The Transformation Continues - Qantas

The Transformation Continues - Qantas

The Transformation Continues QANTAS SUSTAINABILITY REVIEW 2013                             This page has been intentionally left blank   TABLE OF...

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The Transformation Continues QANTAS SUSTAINABILITY REVIEW 2013

                            This page has been intentionally left blank

 

TABLE OF CONTENTS    

Page Introduction

2

Governance

4



Corporate Governance

4



Business Resilience

9



Group Security

10



Group Risk and Audit

11

Stakeholder Engagement

13

Financial

15

Safety and Health

19

Customer

22

People

31

Environment

38

Procurement

45

Community

49

Measures

56

Glossary

57

The Group Strategy, supported by environment, procurement and community strategies, underpins the identification and reporting on material items.

To support the Group’s core goal of delivering sustainable returns to shareholders, areas of focus are used to measure, monitor and report on the Group’s performance. Areas of focus and measures are reviewed and updated to ensure that they remain relevant.

The Group Strategy drives sustainable outcomes Governance

Corporate governance is core to ensuring the creation, protection and enhancement of shareholder value.

Stakeholders

We are committed to communicating effectively with our stakeholders.

Financial

Safety and Health

Customers

Vision

We strive to build a strong viable business capable of delivering sustainable returns to shareholders.

To be recognised as the world’s leading airline group in air, ground and people safety and health.

Our Customers are the core of everything we do. The Group is continually striving towards providing exceptional customer experiences.

Focus

»» Long-term Profitability »» Prudent Investment »» Disciplined Capital Management »» Financial Risk Management

»» Safety is our First Priority »» Safety Commitments »» Safety Governance Framework »» Safety Reporting

»» Customer Satisfaction »» Net Promoter Score »» On Time Performance »» Customer Feedback »» Customer Experience Initiatives

»» Underlying Profit before Tax (PBT) »» Net Underlying Unit Cost »» Free Cash Flow »» Average Fleet Age

»» Total Recordable Injury Frequency Rate »» Lost Work Case Frequency Rate »» Duration Rate »» Absenteeism

»» On Time Performance

Qantas Sustainability Review 2013

Measures Sustainability Statistics and Notes, Qantas Annual Report 2013

Qantas Sustainability Review 2013

2

The Qantas Group’s vision is ‘Always the first choice for customers in the markets we serve’.

The Group Strategy underpins our vision and positions the Group towards delivering sustainable returns to our shareholders.

The Qantas Sustainability Review 2013 provides a holistic review of the Group’s governance structures.

The Qantas Sustainability Review 2013 provides an overview of our commitment to Stakeholder Engagement.

People

Environment

Procurement

Community

A leading airline group The success of the Qantas committed to environmental Group is underpinned by our sustainability. People and ensuring that our People are skilled, developed, motivated and supported to do great things.

The Group is committed to ensuring supplier relationships are managed in a competitive, fair and ethical manner.

To inspire social impact through community leadership, commitment and excellence.

»» Engagement »» Communication »» Diversity »» Development »» Talent »» Recognition »» Industrial Relations »» Supporting

»» Direct Greenhouse Gas Emissions ——Fuel Efficiency and Fleet Renewal ——Biofuel ——Carbon Offset ——Utilities and Resources »» Noise Impacts »» Environmental Engagement

»» Supplier Requirements »» Sustainable Procurement Procedure »» Sustainable Sourcing »» Sustainability Assessment »» Supplier Relationship Management »» Supplier Diversity

»» Qantas Foundation »» Qantas Community Champions »» Qantas in the Community »» Jetstar’s Philanthropic Activities »» Investing in Regional Australia

»» Gender Diversity »» Age Diversity »» Workplace Flexibility »» Indigenous Employment »» Number of Full Time Equivalents (FTEs)

»» Aviation Fuel and Carbon Emissions »» Aviation Fuel and Carbon Efficiency »» Electricity, Water and Waste

Qantas Sustainability Review 2013

»» National Export Revenue »» Domestic Traveller Expenditure

3

GOVERNANCE CORPORATE GOVERNANCE Corporate governance is core to ensuring the creation, protection and enhancement of shareholder value. The Qantas Board The Qantas Board of Directors (Board) is responsible for ensuring that the Qantas Group has an appropriate corporate governance framework to ensure the creation, protection and enhancement of shareholder value. The Board also maintains, and requires that Qantas management maintains, the highest level of corporate ethics.

ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations with 2010 Amendments, 2nd Edition (ASX Principles) Qantas endorses the ASX Principles and provides details about its corporate governance framework annually in its Corporate Governance Statement. The 2013 Corporate Governance Statement is contained in the 2013 Qantas Annual Report and is available in the Corporate Governance section of the Qantas website. http://www.qantas.com.au/travel/airlines/governancestructure/global/en#jump1

Qantas Group Governance Structure Board Board of Directors

Board Committees

Qantas Constitution The Qantas Constitution is Qantas’ key governance document. It contains a number of principles to which Qantas must adhere, including the location of Qantas’ principal operational centre, place of incorporation and the limit on foreign ownership of Qantas. In addition, Qantas is required to comply with the Qantas Sale Act 1992, which contains specific provisions designed to protect Qantas' position as an Australian designated airline.

Audit Committee

Safety, Health, Environment and Security Committee

Remuneration Committee

Nominations Committee

Executive Management Group Management Committee

Management

Qantas Domestic Management Board

Qantas International Management Board

Jetstar Management Board

Loyalty Management Board

Freight Management Board

Each of the areas in the governance structure is described in more detail in the following pages. MATERIAL AREAS OF FOCUS

Board Charter

Page

The Board is responsible for setting and reviewing the strategic direction of Qantas and monitoring the implementation of that strategy by Qantas management, Qantas’ commitment to corporate governance is set out in the Board Charter which is available in the Corporate Governance section of the Qantas website.

Corporate Governance Group Corporate Governance Structure

5

Non-Negotiable Business Principles

6

Qantas Group Policy Framework

6

Mandatory Training

7

Group Assurance and Reporting

7

Corporations Act 2001 and ASX Listing Rules

Whistleblower Policy

7

As a company incorporated in Australia and listed on the Australian Securities Exchange (ASX), Qantas must comply with the Corporations Act 2001 and the ASX Listing Rules.

