increasingly, our narrow-body fleet of 220s and XLRs will play a role flying into the Tasman, the Pacific and Asia and ensuring that capacity is matched to demand whilst also optimizing frequencies. The 220 already flies between Brisbane and Wellington. -- and the XLR will fly early 2027 from Brisbane to Manila. The new wide-body fleet includes Project Sunrise A350 aircraft and the 350 standard variant, which will fly to some of our longest sectors in Europe and the U.S.A. The 787-10s will join the 787 fleet and fly slightly closer to home.

By financial year '31, 70% of our capacity will be on next-generation aircraft. All of these aircraft will deliver a step-up in customer experience compared to what you see and what you experience today. We'll also bring LeLat to Qantas single-aisle aircraft for the first time with a new business suite for our XLL fleet. The new wide-body aircraft will start arriving first with Project Sunrise from April 2027 and the next 787 in financial year '28. We will also start to see the progressive retirement of our 737s and A330s.

And as Vanessa mentioned, today, we announced our A380s will start to exit from the mid-2028. So talking about the A380, let's turn to Slide 8. The Airbus A380 is our flagship. It's much loved by customers and our people, and it's played a critical role in our fleet ever since the first delivery way back in 2008. Over the last 6 months, it's allowed us to optimize the network and fleet to capture demand arising from the Middle East conflict.

Now I know some of you may ask, given how loved this aircraft is, why retire it and why retire it now? Well, there are 3 key reasons why. One, we are constantly looking for ways to optimize how and where we deploy our capital. The A380 retirement unlocks approximately $300 million of net cash flow benefit from FY '28 to '31, primarily through lower capitalized maintenance costs. This capital can be more efficiently deployed to new aircraft and deliver sustainable earnings uplift. That's a big deal for how we sequence this transition. Two, it's an aircraft which has been out of production since 2021. We already have supply chain challenges today, and we know there's likely to be supply constraints into the future. This creates operational complexity and thus higher operating and maintenance costs. And three, with the first Sunrise aircraft now on the horizon, this gives us greater confidence in the delivery schedule of our future fleet.

As the A380 transitions to newer tech like the A350s, this will deliver value to Qantas International. And there's 2 stats that bring this to life. The A350 standard variant has a higher premium density at more than 40% compared to 30% on the A380. And on city pairs like Sydney to Dallas, switching to an A350 delivered an estimated 12% increase in contribution margin.

Moving to Slide 9. We've talked a lot about the A380s, but it's the A330s that actually make up more than half of our wide-body fleet. The Qantas A330s only have premium density of around 10%. It doesn't have a premium economy cabin, which we know our customers want, and the economy cabin is bigger than it needs to be on some of our thinner international routes.

The 330 flies a mix of international routes, and now we've got the chance to move on to 2 new aircraft types that will better match demand and optimize costs. An example is Brisbane to L.A., which is a long-haul city pair. Switching from a 330 to a 787 lifted contribution margin on that market by 20 percentage points. Higher premium density is a big part of that, especially on longer routes where we know the demand is there. We also know customers prefer the 787. OTP lifted and NPS doubled on that city pair.

Now it's a different strategy on shorter city pairs like Perth to Singapore. Here, the challenge with the 330 is the high seat count. Put simply, we're flying more seats that we can fill at the right price. This route can soon be served with a narrow-body like XLR, which best matches capacity to demand whilst also retaining frequency.

We expect to see a 10% increase in contribution margin. Higher unit revenue plays a part, but also key to switching to a narrow-body with this next-generation technology. This turns up in lower fuel unit costs and lower unit depreciation relative to the 330.

If I move to Slide 10, a slide I suspect you will be keen to see. This slide outlines our indicative earnings trajectory from financial year '27 to '31. Quantas International EBIT margin is expected to go from 4% in financial year '26 to 10% by financial year '31.

The earnings and margin trajectory is directly tied to the new fleet delivery, which unlocks premium cabin seat growth and delivers technology efficiencies. By financial year '31, Sunrise is expected to deliver the $400 million in earnings uplift that we've mentioned in previous results. Beyond financial year '31, we expect Qantas International earnings to grow and margins to reach between 10% to 12% as the fleet renewal continues. We know entry into service cost is necessary to unlock these benefits. That's expected and captured in the earnings trajectory shown here.

In financial year '28, '29, the EIS cost is approximately $150 million, but that will decline over time as the fleet reaches scale. And while this slide is focused on the medium to long term, it is important to acknowledge that in the short term, Qantas International will be impacted by elevated fuel price, as mentioned in the outlook earlier.

On to Slide 11, integrated value. Group integrated value is the glue that underpins the success of the Qantas Group. The investment in Qantas International generates value across the group in 3 key ways: one, international feeds domestic. Our international network proposition underpins the value we offer our domestic customers across the group. With Project Sunrise and the increasing direct markets, we believe we will further strengthen that proposition. Two, international and loyalty reinforce each other. Members want to redeem points on Qantas International and particularly on premium seats. We actively invest in the loyalty program by ensuring reward seats are available to our customers. And that's the flywheel. It drives the attractiveness of Qantas Frequent Flyer and Qantas Business Reward program, which in turn attracts quality coalition partners and drives value for loyalty.

And finally, freight. The investment in our future fleet means more freight capacity and unlocks earnings growth. Put it all together, and while Qantas International segment was 15% of the group's FY '26 underlying EBIT, it actually enabled 30% of that result. It's also enabling around 40% of the group revenue received in advance, which is critical to our working capital.

So to bring it all together, if we could move to Slide 12. Qantas International is undergoing its most important fleet renewal. The sustainable earnings uplift is based on 3 key things: flexibility, premiumization, efficiency. That's the thesis, and we're already seeing it playing out with our 787s. Project Sunrise is almost here and will deliver a $400 million uplift in earnings and working capital by FY '31 when that fleet reaches scale. This means Qantas International has a clear pathway to the 10% margin target by FY '31 and to 10% to 12% beyond that.

And that's before including the broader value delivered back to the group. I'd like to close by thanking our people around the globe for everything they do, taking Australians to where they want to travel and bringing them home safely again. And thank you to all of our customers for their continued loyalty and support.

I'm now going to hand back to Vanessa, who will head into the Q&A.

Thanks, Cam. We closed FY '26 and we have entered FY '27 from a position of strength. Customer satisfaction is at its highest level in a decade, and our domestic fleet renewal is well in progress. The first Sunrise aircraft arrived in April next year and broader international fleet renewal will begin soon. Our integrated portfolio provides resilience to respond to market conditions as they evolve. As a management team, we remain focused on delivering to our customers, our people and our shareholders. And I'd like to close by saying thank you also to all of our staff for making the results possible that we delivered here today. We now will open up to Q&A. And moderator, I will pass over to you.

Your first question comes from Anthony Moulder with Jefferies.

A lot of detail on the medium-term transformation for the group in this presentation, I appreciate. But can I just go back to domestic and specifically around that TRAS guidance for domestic 5% growth that we saw in fourth quarter '26, but that is now expected to step up to that 8% to 10% growth in first half '27. So I guess I wanted to understand as to whether or not you're expecting the fare increases that you've already pushed through will give you that growth across Qantas and Jetstar -- or are you needing further increases to cover that higher growth through first half '27, please?

Yes, great question. And I will pass to Steph and Markus in a minute to just kind of give you a flavor of what we're seeing, but also what our intakes are showing us. But as you would appreciate in quarter 4, when the higher fuel price impacted, we've actually sold quite a large amount of our revenue. And so therefore, sold those on tickets that obviously were inclusive of fare increases.

