Our 5 year financial plan
This financial plan ensures the ongoing funding of our critical and essential services while building on the strategy and programs established in previous plans, to transform our business and support the recovery and growth of our industry into the future.
Since the start of the pandemic, 2022-23 delivered the strongest growth to date across the aviation industry. While industry has lagged other parts of the Australian economic recovery, this growth is forecast to continue to improve revenues and restore our profitability over the second half of the plan.
The economic outlook indicates that inflationary and supply chain pressures are likely to persist over the near term with some volatility in growth still predicted. This has eased the recovery profile previously forecast in our plan. It is now assumed that domestic traffic will rebalance during 2023-24, with international travel continuing to grow and recover by 2024-25.
As our industry stabilises, we continue to prioritise our investment in key strategic programs and will fund $1.26b over the 5 years in delivering our transformation ambition. The 5-year operating projections and performance measures are shown in Table 2.
Our pricing
We set our prices in consultation with our customers for core airways services under Long Term Pricing Agreements. Under the provisions of the Competition and Consumer Act 2010 any increase in prices must be communicated to the Australian Competition and Consumer Commission for review.
We last increased our prices on 1 July 2015 and have therefore delivered a 20% price reduction in real terms as at 2023-24. The plan assumes affordable price increases from 2023-24 onwards, as we realign our cost base and services to match the new industry demand and reduced traffic level assumptions compared to our pre-pandemic plan.
Real airways price change 2015 – 2028
Our financial operating performance
We are continuing on our path to transform our business to ensure we support the aviation industry through its recovery and foster its growth into the future. In the near term, the costs to deliver this change and the lag in the traffic recovery will mean that operating losses will continue for the next 2 years. From 2025-26, through the transition and delivery of investment enabling benefits, profits are planned to return.
Importantly as our financial performance improves, our transformation will also ensure our long-term financial sustainability while positioning us to manage the current inflation and supply chain cost pressures forecast over the planning horizon. While we have benefitted from the financial support the government has provided through the recovery, the plan proposes to start paying dividends from 2026-27 as profits allow.
Table 2: Operating projections and performance measures
| ($m) | FY2023 | FY2024 | FY2025 | FY2026 | FY2027 | FY2028 |
|---|---|---|---|---|---|---|
| Forecast | Plan | Plan | Plan | Plan | Plan | |
| Revenues | 914.4 | 1,047.9 | 1,221.2 | 1,327.6 | 1,405.4 | 1,465.4 |
| Staff costs | 671.0 | 746.9 | 757.1 | 786.7 | 814.4 | 838.3 |
| Supplier costs | 332.0 | 303.6 | 257.6 | 213.8 | 253.8 | 251.9 |
| Depreciation | 109.0 | 130.7 | 141.6 | 156.0 | 164.2 | 175.4 |
| Total expenses before interest and tax | 1,112.1 | 1,181.1 | 1,156.2 | 1,156.4 | 1,232.4 | 1,265.6 |
| Earnings before interest and tax (EBIT) | (197.7) | (133.2) | 65.0 | 171.2 | 173.0 | 199.8 |
| Net profit/(loss) after tax (NPAT) | (165.3) | (122.7) | 4.6 | 74.1 | 72.7 | 91.3 |
| Gearing | 47% | 61% | 64% | 63% | 62% | 61% |
| Return on assets | (9%) | (5%) | 4% | 8% | 8% | 8% |
| Return on equity after tax | (23%) | (15%) | 1% | 10% | 9% | 11% |
| Dividends ($m) | 0.0 | 0.0 | 0.0 | 0.0 | 44.1 | 49.2 |
Our investment
To deliver our strategy, benefits-enabling programs and improve customer services into the future, this plan funds the delivery of $1.26b in investment over the next 5 years. This is driven by our key activities.
Image credit: Western Sydney International Airport