Qantas Group Code of Conduct and Ethics

7

Qantas Group Behaviours and Values

8

Business Resilience

9

Group Security

10

Group Audit and Risk

11

Qantas Sustainability Review 2013

4

GOVERNANCE Qantas Group Corporate Governance Structure

Board Committees

The Qantas Board

To assist in fulfilling its duties and responsibilities, the Board has established the following four Committees:

The Board is responsible for setting and reviewing the strategic direction and monitoring the implementation of that strategy by Management. The Board comprises a majority of independent Non-Executive Directors who, together with the Executive Director (the Qantas Group Chief Executive Officer (CEO)), have an appropriate balance of skills, experience and expertise, and bring independent judgement to bear in decisionmaking. The independent Non-Executive Directors are elected by Qantas shareholders. When appointing new Directors, the Board and its Nominations Committee look to ensure that an appropriate balance of skills, experience, expertise and diversity is maintained. Directors submitting themselves for re-election at a general meeting are reviewed by the Nominations Committee. Directors are re-elected in accordance with the Qantas Constitution and the ASX Listing Rules. The independent Non-Executive Directors and the year in which each was appointed to the Board are set out below. Director

Year of Appointment

Leigh Clifford (Chairman)

2007

— Audit Committee — Safety, Health, Environment and Security Committee — Remuneration Committee — Nominations Committee Each Committee has a formal Charter and is responsible for assisting the Board in fulfilling its corporate governance responsibilities in relation to matters within each Committee’s respective remit. Each Committee’s Charter is available in the corporate governance section of the Qantas website.

Qantas Group Management The CEO is responsible for the day-to-day management of the Qantas Group, with all powers, discretions and delegations authorised from time to time by the Board. The Group's executive management team is the Group Management Committee (GMC). The GMC is chaired by the CEO and meets fortnightly to review the performance of the Group and make decisions that impact more than one Group business segment (Segment).

Maxine Brenner

2013

Peter Cosgrove

2005

Patricia Cross

2004

Segment Management

Richard Goodmanson

2008

Jacqueline Hey

2013

Garry Hounsell

2005

William Meaney

2012

Paul Rayner

2008

Barbara Ward

2008

The Qantas Group comprises a number of operating segments (Segments), each of which has a dedicated management Board that is chaired by the Segment chief executive officer (or equivalent) (Segment CEO).

 

Details of the Directors, their qualifications, skills and experience are set out in the 2013 Annual Report, which is available in the Investors section of the Qantas website: http://www.qantas.com.au/travel/airlines/board-ofdirectors/global/en

Each Segment CEO is a member of the Group Management Committee. The Segment management Boards review their respective Segments’ performance, budgets, strategy and outlook.

Qantas Sustainability Review 2013

5

GOVERNANCE Qantas Group Non-Negotiable Business Principles

Qantas Group Policy Framework

Qantas’ Board-approved Non-Negotiable Business Principles (Principles), together with the Qantas Group’s Behaviours and Values, guide how the Qantas Group undertakes business and makes decisions. Qantas’ Corporate Governance Framework comprises a number of principles and policies which together enable Qantas to comply with its legal and regulatory obligations and ethical standards which derive from various sources, including the Qantas Constitution, the Australian and international statutory and regulatory framework and the Qantas Group’s Behaviours and Values. Together with the Qantas Group’s Behaviours and Values, the Principles guide how the Qantas Group and its employees undertake business and make decisions.

Qantas Group Policies apply to Qantas Group entities and employees in line with the Group’s Corporate Governance Framework. The Qantas Group has 10 Group Policies, which reflect the Non-Negotiable Business Principles. The Group Policies set out the minimum expected standards across a range of governance areas where compliance is necessary for legal reasons and to protect our brands and reputation. The Group Policies are: 1. Code of Conduct and Ethics – refer to page 7 2. Safety and Health Policy 3. Legal Matters Policy 4. Finance Policy 5. Contracts Review and Execution Policy 6. Environment Policy 7. Information Technology Policy 8. Security Policy 9. Risk Management Policy 10. Business Resilience Policy

The Principles are: 1. 2. 3. 4. 5. 6. 7.

8.

We are committed to safety as our first priority We comply with laws and regulations We treat people with respect We act with honesty and integrity, upholding ethical standards We are committed to true and fair financial reporting We are committed to environmental sustainability We have a responsibility to safeguard Qantas Group reputation, brands, property, assets and information We proactively manage risk.

The Principles are the foundation for our Group Policies. A supporting mandatory training program ensures that Qantas Group employees understand and effectively apply the Principles and Group Policies.

 

For further details on Group Policies, see the Group Business Practices Document at: http://www.qantas.com.au/infodetail/about/corporateGovernance /BusinessPracticesDocument.pdf

Other Policies Human resource and other policies exist at entity or business unit level, and outline the entitlements and minimum expected standards for Qantas Group employees in the context of their employment. Additionally, business unit specific policies exist, for example the Procurement Policy, which set out requirements relating to specific areas of the business. Policies are supported by procedures where appropriate.

The Group’s Non-Negotiable Business Principles can be found in the Qantas Business Practices document available on Qantas.com: http://www.qantas.com.au/infodetail/about/corporate Governance/BusinessPracticesDocument.pdf Qantas Sustainability Review 2013

6

GOV ERNA ANCE E Mandatory Training Prrogram The Qantass Group has a robust ma andatory training pro ogram recog gnising the im mportance o of embedding the Principlles, Group Policies P and the standards e expected of employees. The manda atory training pro ogram also in ncludes add ditional role-specific train ning (for em mployees in a safety sensitive rolle or custom mer facing en nvironmentss). The Qantass Group Train ning Council, comprised d of representattives from ac cross the bu usiness and Group Policyy owners, ov versees the mandatory training pro ogram. Group Assu urance and Reporting A number o of assurance e activities are undertakken by the Grou up, including g a bi-annua al selfassessmentt questionna aire which is s required to o be completed b by certain operational and a financia al managers id dentified witthin the Qan ntas Group. Group Auditt and Risk also provides s independe ent, objective asssurance an nd consulting g services fo or Qantas’ system of risk managemen m nt, internal control and governance. As part off the Qantass Group’s risk manageme ent process, Group Audiit and Risk is rresponsible for maintain ning and ent improving th he Board-ap pproved risk k manageme framework, bi-annual re eporting to the Board about risk a and performiing audit an nd other advisory services. Whistleblow wer Policy Qantas hass a long-esta ablished whistleblower process, inc cluding a ‘ho otline’ throug gh which employees may report concerns. c The hotline iss a comprehensive reportin ng service (ttelephone, e email and mail) in ndependently managed d on behalf o of Qantas by P Pricewaterho ouseCooperrs. Reports made throu ugh the whisstleblower prrocess can choose to b be anonymo ous. The Group has a dedicated W Whistleblowe er Committee e comprising g executive and senior management m t. The Whistleblow wer Committe ee is respons sible for overseeing investigation of matters s reported a and it reports to th he Board an nd Audit Com mmittee on a an annual basis and as ottherwise nec cessary.