But across the business, we have taken active fare increases in terms of capacity, but also the fare increases across Jetstar and Qantas was not just in quarter 4, but actually many across the financial year. I think as we look forward, TRASK, we think, is a really important metric to move to because TRASK builds into not just fare increases and also obviously, average fares, but it includes increase in seat factor, it includes ancillary revenue, which we're driving very hard, but it also includes charter revenue, which is increasingly becoming a greater proportion of our revenue.

So we think TRASK as a metric going forward is going to be much more meaningful to investors. And just on the point of what we are going to continue to do, we're going to continue to drive and do what we need to do to respond to the market. And so we are not saying that everything that can be done has been done because we're going to continue to drive where we see demand, we're going to continue to push to maximize revenue and clearly, obviously maximize earnings. But the outlook that we've given you is the best indication that we see at the moment. And I might pass to Steph because J start seeing incredibly strong demand.

Yes. Thanks, Vanessa, and thanks, Anthony, for the question. I think we have a lot of confidence in the outlook from a leisure demand perspective. And I think there's a few proof points. Firstly, still in our research, we see that travel intention high and the prioritization of travel high. I think there genuinely has been a structural change in the desire for travel and experience in the last few years, and we're seeing that hold and in some ways, strengthen. We're now late August. And so we've had 2 months of intakes, and we're seeing for the financial year, we're seeing very strong intakes.

Jetstar had a record week last week, in fact, but very strong intakes across both domestic and international. And what you see in this first half, in particular, is a really strong events calendar. AFL finals configured the way that we like and very strong concerts, et cetera, this half. And I will say on just a managing yield perspective, we like to look at the way we manage prices always on. We've got sophisticated tools in our revenue management team, which means you don't just see blanket increases, you see multiple increases across different routes every week, and we will continue to manage that in a dynamic way to make sure we're getting the yield we need to look to mitigate the fuel.

And as Vanessa said, I think from a TRASK perspective, for Jetstar, that's particularly important as we look to keep innovating on ancillary revenue, our new priority carry-on bag is an example of that, which really changes the mix. So -- and seat factor is always a factor in TRASK as well, and we will keep driving high seat factors on Jetstar whilst maintaining the flexibility with capacity. So I think we've got very confident view of that outlook from a leisure demand perspective, which continues to be resilient and strong, I would say.

Yes, Markus?

Yes. I can just echo what Vanessa and Steph said in terms of the outlook and the confidence we have in the outlook for the first half. As Steph mentioned, we're almost 2 months in and what we're seeing is very much what Steph mentioned in terms of the strength of leisure demand, SME demand and how the events calendar fall into place for us in the first half. So yes, we have a high level of confidence in the numbers.

Next question is from Owen Birrell with RBC.

Just 2 questions from me. Just the first one around the CapEx guidance. I noticed a step down from what you were guiding in February. I'm just wondering whether that's a deferral or delay of deliveries or just a shifting of payment terms? Or is it associated with the A380 retirement? I just wanted to get the bottom of the CapEx reduction.

And then in terms of a second question, just referring to the loyalty business. Just wondering if you're starting to see -- or we're starting to see banks having to reconfigure the loyalty linked credit cards. Just wondering if you can give us some sense of what you think about the impact into '27, any measures you had to mitigate that?

I might take the first question just on the CapEx. So the $4.3 billion to $4.6 billion is essentially there's 4 reasons. So if you go back to February when we had the previous guidance, we were calling 4 Sunrise aircraft in FY '27, we've now got 3. So that's the first reason. We've also seen improvement in the foreign exchange. The Australian dollars got better, which is obviously good for CapEx. With less flying, we've got less capitalized maintenance that we're scheduling in FY '27.

And then also just going back to the point around recycling of capital, we've called out the Jetstar Japan and expectations at the end of June that those proceeds would also help with regards to the capital recycling. So they're probably the 4 main reasons with regards to CapEx guidance.

And I might just make a couple of comments on loyalty, then I'll pass to Andrew. The financial services approach to defining the customer value proposition on credit cards has been a focus for them given the change in the interchange rate. We're really pleased that all of our banking partners, we've reached in-principle agreement across all of our banking partners who remain important to the Qantas Group for all of them. I think as you note, there are differences in the decisions that those banks have made, and that's okay in that regard. But I think that the one thing that I would say is that we continue to see incredibly strong demand with our customers for points and also points on credit cards. And we are starting to see customers who are savvy and who are focused on understanding how that market is changing. We are seeing our customers change and move across different kind of card products. And so this will remain an incredibly important part of the loyalty program, but so are the other parts of our program because the team has been diversifying that over time.

Yes. Thanks very much, Vanessa, and thanks for the question, Owen. I think Vanessa has probably covered most of the points there, but I do think it's important to sort of acknowledge upfront. This was something that we were very much prepared for. And we've been building these relationships over the last 30 years with our financial services partners. And going into these conversations, the conversations were essentially led through 3 overarching objectives. Number one, it was to ensure that we maintain that direct earn construct of which members can earn points today. Number two, and really important was to ensure that we preserve all of our financial services partnerships. And number three, it was about balance and importantly, balance for our members. I'm extremely pleased to say that we've achieved all 3 of those.

The direct earn construct remains all partnerships are preserved. But equally important or most important, I should say, is there's been a balanced outcome for our members overall. So clearly, each issuer has decided its own response through fees, rates, rewards and a combination of these. From a timing perspective, yes, we will see the greatest impact in the second half of '27, and that's why we've guided between the 5% to 7%. But most importantly, we remain committed to the 10% through to '28 and importantly, the $800 million to $1 billion.

Your next question is from Andre Fromyhr with UBS.

I just wanted to follow up on Cam's presentation on international, including the retirements of the A330s and A380s. So I guess you called out the capital benefits of no longer investing in the capitalized maintenance on those fleets. Curious if there is any potential proceeds from retiring those. But then more broadly, what does that time line of retirements mean for how international capacity growth will look over that medium term?

And by extension, how would you build the confidence with investors that the Sunrise EBIT estimate of $400 million is truly incremental rather than replacing income from the existing services on those aircraft?

Well, a couple of things, and then I'll pass to Cam. I think first and foremost, we have been absolutely focused on making sure through the lens that we always apply, which is the financial framework is that we are putting in place plans that not just kind of generate quality of earnings and improvement in earnings, but actually do that by minimizing the capital that we've got deployed across the business. And that is absolutely what you can take in terms of the objective and the intention that sits behind the plan that we put today.

We haven't yet defined the endpoint of the final retirement of the A380s because we also, as we said over time, want to maintain flexibility to operate through the next 5 years and making sure that we're responding appropriately to the competitive supply and also demand environment. And I think that, that remains really important, and that's something that we've committed to investors in the past, and we'll do that.

We've obviously outlined Project Sunrise. And if I come back to the A380 was always going to be retiring in our plan. We've just now brought forward the perspective and some confirmation of the commencement of the retirement date. But we remain really confident that the $400 million in uplift in Sunrise is contributing to this improvement in earnings performance over the next 5 years. But also, you can see in that presentation that, that will continue to run through earnings growth beyond that as the run rate and as the new fleet come in over time. But Cam...

Yes. I mean I think you've covered a lot of that. But in terms of the A380, I'll just expand on that a little bit. In terms of the capitalized maintenance savings, that's for things like engine overhauls, landing gear and heavy block checks that we can actively avoid.

Now the key part of making the determination today around the start of the retirement was to give clarity to customers, but also importantly, our people, certainly our pilots in terms of what aircraft they want to be trained on and whether we can generate some opportunities and some savings through that process, which we are confident we can. But at the back end of the program, we are giving ourselves some flexibility. So we'll be managing it actively and looking at the market conditions, looking at the growth and looking at the competitive activity. So we'll still maintain our ASKs capacity.

But importantly, through that transition, we'll be having a material step-up in the number of premium seats not just business class, but premium economy and on the new aircraft will have Yus as well. So what we're getting right as we retire the A380 is the right platform for us. We were based geographically in the markets we serve, which is more and more going to be nonstop direct point-to-point markets, but also the right premium density and importantly, for us in an environment like the right cost vehicle. So yes, we have got flexibility at the back end of the program, but we thought it was important to announce today.

Your next question comes from Matt Ryan with Barrenjoey.

I had a question about the fuel recapture and your guidance. So I guess at a high level, in fact, I think you've actually talked about TRASK sort of being aligned to the fuel outlook and you don't have any capacity growth per your guidance either. So just interested in your ability to push RASK any further. So I think 9% is clearly a huge number.

And if you can get there, that's very high on historical standards. But are you sort of pitching that number to recapture the fuel because that's about the limit that you think you can get to because the consumer environment or what have you? Or is there an ability to go any higher to actually provide growth ahead of the deal?

So Matt, I might take that. Just in terms of the recapture, obviously, Vanessa talked earlier around the time period in the fourth quarter that we'd already presold a number of the tickets. And so with greater time, it gives an opportunity to get more of that increased price and so therefore, be able to capture more of the price increase. So as you saw in the fourth quarter, it was around 30%. So we would expect to be able to capture more of that. I think your point on the TRAF, again, going back to the components of TRAS. So it obviously includes price.

But as Stephan and Markus have also said, it also includes load factors, which we're going to be pushing hard on and also ancillary. So whether it's through the baggage product, whether it's through Economy Plus that we've now got in a greater part of the Qantas Domestic network. So there are a lot of ways that we can help to recapture the price. Your point on elasticity is well founded, though. We are very focused on that, very aware of it. I think what Steph said earlier in terms of the intakes indicate that there's very strong and continued demand from a leisure and a number of the other segments. And so we are very conscious of the elasticity, and we continue to monitor that on a weekly basis.

Your next question comes from Jakob Cakarnis with Jarden Australia.

Rob, if I could just pitch one to you, please, Slide 26 and 27. I mean the message seemingly is that there's a CapEx reduction in '27. The buybacks probably prudently be put to the side. And you're telling us that gearing is going to be top end of the target range. I guess wrapping that all together with Cam's presentation, how do we think about the suitability of the capital framework moving forward? I mean it's been a couple of years since you've been at that 10% ROIC level that that's set on. Can you just help us, firstly, are we seeing prudence today given the outlook? Presumably, there's some flex in non-fleet CapEx. And then yes, just the viability of that capital framework as we move to fleet changes for international, please?

Yes. Thanks for the question, Jake. And I would say the financial framework is a bedrock of the way that we run the business. As you've indicated, the financial framework is conservative in nature because it assumes a 10% ROIC. And so our confidence level in moving to the upper end of the net debt range, which we flagged in this presentation, why are we doing it? Well, we're doing it because we're investing in aircraft, and we continue to see the benefit from doing that and up to 31 aircraft.

But why are we confident moving to the upper end of the net debt range is because it is a conservative range. It is based on the 10%. But I think also the liquidity that we've got in the business, over $13 billion now gives us continued confidence in the setting of the business. And also, we're a long way from the threshold with an investment-grade rating.

The other thing I'd say, though, is that we also made reference to the net debt range that in FY '28, we're not giving any specifics, but it's our intention to come back towards the middle in FY '28. So we're very confident that what Cam laid out and the fleet investments that we've also given you for FY '28, which obviously will require an increase in CapEx, we feel quite comfortable with that given the conservative nature of how the financial framework is set up.

Your next question comes from Lee Power with JPMorgan.

Just on costs ex fuel, is it possible to give us an idea of how you see them tracking? I obviously transformation benefits, but it'd just be interesting to see how the different buckets are looking? And then any comment, I think in the annual wage review, there was some call out of flight attendant wages. So anything that's changed around that would be useful.

Yes. Look, I think that a broad comment on costs ex fuel is that we have seen and we have provided in the investor presentation a bridge that kind of helps you step through on a gross basis of what are the drivers of cost. And that is inclusive of wage growth. We have seen many industry costs grow ahead of CPI, including airports and particularly also security and also government charges as well. And so that table that we've provided shows approximately a 4% growth in underlying costs, excluding fuel.

But as we've said in the past, our focus is on making sure that we continue to drive transformation across the group, both revenue and also cost to offset the impact of CPI on our business. And that is inclusive of wage escalation as we move through new EBAs and as we close EBAs as well. And that's going to be our commitment going forward. Increasingly, that transformation is going to be unlocked through automation, digitization, use of AI.

And we look forward to talking to you more about what those use cases are over time because we are seeing incredible value being unlocked across the business, not just in terms of productivity and driving efficiency, but unlocking better customer outcomes and also better outcomes that drive improved operational performance. So we see that this is an incredibly important part of our forward view. And it's a commitment that, as you can see in our outlook statement that we maintain. Next question...

Your next question comes from Cameron McDonald with E&P.

Can I get some breakdown of what you're seeing in international, in particular and even into the fourth quarter of last year around -- you made some sort of very quick comments around Europe, but the split between the European contribution, the capacity that went into that market to offset the Middle Eastern carriers, the fare increases and then correspond that to what you're seeing in the U.S., noting that Flight Centre in particular, yesterday actually called out that the U.S. was "booming." -- so interested in seeing what you're seeing in that space.

Yes. I'll make a few comments, and I'll pass to Cam. We have seen in the fourth quarter really significant growth in demand to Europe. And we saw our RASK respond accordingly and also driven by a much improved seat factor. And so the capacity -- we maximized the capacity or the additional capacity that we could get into Europe, and that's been both in terms of redeploying aircraft across our network, but also driving utilization. And so we believe we've positioned Qantas International as best we can for that. But Cam will give you a bit of an overview across all of the different markets because we've seen strong performance across other markets than just Europe as well.

Yes. I mean if I look to how we have leveraged the network, and it's not just the international network, it's actually the power of the group taking some equipment from domestic and redeploying it in international and then moving our 78 fleet into parts of the network where we could extract value and minimize some of the cost impact. That's been really successful for the U.K., for Paris, for Rome. But also in the short term, the U.S.A., we actually developed some connecting traffic after the war started through the U.S.A. where there really was demand looking for ways and means to get to their final destination.

And then importantly for us, actually Africa, which we serve with A330 from Perth and A380 from Sydney is emerging as another connecting way to get to the U.K. and Europe. In terms of the U.S.A., that's a market that we deployed the A380 on. So that was a 14% step-up in ASKs. And that has rebounded. So we're about flat on our RASK at the moment. So we're seeing strong both outbound demand from Australia to the U.S.A. as well as a strong response for in the U.S.A. for getting people to Australia. So I would agree with the analysis from SplightCentre that, that is a market that has rebounded, and we have the capacity available to absorb that demand. So we're very happy with the way has gone in the last 6 months.

Your next question comes from Samuel Seow with Citi.

Just a question on domestic RASK. I guess we can see the divergence in seat factors across the brands. expect -- so as we think about first half '27, are we expecting that domestic RASK to be even across the 2 or more weighted to one versus the other? And if refining margins do come down, should we be expecting RASK to follow? Or how we should think about any margin or catch-up you might be targeting?

Well, obviously, we haven't given a breakdown of the RAS. We've given you a TRASK for the domestic flying segment. And just to reiterate that Marcus and Cam, in terms of what we're seeing in the intakes across the 2 business gives us the confidence that, that outlook statement is on track.

And I think that, that's really important. In terms of just the broader question that you asked around normalization of fuel, I believe that some of our RASK performance will become structural.

And it kind of -- it needs to in some regard because -- we're seeing a certain amount of escalation in costs in other categories, industry costs, airport costs, government cost. And that is a cost that's borne by all operators. And so we would not expect that RASK would normalize in line with fuel. And that would be the same for the international businesses as well. Markus, do you have anything else to add to that?