Qantas Group Cod de of Condu uct and Ethics de of Condu uct and Ethic cs (Code) is The Cod the Qan ntas Group’ss principal co orporate governa ance policy. The key principle un nderpinning g the Code iss compliance with law ws, regulatio ons and ethical standards. s Togethe er with the o other Qantas s Group Policies referred to on page 6, the Code outlines the minimu m requireme ents and respons sibilities nece essary to ad dhere to the Non-Negotiable Bussiness Princ ciples. The Cod de sets out Q Qantas’ expectations in a number of areas including:

− − − − − − − − − − − − − − −

Qantas Sustainability Review 2013

com mpliance with h laws, regu ulations and ethical standard ds continuous discclosure share trading   polittical donatio ons and prohibited payments com mpliance with h competitio on laws givin ng or receiviing gifts conflicts of interrest accounting reco ords and retention of reco ords dealing with au uditors mak king public sstatements about a the Qan ntas Group use of confiden ntial informattion treating people e with respec ct the whistle-blow wer process priva acy equal employm ent opportu unity The e core elements off the Qantas Group Code of Conduct and Ethics a are summarised in n the Qantas Gro oup Business Pracctices Document which w is available in the t Corporate Govvernance section on o the Qantas we ebsite. The e Qantas Group Coode of Conduct an nd Ethics was lod dged with the ASX in September 2013 3.

7

GOVERNANCE Qantas Group Behaviours and Values

Values

Qantas Group Behaviours

The Group Behaviours are underpinned by Values which reflect the unique culture and brands of Qantas and Jetstar.

Our organisational behaviours guide how we behave every day at work. By adopting these behaviours as part of our daily routine, we are exhibiting the brand values and doing our part to help achieve the Qantas Vision. The Qantas Group’s Behaviours are:

Qantas Values

Qantas’ Values support better connections with our customers and people. Qantas:

Safety — All of our people have a genuine commitment to safety. Service — We demonstrate our ‘can-do’ attitude and deliver on the customer promise. Innovation — We challenge the way things are done and take ownership for finding a better way. Collaboration — We work with others to create a winning culture and an enjoyable place to work.

9 9 9 9

Cares; Is forward thinking; Has wisdom of experience; and Represents the best of contemporary Australia.

Jetstar Values

Jetstar’s Values support its strategic vision of being the ‘World’s Best Low Fares Airline’. They are:

Integrity — We are open, always listen and speak with honesty and respect. The Qantas Group Behaviours are supported by Qantas Values and Jetstar Values.

9 9 9 9 9

Be responsible; Be energetically efficient; Be consistently ‘can do’; Genuinely care; and Passionate about enjoyment.

Qantas Sustainability Review 2013

8

GOVERNANCE BUSINESS RESILIENCE

Crisis Management

The Qantas Group has an industry leading Business Resilience capability to proactively identify developing risks, respond effectively, recover quickly and always emerge as a stronger and more capable organisation.

The Group maintains a highly effective crisis management capability to reduce the impact of unavoidable events. This capability allows the business to quickly come together to manage the impacts of an event and to coordinate diverse stakeholders.

The Business Resilience framework brings together the disciplines of crisis management, business continuity and corporate contingency planning. Assurance of the resilience capability is provided to the Board via the Safety, Health, Environment and Security Committee. Reports provide oversight of recent events and progress of the Resilience Strategy.

Group Business Resilience Management System (GBRMS)

Board

Safety, Health, Environment and Security Committee

Business Resilience Policy

This crisis management capability meets and exceeds IATA Operational Safety Audit (IOSA) Airline Emergency Response organisational standards and CASA requirements and enables the Qantas Group to meet both voluntary and regulated Family Assistance Codes internationally. Business Continuity

Qantas Management System (Business Resilience Standards)

Group Business Resilience Management Plan (GRMP)

Group Crisis Management Plan (GCMP)

This capability has been utilised to provide support to the QF32 A380 incident as well has humanitarian support in response to natural disasters such as the Queensland floods and the Christchurch earthquake and also to facilitate government requests such as the Cairo Evacuation charters in 2011.

Group Business Continuity Program (GBCP)

Resilience Assurance Tool

This framework is centrally coordinated from within the Office of the CEO through a dedicated Business Resilience team, providing policy and governance for accountable managers in each of the Segments. The framework is designed to enable identification and implementation of risk mitigation options, such as those associated with projects, technology initiatives, markets and finance, commercial, regulatory interface and industrial relations.

In addition to this responsive crisis capability, the Qantas Group has an ongoing proactive business continuity program focussed on systematically capturing the dependencies that critical operational processes have across a range of areas such as technology, physical locations and supply chains in order to identify and mitigate any vulnerabilities, develop effective continuity strategies and reduce potential impacts. Corporate Contingency Planning The Qantas Group actively monitors threats and risks to the business and develops associated contingency plans to address potential impacts. This planning capability has been applied to manage pandemic planning and risks of civil unrest and global conflict.

Qantas Sustainability Review 2013

9

GOVERNANCE GROUP SECURITY

International Engagement

The Qantas Group operates in an environment of evolving and adaptable security threats and as such an integrated security coordination, threat monitoring and assurance model is essential to ensure operational continuity and the protection of the Group’s people, customers, assets, brand and other interests.

Qantas continues to be recognised by IATA as being a world leader in the development of a Security Management System including best practice research into aviation security culture. The Security Management System integration program has been independently assessed by a peer ‘systems’ review conducted by a major US based airline.

As regulators and industry continue to adopt the ‘risk-based outcomes focused’ philosophy, it is at the core of Qantas’ strategy to build security capability in the business. The ‘risk-based outcomes focused’ concept is driven by the belief that frontline staff and managers know their environment better than most and are therefore best placed to identify a security risk before anyone else. Security is everyone’s responsibility and it is therefore paramount to embedding an effective security culture throughout the Qantas Group. This capability needs to continue to be nurtured, enhanced and supported by a robust security management system which provides for effective lines of reporting, assurance, leadership and continuous improvement.

oneworld Security Committee and IATA IOSA Security Task Force Committee As a result of harmonisation and influencing activities it has undertaken, Qantas acts as Chair of the oneworld Security Committee and Vice Chair of the IATA Security Executive Group. International Sub-Committee of the US Department of Homeland Security Aviation Security Advisory Committee Qantas continues to be a member of the International Sub-Committee of the US Department of Homeland Security Aviation Security Advisory Committee.