No.

Your next question comes from Justin Barratt with CLSA.

I think my question today is for Steph. I guess from what I can see, again, a really strong revenue performance from Jetstar, but the really positive EBIT result, I think, comes equally from the benefits to your cost base. So I was just wondering, Steph, if you could talk to the relative advantages that you believe that you have in your cost base, what the key drivers are of that? I mean I appreciate a lot of it may come from the fleet renewal program, but if there's anything else there that we should be aware of, I guess?

Yes. Thanks, Justin, for the question. I think there's a few things that are worth probably pointing out. First and foremost, the biggest contributor is the fleet, and that's not just the efficiency of the fleet, but also the growth it's enabled for Jetstar. I think secondly, just to Vanessa's earlier narrative on transformation, absolutely for Jetstar, we're always going to be laser-focused on transformation, both cost and revenue, and we're seeing some really great outcomes there across the different parts of the business.

And I think the other thing for Jetstar that's really important is just operational stability because a good operation is the lowest cost operation, and we're really focused on cancellations and seeing good results there. The other thing I would say for Jetstar, it's worth noting we've made tough decisions. We sold an airline and we closed an airline in this reporting result, and they will have positive outcomes given their financial performance for Jetstar's result going forward. So I think there's lots of momentum to continue that trajectory.

The next question comes from Ian Myles with Macquarie Research.

Just following up on that, you've got the fleet renewals or new planes coming in. It's curious to see Jetstar is the outperformer yet it doesn't actually have any more planes arriving post the fall this year. Just sort of what your thought process on that? And the follow-up to that is, what's the latent sort of capacity in the fleet given higher fuel prices you're optimizing. If things go back, how much can you sort of surge the fleet without actually needing more planes?

So just the question on the mix of allocation of capital to the Jetstar refleet versus Qantas Domestic. I mean, clearly, the decisions that we have made to prioritize the capital into commencing and accelerating the Jetstar fleet to almost 50% new fleet has been a fundamental part of our strategy to make sure that Jetstar is fighting fit, but also enabling Jetstar to grow and expand into new markets. And the one thing that I think is important to recognize is that Jetstar were not changing the fleet type. It was remaining with just the next fleet variant of the A320 and the A321.

And so Jetstar has been able to demonstrate without the entry into service costs, the fast ramp-up and improvement of earnings that have come from that. And that's both in terms of driving transformation fuel efficiency, but most important, utilization and opening new markets. Again, not just driving improvement in profit, but actually bringing lower fares and affordable fares to customers. And we're going to continue to be focused on that. But we also have to make sure that we get the balance right across the renewal of the group.

And so commencing the narrow-body replacement for the Qantas fleet is important. And so a large amount of allocated capital in the next 12 months will be to get the Qantas XLR and 220 to scale. That's really, really important for Qantas Domestic because as Qantas is moving from a 737 fleet to the Airbus fleet, we need to do that as quickly as possible. And this is always through the lens of the financial framework. And that is, again, the commitment that we have to the market is that we get that balance right.

We focus on making sure that the fleet renewal is balanced across the different brands. but also driving towards that earnings uplift and that scale really quickly. Now I've forgotten the part of the question.

No, I'll answer the second part of the question. So I think your words, Ian, were sort of surge in ASKs. I think what I wanted to just point out here again is just to reiterate the benefits of owning our own fleet. So owning 85% of our fleet allows us, and Ken mentioned it earlier, but allows us the flexibility to not be beholden to lease rates and lease returns. And so whilst we do have a retirement plan and with the aircraft, I think the flexibility we have to stare into that retirement plan is an advantage that we have versus many other airlines.

Your next question comes from Joseph Michael with Morgan Stanley.

I just had a question on Project Fish and more specifically the returns. So I guess the A330 fleet renewal case studies you've given us today show a pretty meaningful contribution margin improvement. So my question is, how should we think about Project Fish returns compared to the broader group and Project Sunrise?

Well, I might just take it at the group level. And obviously, each of the individual fleet programs that we put in place have a return that's above the cost of capital. But I think more holistically, and Ken mentioned this before, is we operate the group as an integrated value. And so with the investment that we're seeing in Qantas International, whether it's Sunrise, whether it's Project Fit is being monetized, not just directly in Qantas International, but also across Qantas Domestic and Qantas Loyalty.

And so we have a return on investment for this financial year of 32%. That is coming down as the invested capital increases. But as we said before, we expect to normalize, if you like, at a number that's higher than pre-COVID levels. So we're really happy with the returns, and we just want to get those aircraft here as soon as we can.

Your next question comes from Nathan Gee with Bank of America.

Maybe just a question on corporate demand. So can I dig just a little bit more into that weakness you're seeing in corporate and government and any signs of improvement in the forward book?

Well, I think -- thank you for the question. What we did see in quarter 4 and probably not unexpected that the trickle-down effect of the higher energy prices, moves in interest rates has actually impacted business confidence and what we saw in quarter 4, that there were some noncorporate and also government just actually reduced some travel demand or travel spend in reaction to that. But we have not seen that deteriorate. In actual fact, we've seen that stabilize. And that is actually what we are planning on for at least the first half, and that has been incorporated into the capacity settings that we've provided guidance on because that's a really important part of the levers that we have to manage in an environment where fuel is higher in the first half, but also based on the demand outlook.

But I think really importantly, to come back to that's a subset of the corporate market. It shouldn't be taken as an indicator of the whole market. And we are seeing really strong ongoing demand in the corporate market and the mining market in Western Australia, and that is continuing to grow. And we are also seeing the SME market continuing to remain really resilient.

And when we talk to SMEs, what we hear from them is how important face-to-face interactions are with suppliers or customers or their people. And so therefore, we continue to believe be really optimistic around that part of the business purpose travel market.

Your next question comes from Niraj Shah with Goldman Sachs.

One for Steph perhaps. What percentage of Jetstar revenues would be sort of Ansell at this point in time? What could or should that get to? Now that we've kind of rolled into a TRASK measure, I'm just trying to get a sense of what that should contribute over time.

Thanks for the question. We haven't given that breakup before. And -- but what I will say is we -- over time, in our planning, we will see ancillary proportion become a greater component of the Jetstar revenue. It's already over $1 billion of our revenue, we've said before. But what we will see is what we're trying to do to make sure our lead-in fare stays as low as it can in an environment where we've got those escalating costs is to unbundle as much as possible. And that means we can keep that lead-in fare low for the majority of customers, but we have the opportunity to charge for anything extra.

And obviously, we've launched a product in the last few weeks that's got a bit of attention around baggage, but we've got many more to come, to be honest. So we've got a whole pipeline of ancillary initiatives. It's hard to compare across airlines, I would just warn because many airlines when they report results include frequent flyer in their ancillary revenue.

And that often leads to more inflated numbers than maybe what I'm saying. But I think for Jetstar, it will be an increasing part of the mix, and I know for Qantas as well.

Thank you, Stephan. And just calling whether there's any more questions. I'm seeing that there might not be any on hold, but just wait a minute and moderator, if there's any questions that come in.

There are no further questions at this time.

Okay. Fantastic. Well, thank you so much for your time this morning. We are really looking forward to coming out and having more conversations with you all next week. So thanks again.

Good morning, and welcome to the First Half Financial Year 2026 Investor and Analyst Results Briefing. My name is Filip Kidon. I'm the Group Head of Investor Relations at the Qantas Group. I'd like to now hand over to our Chief Executive Officer, Vanessa Hudson, to take you through the results.

Thank you, Filip, and good morning to everyone. Thanks for joining us today at the Qantas Group Half Year 2026 Investor and Analyst Briefing. I am joined by Rob Marcolina, our CFO, who will be assisting me in presenting the results today, but I'm also joined by our entire leadership team. Today's briefing will only be in audio format, and Rob and I will take you through a number of the key slides in our materials that we lodged today, but then we will open to questions.

We will start on Slide 4 of our presentation with our results highlight. This has been another half year defined by execution. Our focus continues to be on delivering for our customers, our people and shareholders. By delivering these strong results for earnings, we can invest in the largest fleet renewal in our history. In summary, our underlying profit before tax for the half was up $71 million on last year. Our earnings per share at $0.68 was up 7%. Operating cash flow was strong at $1.8 billion, and we are delighted to announce that the Board has also improved an interim shareholder distribution of up to $450 million.

This includes a fully franked base dividend of $300 million, an increase of $50 million and an on-market share buyback of up to $150 million. Our performance is driven by 3 factors: one, the strong demand for travel across Australia and internationally; two, the reinforcing strength of our integrated portfolio, which includes our premium and low fares airlines alongside a world-leading loyalty program; and three, the emerging benefits to our customers, people and shareholders as we execute one of the largest fleet renewal programs in our history.

Fleet. The renewal of the Qantas Group fleet is accelerating. In this half, we invested $1.8 billion in fleet and other projects. This included 18 aircraft joining the fleet. Of these, 9 were new aircraft, including 2 A321XLRs for Qantas, 4 A220s for QantasLink, 2 A321XLRs and 1 A320neo for Jetstar. With Jetstar's fleet of A321s now at scale, we are seeing significant benefits in financial performance, customer experience and emissions reduction. In this half, our investment in A321LRs contributed to 60% of Jetstar's earnings uplift through efficiency and better aircraft utilization.

This gives us confidence in the benefits that will flow once the Qantas fleet reaches scale. We remain incredibly focused on all customer metrics, and it is pleasing to see this reflected in our operational and reputational scores. Our Qantas Net Promoter Score lifted 5 points and Jetstar lifted 4 points. Operationally, Qantas delivered 70% on-time performance, the highest of any major domestic airline, while Jetstar improved to 71%. Our customers have more to look forward to over the next 12 months.

Fleet deliveries, including our first Project Sunrise aircraft, cabin refresh programs on our A330 and also Jetstar 787s, refreshing our international lounge in Los Angeles and also Sydney, rolling out WiFi across our Qantas International fleet and progressive rollout of changes to our frequent flyer announced today.

Turning to our people. None of this would have been possible without the dedication and the professionalism of our 30,000 team members across the group. During the half, we increased our frontline workforce by 4%. We are investing in our people through leadership programs, improved staff travel and creating opportunities for development and career progression. Eligible employees are on track to receive another $1,000 in Qantas shares later this year. And we are excited to open a new Jetstar Perth cabin crew base later this year, creating 90 new roles. And Qantas will also reestablish a crew base in Singapore, supporting our growth in our international network.

Now turning to Slide 5. The strength of today's result reflects the deeply integrated value across our group. I'll now provide an overview of business performance and the CEOs of each segment will be here with me to give their perspectives during Q&A. So firstly, Qantas Domestic or Group Domestic. Group Domestic delivered strong performance with an EBIT of over $1 billion, up 14% last year and an EBIT margin of 18%. Group domestic capacity grew by 5% and RASK was up 3%. This reflects the strong demand across both leisure and business purpose travel.

Our dual brand strategy drives strong performance across all market segments, including business purpose, premium and low fares leisure. Jetstar Domestic had an outstanding half with earnings up 38%. EBIT margin was above target at 22%. Once again, the fleet renewal is a key driver behind Jetstar's success with its A321LRs and A320neo fleet now at scale. Qantas Domestic also saw strong demand, contributing to RASK growth of 2% as capacity grew by 4%. This was underpinned by business purpose travel growth and premium leisure growth supported by strong event demand. Qantas Domestic achieved an operating margin of 16% despite the ongoing investment into entry into service of its new fleet.

Group International, excluding Qantas Jetstar -- sorry, excluding Jetstar Asia and Jetstar Japan, saw its underlying EBIT impacted by 6%. This was due to cost escalations, including higher engineering and industry pressures, higher operational wages and commencement of training for new aircraft into Qantas International. We are offsetting these costs where possible and working across the industry to address what can be done to ensure this doesn't impact the affordability of air travel.

Capacity for Group International Airlines increased by 3%, reflecting the impact of the closure of Jetstar Asia in July. Jetstar International performed strongly with earnings from its Australian international operation up 9%. Jetstar International reached an operating margin of 14%, also above its margin target. For Qantas International, we continue to see strong demand, particularly in premium cabins on our long-haul routes. This half also saw the return of our final A380 to service, continuing to restore our U.S. market capacity.

Now to Loyalty. Underlying EBIT for loyalty was $286 million, up 12% on the prior year. Points earned were up 10 points and points redeemed grew by 17%. The program is growing at pace with Qantas Frequent Flyer membership now exceeding 18 million members. Engagement across our partner network remains a key driver with the number of members earning across 2 or more categories up 8% on prior year. Today, we are thrilled to unveil the most significant change to status in the program's history.

For the first time, we are giving tiered members the ability to roll over unused status credits into their next membership year. Even more exciting, we are breaking new ground by allowing members to earn status credits through everyday spending on the ground. This represents a new era for Frequent Flyer program in the face of changing loyalty landscape.

I am now going to pass to Rob to overview our financial performance.

Thanks, Vanessa, and good morning, everyone. We'll now turn to Slide 16 for a more detailed look at our financial metrics. Underlying profit before tax for the half was $1.46 billion, up 5% versus first half '25. Statutory profit after tax was $925 million, flat versus first half '25. Underlying earnings per share reached $0.68, a 7% increase, and the group's operating margin was 12.3%. For the half, operating cash flow was strong at $1.8 billion, providing a solid foundation for our ongoing capital requirements. Net debt ended the half at $5.6 billion. This remains at the bottom of our FY '26 target net debt range of $5.6 billion to $7 billion.

Net capital expenditure was $1.8 billion. There were $400 million of dividends returned to shareholders in the half. Total unit revenue and total unit cost both increased by just over 2%. This was driven by several factors, which I'll now explain as part of the group profit bridge. So if we now move to Slide 17. On this slide, I'll walk through the key drivers behind the year-on-year increase of $71 million in our underlying profit from first half '25 to first half '26. For the half, group capacity increased 4% and coupled with a moderation in oil prices, saw $122 million in contributions during the period.

Group RASK grew by 3% across both domestic and international. As previously guided, our transformation program is weighted to the second half, and we remain on track to target $400 million for the full year to offset ongoing CPI pressures. Depreciation and amortization increased $89 million, reflecting the acceleration of our fleet renewal program. The ramp-up in fleet renewal saw the business incur fleet-related EIS costs. These increased by $10 million for the period. Net industry costs increased by $40 million. Underlying airport security and navigation charges continue to escalate above the rate of inflation. Profit was impacted by $76 million from unfavorable foreign exchange movement across nonfuel costs during the period and Jetstar Japan's lease liability.

Turning now to Slide 25. We want to highlight the important role that the new fleet is playing to grow our profitability. Jetstar has delivered a stellar performance in the half and fleet investment is a key driver. The 321LR and the 320neo aircraft are providing significant replacement benefit. This includes lower fuel burn per seat and reduced maintenance costs. However, the fleet renewal extends beyond replacement benefits. Because these aircraft are more efficient and have longer range, we are seeing a step change in utilization, allowing us to launch new short-haul international routes.

And by deploying the 321LR onto these shorter international sectors, we have been able to redeploy our 787 wide-bodies on to longer, higher demand markets like Japan and Korea. For the first half '26, the contribution of these was approximately 60% of Jetstar's underlying EBIT growth. This gives us confidence as the Qantas fleet renewal reaches scale.