Qantas Group Security Management System Improved security systems require input from those who use the system every day. As such, the Qantas Group Security Management System aims to increase security awareness through continuous improvement of security processes and enhancing the security culture across the Group. Security Capability in Business Units The key to an effective security culture is leadership and commitment, demonstrated by the degree to which the organisation holds managers and employees accountable for security outcomes. To effect this, Group Security continues to mature its approach to developing an integrated security capability across the entire business. The new structure maintains a centralised strategic policy setting and corporate security advisory role and establishes dedicated security teams in the business aligned with the new Qantas Group structure. Qantas Sustainability Review 2013

10

GOVERNANCE GROUP AUDIT AND RISK Group Audit and Risk provides independent, objective assurance and advisory services on Qantas’ system of risk management, internal compliance, control and governance. Group Audit and Risk is part of the Office of the CEO and has an additional independent reporting line through to the Qantas Board via the Audit Committee. The Corporate Governance Statement in the Qantas Annual Report 2013 contains an overview of the way in which risk is managed at Qantas (refer to page 68) and outlines the role of Internal Audit (refer to page 69).

 

See the Corporate Governance Statement in the Qantas Annual Report 2013 for further information in relation to Risk Management and Internal Audit.

Group Audit and Risk Governance Framework

Board

Safety, Health, Environment and Security Committee

Audit Committee

Qantas Domestic Management Board

Qantas International Management Board

Jetstar Management Board

Loyalty Management Board

Freight Management Board

Assurance Activities

Group Audit and Risk

Group Management Committee

Business Units

Each of the areas in the Audit and Risk Governance framework is described in more detail on this page.

The Audit Committee assists the Board in monitoring the effectiveness of the Qantas Group’s enterprise-wide risk management and internal control framework. The Safety, Health, Environment and Security Committee assists the Board with risk management in the areas of safety and health, security, environment and business resilience. The Group Management Committee (GMC) is the primary governance forum that monitors risk management performance. The GMC is chaired by the CEO and meets fortnightly to review the performance of the Qantas Group and make decisions that impact more than one Segment. The Qantas Group has adopted a common risk management framework that covers Qantas Group operations and facilitates the assessment and treatment of risk. The framework includes defined timeframes for the notification and evaluation of risk and defined timelines to action the risk treatments. The framework employs the ‘as low as reasonably practicable’ (ALARP) principle for the evaluation of risks to safety and health. Business Segment Management Boards are accountable for implementing the risk management framework and identifying and managing risk within the business in the pursuit of their strategic and operational objectives, including the risk to safety and health. Risk management is incorporated into business processes managed by individual business units providing management with decision making support. Business Units are responsible for monitoring that risk management controls are effective. Group Audit and Risk is responsible for providing independent assurance and advice to the Audit Committee on risk-based assurance of strategic, financial and operational risks across the Group. Group Audit and Risk conduct risk based internal audits across the Group as well as managing the conduct of external independent audits.

Qantas Sustainability Review 2013

11

GOVERNANCE Group Risk Framework Risk management in the Qantas Group has matured to be embedded in Management accountabilities, enabling the integration of risk management into all business activities and decision-making processes to ensure the Group effectively manages its risks. To support Qantas Group employees in their understanding of risk management, a number of training courses are available to employees which reinforce the Qantas Group Non-Negotiable Business Principle of we proactively manage risks. Group Audit and Risk is responsible for the design, implementation and continuous improvement of the risk management framework. This accountability extends to the development of Qantas’ risk management culture and the capability of managers and employees to identify, understand and treat risk. Group Audit and Risk monitor and report on the Qantas Group Risk Profile in addition to providing independent assurance on the effectiveness of key risk management and internal controls in the business to the CEO, GMC and the Board. Group Audit and Risk participates in annual strategy discussions with the Audit Committee to discuss and align the continuous improvement plans for the Framework with the expectations of the Board. Non-Negotiable Business Principles

Mandate and Commit

Framework design

Implement risk management

Continual improvement

Business Units

Group Audit and Risk

Group Risk Management Policy

The Group Risk Management Policy outlines how risk management supports the achievement of business objectives and corporate governance requirements, the minimum requirements for risk management and role responsibilities. Framework Design Group Audit and Risk is responsible for providing independent advice to the Audit Committee on risk-based assurance of strategic, financial and operational risks across the Group. Group Audit and Risk is accountable for the design of the Risk Management Framework. Group Audit and Risk maintains expertise in risk management framework design and implementation and work alongside the business to design the framework that creates and protect value and generates strategic advantage for the Qantas Group. Implementing Risk Management Business units are accountable for implementing the risk management framework and identify and manage risk within the business in the pursuit of their strategic and operational objectives, including the risk to safety and health. Monitor and Review Group Audit and Risk engages with the business to monitor and review the implementation of the risk management framework to identify gaps in the effective management of risk; and opportunities to continuously improve the framework. Continual Improvement Independent reviews of the risk management framework design and implementation are conducted to assure the Audit Committee of the effectiveness of the Qantas Group’s management of its material risks.

Monitoring and Review

Qantas Sustainability Review 2013

12

STAKEHOLDER ENGAGEMENT VISION

STAKEHOLDERS

We are committed to communicating effectively with our stakeholders.

People

The Board Charter states that the Board is responsible for ensuring that Management recognises Qantas’ legal and other obligations to all legitimate stakeholders.

The Qantas Group employs more than 33,000 employees, with 93% of employees located in Australia. At 30 June 2013, the Qantas Group community was made up of people with 99 nationalities, who speak 51 languages and are from 157 countries of origin.

“Stakeholders” are groups that are likely to feel a social, environmental, economic or financial impact from Qantas’ actions.

Having an engaged workforce and effectively communicating at all levels across the business are key priorities for the Qantas Group.

Qantas’ stakeholders include our people, shareholders, government, the investor community, customers, suppliers, trade unions and members of the communities in which Qantas operates.

Refer to the People section for detailed information in relation to Employee Engagement, page 32 and Employee Communication page 33.

The Qantas Group’s obligations to its stakeholders require that appropriate accountability and control systems are in place.