Now turning to Slide 31. Our long-standing financial framework is core to maintaining our financial strength. It's designed to structurally maintain low leverage, strong liquidity and an investment-grade credit rating. It also guides capital allocation, including opportunities for capital recycling to maximize group value through the cycle. An example of this is the closure of Jetstar Asia in July. And recently, we announced our intention to sell our stake in Jetstar Japan. This allows us to focus on our core business in Australia. As previously guided, capital expenditure for FY '26 is expected to be $4.1 billion to $4.3 billion.

Today, we are also providing guidance for FY '27, which is expected to grow to $5.1 billion to $5.4 billion. This reflects the acceleration of our fleet renewal program, including the arrival of the first 4 Project Sunrise aircrafts. We are confident in the earnings and cash flow growth from this fleet and our Jetstar result demonstrates this. We are committed to a base dividend that is sustainable through the cycle. And as Vanessa mentioned, we are delighted to share that the Board has approved an interim FY '26 shareholder distribution.

This includes a fully franked base dividend of $300 million, which is a $50 million increase over the first half '25 base dividend. This demonstrates our commitment to delivering sustainable value to our shareholders. We've also announced an on-market share buyback of up to $150 million. So whether it's the decisions about which routes to fly, which brands to fly or how to adjust the portfolio, we remain focused on ensuring optimal capital allocation across the group.

I'll now hand back to Vanessa, who will go through the outlook.

Thanks, Rob. So we're now on Slide 35. The Group continues to see strong travel demand across the portfolio. We expect Group RASK to increase in the second half compared to the prior year, made up of the following. So Group RASK is expected to increase approximately 3% versus last year, while Group International RASK is expected to increase between 1% and 3%. This includes the impact of Qantas International capacity growing at a faster rate than Jetstar International. Entry into service and fleet-related transitionary costs will increase by $20 million versus the second half of '25.

The gross impact of Same Job Same Pay in the full year '26 is now expected to be approximately $95 million, a $15 million increase on the second half of '25. This is expected to be mitigated over time. Qantas Loyalty is expected to grow underlying EBIT between 10% to 12% for the full year '26. And finally, net freight revenue in the second half of '26 is expected to be in line with the second half of '25. Our outlook slides provide further detail on specific line items, including fuel cost depreciation, transformation and the latest estimates on the closure cost of Jetstar Asia and restructuring costs.

We also have our latest capacity guidance on Slide 36 of the investor material. So in closing, this is an exciting new era for the Qantas Group. We're seeing the benefits of our fleet renewal flow through to customer experience, operational performance and financial results. We're investing in our people and our network, and we're building on the momentum that we've created. By consistently delivering strong earnings growth through our dual brand strategy, we can invest in our customers and our people while also rewarding shareholders. I would like to close again by thanking our 30,000 team members for making this result possible.

And now I'm going to hand over to the moderator, and we look forward to answering your questions.

Your first question comes from Anthony Moulder with Jefferies.

If we can start with Domestic. I think strong Domestic capacity growth we've seen across the market, particularly in that December quarter and particularly on the triangle. Just referencing back to obviously the AGM commentary around corporate yield or corporate RASK slowing. Just talk to what you're seeing as far as corporate growth and the outlook for second half '26, please?

Yes. Thanks for that, Anthony. And I think that what we have said, and I'll pass to Markus and Steph to just comment on demand as a whole. But I think it's fair to say that we're continuing to see a very strong travel demand environment across our domestic brands.

And I'll pass to Markus now to just comment on both premium leisure and business purpose travel.

Thanks, Vanessa. Anthony, just on demand, we continue to see strong demand, both as Vanessa mentioned, premium leisure as well as business purpose travel. And when you look at business purpose travel, it's really the small and medium enterprise market as well as resources market in WA that is particularly strong. So -- and we see that continuing to the second half. So we're confident with the capacity we're putting in, in the second half, it's going to address that demand.

And I think just some of the comments that I'd make on business purpose travel. I think what we are seeing in this market is the small to medium-sized business really growing and outperforming. And that was a result of the 6% increase in revenue that we saw for business purpose travel. As you say, in November, when we did update around the AGM, there was in the non-resource corporate market, there has been some lower-than-expected growth. However, that has been offset by the strong performance in the SME market and also resource and mining market. But Steph, on Jetstar?

Yes. And I will just -- before I talk about low fares demand, also just say from a small business perspective, which is really important is we also look at how the dual brand plays into that. So Jetstar, obviously, if there's price sensitivity for business purpose, small business, particularly, how Jetstar plays a role in supporting Qantas with that is really important. But on the more price-sensitive leisure and we've seen really strong demand continue through this half, very strong events calendar that looks strong into the second half as well. And when we look at all of our data around intention to travel, the Australian love affair and prioritization of travel has certainly not waned. So we're seeing really strong demand for low fares travel.

Your next question comes from Matt Ryan with Barrenjoey.

I had a 2-part question on the distribution. The first is just, I guess, motivations around the buyback, whether that had anything to do with franking balances or just the decision-making around that. And then the second part of that is maybe just to understand your messaging around the dividend and the buyback. I think if we go back to sort of the pre-COVID period, you were paying a base dividend and then you top up with buybacks depending on where you ended up with free cash. Is that the same sort of methodology that we should be thinking about from now on?

Yes, Matt, thanks for the question. So I think the first thing to say is that we're obviously continued to be guided by the financial framework. So we were delighted today to be able to announce an increase in the base dividend. And the way that we've described the base dividend previously is the same, which is we expect that, that will be sustainable through the cycle. So moving that up to $300 million per half or $600 million per year was really important.

I think the point on additional distributions, we've always said we would stare into the decision around whether that would be paid through dividends or whether it would be paid through a buyback. Obviously, different shareholders have different perspectives. We absolutely have franking credits that can continue to be utilized, but at this point in time, we saw value in the share price with regards to doing the buyback. So it will be consistent and it has been consistent, and it will be consistent in the way we consider it going forward.

Your next question comes from Jakob Cakarnis with Jarden Australia.

Just wanted to focus on Qantas International, if I could, please. It looks like you're getting inflation type yield growth there, but I'm just interested in marrying together still quite high capacity growth through the second half for the Qantas International brand and now an adjusted RASK guidance. Could you just help tie all those together for me, please?

Yes. Look, I might just make a few comments broadly on Qantas International and for the specifics, I'll pass to Cam. You mentioned, Jake, ASK growth. And I think it's really important to mention in this moment that the A380 is a critical part of Qantas International ASK production. And that is a really important part of the integrated value and the value that Qantas International provides across the group. Bringing back 10 A380s, we believe, was the right decision and obviously was contributing to the capacity growth that you saw this year for Qantas International.

The reason why those 10 A380s are important, it is important for scale. It's important for resilience, and it was important for us to finish reestablishing our network post COVID, which has only really just happened. And I think that, that is a really important part of the overarching narrative for Qantas International until we can renew the international fleet, that A380 fleet is going to be a core part of that ASK production.

So I'll now pass to Cam to just talk a little bit about how we're seeing the A380 deployed, how we're pivoting some of that capacity in the light of some demand and also cost.

Yes. Thanks. I mean I think it's a good question. And -- you'll see from the outlook and the announcements we've made, we're making some material changes to where we deploy that capital and capacity in the near term. So having A380 come back has given us the flexibility. We positioned that into Dallas because that's second largest airport in the world, 930 connecting flights on AA every day. So it gives us a diversified revenue pool. But clearly, when we look at the U.S.A., we're going pretty well out of point-of-sale U.S.A., we're making significant gains in that market.

And actually, premium travel is holding up pretty well. Where we're seeing some suppressed demand is ex Australia and the leisure segment. So we are making some capacity adjustments as we should do. We're going to be quite nimble and fluid on that. So we're switching 3 A380s from North America into Singapore. We're also redeploying some capacity from L.A. into Vegas from December to March. Now in terms of the net impact of capacity into North America, we'll be actually down 2%. So we're managing our capacity into that market given the conditions.

But also the market between Australia and U.S.A. is only at 88% of COVID. So it actually hasn't come back at the moment as well as the one-stop capacity is not as frequent as it was before COVID as well. So we think we're going to manage that well. The other thing I'd say is where we're seeing really, really strong results is when we do get the benefits of new technology. So a proof point of that is Brisbane to L.A.

So we swapped out not an A380, A330 for a 787. We've seen a 15% increase in the margin of that, and we expect to see a better increase in the second half of the year. So the incremental proof points from Jetstar from Domestic are coming through even in the International market. And we remain confident that we have the right aircraft on the right route. And importantly, with the right configuration to absorb that premium demand that we can get good demand and good returns.

The next question comes from Andre Fromyhr with UBS.

Just following on from the discussion about the International Market. I'm wondering if we just understand a bit more of the Sunrise economics based on the information you've shared today. There's a comment about the RASK premium, for example, that you're getting on the direct Heathrow services. Can you just remind us, is that the level of RASK premium that you require on the Sunrise ultra-long-haul services? And how much of that is likely to be explained by just a favorable mix towards the premium cabin as opposed to a like-for-like change in the ticket price that Sunrise customers are paying?

Yes. So let me answer a few of those questions, and then I'll pass to Cam just to give an update on where we're at with Project Sunrise. We are continuing to be really optimistic around the proposition of Project Sunrise. And as you say, it is confirmed by what we are seeing on those longer haul routes that we are flying, both Perth to London and also Auckland to JFK. We are not seeing the demand abate in terms of customers seeking not just that premium experience, but that proposition that, that ultra-long-haul point-to-point flying delivers, particularly out of Perth, but now we're seeing the same thing out of Auckland.

The 2 things on the business case or what do you need to believe for Project Sunrise. It is the most significant uplift is not about a fare increase. So we're not increasing our fares, but what we are going -- what we do believe is that we are going to be able to have more of the higher fare classes available for longer. So you'll actually get an effective premium uplift from the demand that we expect to see. It's not -- it's a very small component on the uplift, which is driven by the cabin seating mix. And let me just kind of give you a sense of what -- when we did the Project Sunrise business case, London was attracting around about a 10 -- 19 to 10-point uplift in premium yield versus the one-stop either via the Middle East or Singapore.

We've actually now seen that improvement on Perth London, and it's now at around about 22%. That is basically in line with what you need to believe and is what we assumed in the business case for Project Sunrise. So again, I think it gives us ongoing confidence that Project Sunrise is going to really hit a very premium part of the market that we know our customers are seeking. But do you want to give an update on Sunrise?

Yes. I mean I think 2 things I'd say. One is we're seeing incremental confidence internally about the modeling and the yield premium given the density of the premium cabin will have on that aircraft. And we have now got more and more data on those ultra-long-haul point-to-point services, not just actually London, whether it's JFK, whether it's Melbourne, Dallas, whether it's Perth to Rome. Those are the city pairs that are performing well for us with the right technology and the A350 ULR just takes that to the next step.

The other thing I'd say is given the capacity of that aircraft, which is only 238 seats, it's going to be complementary to what we do, complementary to Perth London, complementary to our flights over Singapore to London, complementary to the services we have over Dubai with our partner with Emirates. So we're going to be able to offer our customers a whole raft of options, one stop as well as a premium service, which is the only one in the world, which will be nonstop.

And we talk a lot about integrated value, but integrated value is going to be incredibly important for Project Sunrise because the Qantas Frequent Flyer program is a premium demand engine for us, and it does create that self-reinforcing customer loyalty, which is very hard to be replicated in this market. So all our proof points give us incremental confidence about, one, the business case, but two, the customer proposition.

Your next question comes from Justin Barratt with CLSA.

I just wanted to ask you about your long-term margin targets for your airline businesses that you raised at the 2023 Investor Day. I just wanted to ask, has there been any consideration around, I guess, reconsidering them going forward? Jetstar seems to already, I guess, be there. You've got improving reference points, I guess, from the benefits of the new fleet in that business and how that could pertain to your Qantas business. And then obviously, it sounds like the outlook for Project Sunrise is relatively encouraging as well. So I just wanted to see if there's been any thought around reconsidering those long-term targets?

Justin, thanks for your question. And I think we continue to reiterate the targets because they remain the targets. So I think if you think about the Jetstar performance and as you've just articulated where they're at against their targets that we're already there. And so now it's absolutely about growing the bottom line with regards to those targets within Jetstar Domestic, but both in Jetstar Domestic and also International. I think on the Qantas side, if you think about Qantas Domestic, that 18% target, we still maintain coming in at 16% for this particular half.

But what we've said is as we move through from an EIS temporary and transitionary cost perspective that we expect to be at that 18% for Qantas Domestic. And then I think from a Qantas International perspective, obviously, we're at 6% now. We have put out there that 8%. We still believe in that. That is in a pre-Sunrise environment. We're obviously now cycling through Same Job, Same Pay.

There were a number of other costs which we would say are transitory in the QAI business that gives us confidence to get to that 8%, but we have to go through the EIS. And then obviously, Cam has just talked to Project Sunrise, which we've said before is an incremental $400 million of EBIT, which would get us up to that 10% to 12%. So we remain committed to those targets. The businesses were at almost different perspectives with regards to the targets, but they remain the targets.

Your next question comes from Owen Birrell with RBC.

Just a couple of questions from me. The first one is just on the earnings skew first half, second half, whether you're expecting a more normalized 60-40 skew in the profit before tax for this year? And second question is just on -- thanks for the net CapEx guidance for '26 and '27. I'm just wondering what you're assuming for asset sales in both of those years and particularly given the Jetstar Japan proceeds are probably going to be received in '27.

Yes. So just on the -- firstly, on the earnings in terms of the seasonality, we are expecting sort of that 60-40 sort of returning to that. So that would be the first question. In terms of net CapEx, we're not making an assumption with regards to proceeds from asset sales. With regards to Jetstar Japan, we've talked about the fact that we have signed a nonbinding MOU. That will be finalized over the next few months up to July, but then probably would not be closed until the end of the next financial year. So we wouldn't be expecting anything material to come in, in FY '27.

The next question comes from Sam Seow with Citi.

Just a quick question on Loyalty. Just noticing your redemption stepped up quite materially there in the first half of '26. Potentially, if you could just give us some color on that and what's driving that? And then just any update on the surcharging?

Yes. Thank you. I'll pass it to Andrew.

Thanks for the question. Half-on-half redemptions, the primary driver around that is the full half impact of the rollout of Classic Plus on the Domestic network. So that's why you're essentially seeing the increase half-on-half towards sort of 18%. In terms of the RBA, look, I think for us, we wait like other interested parties in terms of what the RBA handed down in March of this year. In terms of speculating what may come of that from a surcharge and interchange perspective, I don't think I need to do that. I think for us, it is waiting until what comes of March, and then we're happy to have the conversation from there.

Yes. And I think just to add to what Andrew said, we remain really confident in the program. And based on whatever the RBA does, we remain really confident to be able to manage through that with our partners. We've also clearly continuing to invest in members, and we -- we'll see and -- from the results of Classic Plus, but also today, a lift in Loyalty and hopefully share of wallet. And then finally, I think when the RBA does make their announcement, we continue to be committed to the 2030 overall margin target. So I think that we feel confident where we're at.

Your next question comes from Nathan Gee with Bank of America.

Maybe just a question on seat loads. Can you just talk about what's driving those softer loads, both on Qantas Domestic and International? And would you characterize this as normalization? Or are you hoping to call some of this back in the future?

Markus?