Qantas has an established process to ensure that it complies with its disclosure obligations under the ASX Listing Rules. In addition, Qantas endorses the ASX Principles and is committed to effective communication with shareholders and the effective participation of shareholders at Qantas Annual General Meetings (AGMs).

GOVERNANCE

The CEO is responsible for managing stakeholder engagement, with assistance from the GMC. The GMC is required to have the necessary governance structures in place to enable the appropriate level of engagement. As part of this process, each member of the GMC is allocated responsibility for specific stakeholders relevant to their respective mandates. Qantas Group Policies Qantas’ Group Policies outline specific expectations and requirements in relation to engagement with certain stakeholders. For example, the Code contains (among other things) details about how Qantas communicates with shareholders, the requirement to comply with Australian and local competition (anti-trust) laws and to treat people with respect. Similarly, other Qantas Group Policies, such as the Safety and Health Policy and the Environment Policy, contain the Qantas Group’s expectations relating to safety and health and the environment.

Shareholders

As part of Qantas’ commitment to effective communication with shareholders, Qantas announcements lodged with ASX are available on the Qantas website and shareholders who are registered receive email notification of significant market announcements. Qantas facilitates the effective participation of shareholders by: − − − −

Providing the notice of AGM (Notice) to shareholders Making the Notice available on the Qantas website Making AGM proceedings available for viewing by live and archived webcast Giving shareholders the opportunity to forward questions and comments to Qantas or the external auditor prior to the AGM

The Qantas Group Business Practices Document, page 17, provides further details in relation to Stakeholder Engagement and related Group Policies. http://www.qantas.com.au/infodetail/about/corporateGovernance /BusinessPracticesDocument.pdf Qantas Sustainability Review 2013

The Qantas Group Business Practices Document, page 19, provides further information in relation to Shareholder communication.

13

STAKEHOLDER ENGAGEMENT Government

Suppliers

The Qantas Group promotes a collaborative relationship with Government while complying with all laws and upholding the highest ethical standards.

Effective and efficient supplier relationships are vital to the success of Qantas.

 

The Qantas Group Business Practices Document, page 20, provides further information in relation to Government and specifically outlines that political donations must not be made directly or indirectly by the Qantas Group.

Investor Community The Group has a dedicated Investor Relations team (reporting to the CFO) that is responsible for interactive engagement with institutional investors and analysts. Investor Relations has a number of communication points including Half and Full-year Investor Results Briefings, Investor Roadshows (in Australia and overseas), Investor Conferences, direct Investor Relations contact and Investor Strategy Days.

Qantas Procurement actively manages relationships with many of its key suppliers through its Supplier Relationship Management program. The Procurement section provides further information in relation to Supplier Relationship Management page 47. Trade Unions The Qantas Group consults and negotiates with a large number of trade unions. There are 49 collective agreements in place with employees and unions across the Group. Qantas has a dedicated Industrial Relations team to manage all consultations/negotiations.

Customers

Members of the Community

Our customers are the core of everything we do.

Qantas is committed to engaging with and being a responsible member of local communities.

The Qantas Group engages with its customers through the Customer Satisfaction and Net Promoter Score processes – to measure our performance in the eyes of our customers. Additionally, the Closed Loop Feedback process allows direct communication between customers and front line managers – supporting continuous improvement and focus on the elements which will drive customer advocacy. Qantas’ website, Qantas.com, provides contact details for areas across the business, including:   − Global contacts − New and existing Booking enquiries − Corporate department contact details − Qantas Frequent Flyer − Qantas Store − Baggage enquiries − Customer Care contact details

Social media is an increasingly important channel for communicating with our customers, with Qantas monitoring and responding to posts on Qantas media sites including Facebook, Twitter, You Tube and online forums.

The Group’s philanthropic activities and partnerships are detailed in the Community section of this report, page 49. In addition to this community work, Qantas is a key participant in community meetings around Australia in relation to noise improvement issues. At these meetings, residents, the Airport and Air Traffic Control work to find noise improvements. Over the past twelve months Qantas has run a number of Required Navigation Performance (also known as Smart Tracking) simulator demonstration sessions with members of the community. These have been conducted as Airservices Australia has implemented RNP procedures at Canberra, Cairns and Melbourne airports to assist the community in understanding RNP and the capability it provides in terms of operational efficiency and noise mitigation.

Please see the Customer section on page 22 for detailed information on Customer Satisfaction, NPS, Closed Loop Feedback and Customer Care. Qantas Sustainability Review 2013

14

FINANCIAL VISION

GOVERNANCE

To build a strong, viable business capable of delivering sustainable returns to shareholders.

Audit Committee

STRATEGY The Group’s financial sustainability is the result of Long-term Profitability, Prudent Investment and Disciplined Capital Management, underpinned by Financial Risk Management. Each of these strategic areas are discussed in more detail in the following pages. The Group’s long term targets are to see the Return on Invested Capital (ROIC) for Qantas Brands (Qantas Domestic, Qantas International, Qantas Loyalty and Qantas Freight), Jetstar Group – and therefore the total Qantas Group’s – exceed the Weighted Average Cost of Capital (WACC). Sustainable Returns to Shareholders Return on Invested Capital (ROIC) > Weighted Average Cost of Capital (WACC)

Prudent Investment

Long Term Profitability

Strategic priorities

Sustainable value proposition

Cost efficiency and productivity

Disciplined Capital Management

Optimised capital structure

Fleet renewal

Investment grade credit rating

Customer product and innovation

Dividends/ capital returns

Financial Risk Management

The Board Audit Committee is responsible for assisting the Board in fulfilling its corporate governance responsibilities in regard to financial reporting, audit and risk management including: — The integrity of the Qantas Group’s financial reporting — Compliance with legal and regulatory obligations — The effectiveness of the Qantas Group’s enterprise-wide risk management and internal control framework — Oversight of the independence of external and internal auditors CEO/CFO Declaration Section 295A of the Corporations Act and ASX Principles requires the CEO and CFO to make certain declarations to the Board. To support the CEO and CFO in making the declarations, Senior Management complete a biannual Financial and Corporate Governance Self-Assessment Questionnaire (FCGSA Questionnaire). The FCGSA Questionnaire forms part of Qantas’ corporate governance framework and it requires Senior Management to respond to questions relating to Qantas’ financial reporting, corporate governance and risk management. Group Finance Policy The Group Finance Policy outlines the minimum requirements and responsibilities for financial reporting, governance and control. The Group Finance Policy supports the Group’s compliance with the following Non-Negotiable Business Principles:

MATERIAL AREAS OF FOCUS Page Long-term Profitability

16

Prudent Investment

16

Disciplined Capital Management

18

Financial Risk Management

18

a) We are committed to true and fair financial reporting; and b) We comply with laws and regulations.

Qantas Sustainability Review 2013

15

FINANCIAL LONG-TERM PROFITABILITY Long-term profitability results from providing a sustainable value proposition, partnered with cost efficiency and productivity. Sustainable value proposition The Group’s brand portfolio and segment strategies are designed to deliver a sustainable value proposition to our customers. The Group seeks to be ‘always the first choice for customers in the markets we serve’. Domestically, the Group maintains its leading distribution, scale, network and frequency advantage through a 65% domestic market share. This is the profit maximising domestic market share and is achieved through the Group’s dual brand strategy with Qantas Domestic and Jetstar. Qantas Domestic is positioned to be best for business and premium leisure customers and to provide a superior customer proposition through investment in product and service. High customer satisfaction sees Qantas Domestic hold a dominant position in the corporate market (currently 84% share of corporate market revenue) helping to provide a margin advantage over the competition. Jetstar is positioned to be best for leisure and price sensitive customers with a vision to be the world’s best low fares airline. Jetstar’s mission is to offer every day low fares to enable more people to fly more places, more often. To achieve this, Jetstar invests in growth and product innovation, seeks to drive scale advantages and build brand strength. Jetstar’s strategy is to build a strong brand across Asia Pacific. By linking with strong local partners and leveraging the low cost model, Jetstar seeks to realise the potential in the growing Asia market. The Qantas International business continues to open gateways to the world by developing new partnerships and strengthening existing ones, allowing the business to deliver outstanding customer product and an enhanced global network. The Qantas and Emirates partnership was launched during the year and the joint network is expected to expand further.

The transformation of the Asian network, enabled by the transfer of Qantas’ hub to Dubai, codeshare agreement with China Eastern, and Jetstar’s expansion in Asia, allows the Group to benefit from growth in opportunities in the Asian region. Through investment in product and service, Qantas International seeks to be best for global travellers. The Group’s dual brand strategy is further supported by Qantas Frequent Flyer, Australia’s leading Loyalty business. With 9.4 million members, Qantas Frequency Flyer continues to grow through providing more rewards, new partners, building communities (such as the food and wine community ‘Qantas EpiQure’) and a new wave of growth with the launch of new products such as Qantas Cash. Cost efficiency and productivity Through operational excellence and efficiency, as well as ongoing cost reduction, Qantas Domestic looks to maintain its margin advantage over the competition, Jetstar looks to retain its position as low fares leader, and Qantas International looks to build a strong, viable business. Qantas is going through its biggest transformation since privatisation in 1995. This transformation is taking place in all areas of the business. It is integral to meeting our strategic goals and ensuring that we are competitive in a rapidly changing aviation industry. The transformation program has already delivered significant benefits and unit cost improvement during the year. Strategic initiatives included: reconfiguration of A380-800 and B747400 aircraft which has improved fleet economics; the consolidation of engineering and catering facilities; and the exit of loss making routes. Qantas is committed to the transformation of its legacy cost base, enabling greater efficiency and competitiveness.

Qantas Sustainability Review 2013

16

FINA ANCIA AL PRUDENT IN NVESTMENT T

Fleet F Profile e

Strategic p riorities

For F the first time t in apprroximately 20 0 years, the Group’s G averrage fleet ag ge is below eight years.. This T not only y puts our fle eet up with the world’s best, b but pro ovides additiional flexibility in moderating m future capita al expenditu ure requirements s.

The Qantass Group’s stra ategy is bas sed on four priorities:

− − − −

Building g on the stro ong Domestic c business Turning around Qantas Interna ational Growing g Jetstar in Asia A Broaden ning the rea ach of Qanta as Loyalty

Delivering o on these stra ategic prioritties requiress the proactive m managementt of capital whilst w continuing tto invest in fleet f and pro oduct innovation. Fleet Renew wal The Group p prudently manages cap pital expenditure e and leasess in order to maintain fle eet flexibility and closely ma anage the Group’s G youn ng average fleet age. Investment in new aircraft drives im mprovementss in safety, passsenger comffort, unit cos st, fuel efficiency, n noise emissio ons, freight capacity c an d range capa ability. Monito oring the av verage passenger fleet age asssists the Gro oup to mana age its long-term m capital req quirements. The Group’ss priority is to provide for long-term fleet renewa al and simplific cation of its fleet, which will directly improve cusstomer expe erience, unit cost and fu uel efficiency. Long–term ffleet plannin ng is essentiial to successs. The Group’ss fleet plan is designed to support tthe strategic ob bjectives of the t Group’s two strong complemen ntary flying brands, b whils st retaining significant flexibility to respond to changes c in market cond ditions.

2.0

9.0

1.5

8.5

1.0

8.0

0.5

7.5

0.0

7.0 2009

2010

20011

Aircraft Deposiits

1. Average Sch heduled Passenger Fleet 

2012

20 013 Aircrraft Age



Aircraft Age (years)

Aircraft Deposits ($B)

In balancing g these, the Group’s ave erage fleet a age will remain in the range e of eight to ten years ovver the long terrm.

FY13

FY12

VPY Y

A380-800

12

12

-

B747-400

10

15

(5)

B747-400ER

6

6

-

A330-200

10

8

2

A330-300

10

10

-

B767-300ER

20

23

(3)

B737-400

6

12

(6)

B737-800NG

66

59

7

Total Qantas

140

145

(5)

A320-200

70

63

7

A321-200

6

6

-

A330-200

10

11

(1)

Total Jetstar

86

80

6

B717-200

13

13

-

Q200/Q300

21

21

-

Q400

28

25

3

Total QantasLink

62

59

3

EMB120

7

7

-

F100

12

12

-

Total Network Aviation A

19

19

-

B737-300SF

4

4

-

B767-300SF

1

1

-

Total Freight

5

5

-

TOTAL GROUP

312

308

4

In nnovation and a producct In n line with sttrategic prio orities, the Qantas Group p is continually c in nvesting in p product, serv vice and in nnovative te echnology to o provide an n exceptiona al experience e for f customerrs. Technology T is a key ena abler for the Group to transform the e business, operate more efficientlyy and a continue e to offer a ssuperior level of service e. 1  The T Group’s investment is targeted towards product p that adds value e for customers and enhances e th heir end-to-e end experie ence. Refer R to the Customer se ection on pa age 22 for detailed d info ormation in re elation to th he Group’s product p and service offe ering.