Yes. Great question. Thank you. So when you said seat factor had slightly dropped, it's a combination. Yes, it's back to where it's been in the long term. But what's really driven this is 2 things for us. One is we cancel less flights as our operations got better. So you don't have that consolidation on the day of travel into fewer flights drive seat factor. And second, also, we continue to grow in the resource market. That market is quite different and operates in about 10, 15 points lower seat factor. So as that becomes a bigger part, it also drives down the average.

Yes, and for international, the primary drivers in the economy class, Kevin, with the A380, given the size and unit of that capacity, it's more at a normalized level. But I would say we are looking at ways and means in terms of digitalization and new tools to stimulate load factors. So it is an opportunity.

Your next question comes from Ian Myles with Macquarie.

Western Sydney Airport, I'm just interested in what the cost implications and the opportunities might be as you're probably coming pretty close to having to make decisions around planes going there.

Yes. Look, we see Western Sydney Airport as a great opportunity. We're going to be starting freight services there in July, so very soon. And this we see is a fantastic market for Jetstar and -- but we're still in a commercial negotiation with Western Sydney, and I might just get Rob to comment on where we're at.

Yes, absolutely. So I think as Vanessa said, I mean, we haven't had a new airport in Australia for decades. So we're really excited about the opportunity. This particular part of Sydney is a growing metropolitan area, so -- which is great. On freight, we have -- we're just about finalizing the build-out of the shed there, 24-hour no curfew airport.

So I think that's going to really assist the freight business. But as Vanessa said, on the passenger side, we're not there yet. The pricing and the cost is going to very much determine the extent of the network that we have in Western Sydney, but we do see a pathway, and we're working through with Western Sydney Airport management at the moment.

Your next question comes from Cameron McDonald with E&P.

Just on Qantas International, I appreciate the sort of the color on the slide. But can we get some more granularity around the cost performance given that's what seems to have driven the sort of the less-than-expected performance out of that division? And how much of those costs will repeat in the second half and then potentially drop out in the full year when we look into FY '27?

Yes. So the kind of 3 primary drivers of cost. One was labor, and that includes Same Job, Same Pay, but it's broadly across many of the operational areas. The second one is engineering investment. So obviously, with the age of the A330s and A380s, we have been investing more to ensure our engines and our airframes have enough resilience to meet our on-time arrival objectives, and that's been pleasing that those have been met, and that's actually coming through in our Net Promoter Score. So that's pleasing.

And then the last one is the start of our entry into service costs. Firstly, for the Finnair aircraft that are coming into the fleet. And the second one is the start of the A350 pilot training, which has now started for the entry into service for the Sunrise aircraft. Clearly, we're making moves to do everything possible to reduce those costs. An example of that would be the announcement we made this morning on establishing a Singapore base, which when it's at full establishment will be up to 650 at the end of year 5. That will help us with cost, but it will also help us with operational resilience as well. So some of the costs are reoccurring and some of them are one-off.

Yes, there is a component this year of the labor cost that as we enter EBAs, we'll have one-off restatement of leave provisions. So I think that is a key part. And also as the entry into service costs start to build, as Cam said, these are -- we are going to see this grow. And we are going to make sure that we continue to deploy the aircraft as most efficiently as we can to the markets where we see the highest demand.

And so you are going to see this focus on making sure that we are agile, that we are deploying the capacity to markets where we can get a greater return. Las Vegas being one, I think, is really important and relocating one A380 to Singapore at the second half of this year is going to be a key part of that. I would actually say that the investment that we're making into the fleet, both A380 and 330 is a critical part of us continuing to generate demand and the premium that we are seeing across our fleets, and that is a really important part of delivering on that customer promise.

Sorry, how much was that engineering investment in the period, please?

No, Cam, we haven't been specific about that. But I think the point that the guys are making as well is that, that investment is something that's now in the base with regards to the investment being then helping with on-time performance and NPS.

And the other thing as well to say is that we do see this demand effect on the U.S. is short term. And I think that we remain optimistic in the half that we're in with the Aussie dollar back above $0.70. We know historically in those environments that the U.S. becomes a much more attractive destination than perhaps where it's been in the past, which has been more costly.

Your next question comes from Niraj Shah with Goldman Sachs.

Just had a question. I thought the Jetstar case study was pretty useful. How should we be thinking about -- and a useful lead indicator. How should we be thinking about the implications for Redtail as it renews its fleet? Just any considerations versus the chart that you've presented, the splits between cost efficiencies, growth and sort of redeployment flexibility would be great.

So we have actually, Niraj, provided as a part of the supplementary pack, which we've actually provided in the past, a reconciliation of the EBITDA uplift for Jetstar for the 220s and the XLR, and we've also provided profit outlook for Sunrise. So I think that, that is a good way of assessing the uplift that may come for Qantas with the 220 and the XLR.

The only point that I would say is that, that EBITDA uplift is more a like-for-like comparison, but it does not account for the utilization benefits that Jetstar has been able to get in the way in which we deploy those aircraft. And so that reconciliation that is in the supplementary slides, I think, is the best useful metric to see those comparisons and estimate the benefits of flow for Qantas, but there is further upside, I think, for Qantas as Jetstar is seeing in terms of utilization.

And Niraj, maybe just to follow up. We will bring a case study in the 220s and then the XLRs. So we'll increasingly bring those proof points as those fleet types reach scale, which is what the Jetstar one has done. And just to Vanessa's point around the utilization advantages around growth, we've today put on Brisbane to Manila on the XLRs, which again is going to be its own proof point within the XLR. So we will -- as I said, we will bring those to market as we get those aircraft up to scale.

Your next question comes from Joseph Michael with Morgan Stanley.

I just had a follow-up on Project Sunrise, where I guess you seem confident that the demand will be there. But my question is, if demand or yields underperform expectations, what flexibility do you have to either redeploy the aircraft, change configuration or slow future deliveries?

I think we've always said that in any scenario, we want these aircraft. They are high-performance aircraft. We are a country that is a long way away. So this is, I suppose, strategy that we've got, which is to renew the Qantas wide-body fleet to those that have got high-performance, long-range, high premium density seat mix. In all scenarios that we've modeled, these aircraft are a no-regret purchase.

And so we don't believe that the demand is not going to be there from what we're seeing. But if there were to be some change, we would redeploy these aircraft. And quite possibly, you would see the accelerated retirement of the A380. So I just want to make the point that we don't see that there is any regret scenario where these aircraft are not going to be a valuable part of the Qantas International fleet. I think that's the last question.

Your last question comes from Scott Ryall with Rimor Equity Research.

I think it might be pretty quick given the answers you've just given around the context of softer international earnings, the costs you've taken on and some of the capacity. I just wondered, could you just remind us the lead time for managing Qantas' International capacity? And you give us an outlook, obviously, that's a few periods earlier. But in terms of how you manage internally, how do you think about that?

Yes. I mean we're probably a lot more flexible and nimble than historically we have been. Usually, the booking period is out to 12 months, but we usually work on a season by season, so 6 months we usually change our settings. But we can be more nimble than that, certainly on short-haul international markets where the booking window is more condensed. But if you look at our markets, we look at weekly intakes and we're making decisions on capacity, either frequency, gauge of aircraft or redeploying capacity where we see fit.

And I think you're seeing that industry-wide. There's more seasonality coming into International markets. We're seeing good support of the likes of Sapporo. We think Rome has also done well. We think Las Vegas is going to go. So you'll see more agile capacity network management and you'll see more seasonality, and we'll be looking to redeploy those 787s, which is our unit of capacity, which is performing really, really well for us. And we see a scenario where the A350s come in with that premium density, that's absorbing the growth that we see in the market. The market supply for premium seats is under the market demand at the moment.

Thank you. I think that's it for the questions. Look forward to seeing you all over the next couple of weeks, and thanks for your time.