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FINANCIAL DISCIPLINED CAPITAL MANAGEMENT

FINANCIAL RISK MANAGEMENT

The Group’s goal is to maintain a strong capital base designed to maximise shareholder value, maintain creditor confidence and allow sustainable investment throughout economic cycles.

The Qantas Group is subject to liquidity, interest rate, foreign exchange, fuel price and credit risks. These risks are an inherent part of the operations of an international airline. The Qantas Group manages these risk exposures using various financial instruments and risk management strategies, governed by the Board-approved Treasury Risk Management Policy.

The Group remains focused on balancing funding requirements with providing returns to its shareholders. Return on Invested Capital (ROIC) measures returns relative to the assets employed in the business. The target is for ROIC to exceed the cost of capital over the long term.

The Qantas Group has a centralised Treasury function that manages the financial risks in line with this policy. The Qantas Annual Report 2013 contains a detailed analysis on Financial Risk Management – refer to Note 35 of the Financial Statements on page 154 of the report.

Optimised capital structure The Group remains focused on maintaining an efficient capital structure that provides the lowest cost of capital and adequate financial reserves to withstand negative impacts from exogenous shocks.

Additionally, the Qantas Data Book 2013 profiles the Group’s financial risk management approach.

Between 2008/2009 and 2011/2012, the Group underwent a growth phase in Jetstar and fleet renewal and cost transformation in Qantas, which temporarily increased financial leverage above target levels. This phase is now complete, resulting in capital expenditure returning to maintenance levels. The Group expects operating cash flow to exceed capital expenditure, allowing for repayment of debt and future returns to shareholders. Investment grade credit rating The optimised capital structure is consistent with an investment grade credit rating, which increases access to borrowing at a lower cost. Qantas is one of only two airlines in the world that are both listed and rated investment grade by both Standard & Poors (S&P) and Moodys. Dividends/capital returns Maintenance of an optimal capital structure and an investment grade credit rating maximises returns to shareholders. The Group remains committed to returning to regular dividend payments when the optimised capital structure is achieved.

Qantas Sustainability Review 2013

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SAFETY AND HEALTH VISION

SAFETY COMMITMENTS

To be the world’s leading airline group in air, ground and people safety and health.

Qantas is dedicated to continuous improvement in the prevention of injuries, illness, accidents and incidents through effective safety management systems, quality processes and a strong safety culture.

STRATEGY The Qantas Group Safety and Health Strategy has the following goals in an effort to realise the vision: −







Underpinning Management Systems: simplification and efficiencies in safety management processes and oversight Targeted Risk Reduction: enhanced and effective safety risk management framework across the Group Improved Culture and Behaviours: embed a strong safety culture across all levels of the Group Proactive Regulatory Engagement: establish robust and constructive working relationships with regulators to promote effective consultation on aviation and workplace safety.

A number of strategic initiatives are underway across all Qantas Group businesses to support these strategic goals. These initiatives include: −











Implementing world leading Flight Data monitoring and analysis software for the early identification of aircraft operating risks Replacing the safety information system used by Qantas branded airlines with a web based configurable solution to optimise safety management processes and data analysis and reporting A group-wide review of supplier and contractor management with a focus on safety standards and oversight Measuring safety culture across the Group through a Safety Climate Survey, with action plans to be developed following an analysis of survey responses Review and consolidation of safety management procedures and documentation; and business unit specific injury prevention programs

We achieve this through our commitment to: 9 Individual acceptance of accountability and responsibility for safe conditions and behaviour 9 A culture of safety leadership, collaborative effort, open communication, dissemination of safety information, consultation and involvement at all levels in the workplace 9 Managers demonstrating and driving genuine safety commitment and leadership through their personal actions 9 Working within a healthy and safe environment by integrating safety and health, environment, security, quality, risk and compliance management systems 9 Managers explicit support of a just cultural environment, where all our people and contractors are encouraged to report errors and hazards 9 Developing strategies and measurable objectives for achieving safety and health targets 9 Continuous monitoring, measurement, reporting and improvement of safety management outcomes and health and safety performance 9 Effective hazard identification and risk management, including integration of human factors into safety management systems 9 Providing education and training based on defined competencies 9 Meeting or exceeding compliance with regulatory and legislative obligations, and company standards and policies 9 Recognising our people for demonstrating safety excellence or developing innovative safety solutions Through the active participation and commitment of all our people we will strive to protect the health and safety of our people, customers, suppliers, assets, operations and the wider community.

Qantas Sustainability Review 2013

19

SAFE ETY AND A HEA ALTH SAFETY GO OVERNANCE FRAMEWORK

Safety will always be the Qantass Group’s fifirst priority and d is at the heart h of eve verything th he Group und dertakes. Safety unde erpins everything that is done at Qa antas — the opera ational safetty of aircraft, the occupationa al health an nd safety of employees e a and contractors,, and the we ellbeing of customers. c The Group’ss safety governance framework is designed to o obtain, collate and sorrt relevant s afety information and report this information to appropriate e decision makers m within n the Group. Each of the areas in the e Safety Gov vernance framework is described d on this pag ge.

The Group w works closely with the Civil Aviation Safety Authority (CASA), Australian Transport S afety Bureau (ATS SB) and inte ernational re egulators on n compliance e matters, the e introductio on of new technology and processses, and inv vestigations into safety occurrences. Qantas Gro oup Safety Governance G e Frameworrk

Whistleblower Program

Board Safety Advisor

Group Safety and Health

Group Audit & Risk

CEO

Business Unit SSafety Sub‐committees

Audit Co ommittee The Aud dit Committee assists the Board B in monitoring the effecttiveness of the e Qantas Group’s enterprise-w wide risk mana agement and d internal control frame ework.

For Grou up airline ope erations, Airlin ne Safety Committees are the p primary goverrnance forum ms that mon nitor safety pe erformance. These Committees C co omprise of ea ach operator’ss Accounttable Manage er (or Air Ope erator Certifica ate Holder) and   Key Perssonnel as deffined in the Civil Aviation Regulations,, as well as other businesss stakeholders responssible for the safe s operation n   of Qanta as Group airccraft. These stakeholders ccover  aspects s of Flight Operatio ons, Ground O Operations, Cabin C Operatio ons and Eng gineering and d Maintenanc ce. In addition n to operatio onal safety, A Airline Safety Committees C also monitor Workplace He ealth and Safety performance and riskks. Airline Safety Committtees are supported by Sub bCommittees that reprresent each operational o area.

Group Safety S and He ealth is respon nsible for providing independe ent objective advice a on aviation safety stand dards and saffety oversightt for the Board and its Co mmittees. Gro oup Safety an nd Health operates o inde ependently off any other Group business b divisiion and is dirrectly accounttable to the G Group CEO.

Safety, Health, Environment an nd Security  Committee

Express  Freight  Jetconnect Enterrprise  Freighters  Qantas  Jetstar QantasLink Network N Airlines Managgement  Australia Airlines  Airline Airline Airline Safety  Safety  Safety  Safety  Safety  Airline Revview  Committee Committee Committee Co ommittee Committee Meeeting Safety  Committee

Health, Environment E and Security Committee is respons sible for assistting the Board in oversight and monitoring of the e Qantas Gro oup’s operatio onal safety syystem, the Qantas Manage ement System m (QMS).

Group Safety S and H ealth

Board

Group Executive Committee (CEO O Briefings)

To prote ect Qantas’ re eputation as one o of the world’s safest s and se ecure airlines and to mana age the safe ety, health, en nvironment an nd security performance of the Q Qantas Group p, the Safety,

Airline Safety S Comm ittees

A dedicated d Board Com mmittee has oversight o f safety gove ernance and d the Qantas s Group’s Sa afety Management Systems cover c all asp pects of safe ety, health, environmental and a security performancce. Ensuring co onsistency across the Grroup in safe ety management and legisslative comp pliance, the S Safety Management System iss acknowledged as a be est practice mo odel in the aviation industry.

Au udit  Comm mittee 

Safety, Health, Envirronment and d Security Committtee

Group Audit A and Rissk Group Audit A and Riskk is responsib ble for providin ng indepen ndent advice to the Audit Committee C on n risk-bas sed assuranc e of strategic c, financial an nd operatio onal risks acro oss the Group p. Group Aud dit and Risk k conduct inte ernal audits across a the Group as a well as man naging the co onduct of external independen nt audits.

Qantas Sustainability Review 2013

20

SAFETY AND HEALTH SAFETY REPORTING As well as meeting all regulatory requirements, the Group encourages employees to report operational and workplace incidents and hazards promptly and openly. Open and transparent reporting of safety performance and related matters through the safety governance framework is central to the management of safety in the Qantas Group. REGULATORY COMPLIANCE Externally, the Qantas Group complies with all regulatory reporting requirements, including those related to the ATSB, CASA and various state based workplace health and safety authorities. The Qantas Group also complies with all regulatory reporting requirements in all jurisdictions in which it operates.

Qantas Sustainability Review 2013

21

CUSTOMER .

The Qantas Group understands that different travellers have very different needs and values. The Group’s multibrand model is designed to give customers the experience they desire, with each brand playing a very specific role.

HIGHLIGHTS During 2012/2013 Qantas Domestic was awarded Best Domestic Airline at The Australian Federation of Travel Agents National Industry Awards for the fourth year running.

MATERIAL AREAS OF FOCUS

The Air Transport Awards 2012 and Australian Traveller Awards 2012 named QantasLink Regional Airline of the Year, and Best Regional Airline respectively.

Qantas Domestic and Qantas International

Qantas Domestic was also awarded Best Australian Lounges at the Australian Business Traveller Awards 2012.

Overview − Qantas Domestic − Qantas International

Additionally at the 2013 Skytrax World Airline Awards Qantas was awarded Best Airline Australia-Pacific, Jetstar was awarded the Best Low-Cost Airline - Australia/Pacific and Jetstar Asia was awarded best low-cost carrier based in Singapore.

Performance Measures − Customer Satisfaction and Net Promoter Score − On Time Performance

Page

Customer Experience Initiatives Loyalty

Skytrax classifies airlines by the quality of their front-line product and staff service standards and is recognised as a leading global Benchmark of airline standards. The annual Skytrax awards are judged by 18 million travellers.

23

27

Overview Net Promoter Score Member Engagement Customer Experience Initiatives Jetstar

Qantas Loyalty achieved continued member growth, up 700,000 members since June 2012 to 9.4 million members. Additionally, member engagement is driving an increase in rewards redeemed during the year – up 9 per cent compared to the prior year.

29

Overview Net Promoter Score Customer Experience Initiatives

Qantas Sustainability Review 2013

22

CUST TOME ER - QAN NTAS S QANTAS DO OMESTIC Building on The Group’ss strong dom mestic business is one of the core c goals of o the Group Strategy. Qantas Dom mestic is Ausstralia’s prem mium airline and through h a superiorr customer proposition, p leading netw work and fre equency and by maintaining g margin adv vantage, Qa antas Domesstic aims to be b best for busiiness and premium leisu ure customers. QANTAS INT TERNATIONA AL To be the premium international ca arrier of choiice for Australia an corporate e and premium leisure travellers. f pillar strrategy to Qantas International’s four ess supportss turnaround the internattional busine er vision. the custome Best for Glo obal Travellers – delivering consist ent customer exxcellence su upported by enhanced end to end product, a strong s servic ce focus and da market lead ding loyalty proposition. p Growing wi th Asia – Se erving the As sian market through imp proved netw work connectivity, enhanced c codeshare partnerships p s and the establishme ent of further alliances. Gateways tto the world d – improved d network position thro ough the establishmentt of key alliances an nd deepenin ng existing partnerships p s. A strong, viiable busine ess – delivered through h network opttimisation, margin m impro ovement and d cost reductiion.

N Look – A Truly Con ntemporary Qantas’ New Australian n Story Vision Since it firs st hit the run nway in 1938, the Qantas un niform has b been an evo ocative symbol of excellence and the irre epressible Australian n spirit of travvel. In each of its guises, fro om the swing ging 60s and d the loud 70s to des signs from E milio Pucci and a Yves Saint Laurrent and mo ost recently Peter P Morrissey, it has uphe eld a contem mporary, stylish and d world-classs image. Our new uniform u markks a new chapter in ourr brand’s story, includin ng the majorr investmen nts Qantas iss making in aircraft, lounges and inflight sservice and entertainm ment. It hera alds what will inevitably contribute e to our 20200 vision: the creation of a single se ervice unit, o or as we like e to say,   “one team m”.

 

An underttaking of thiss scale is immense. The uniform prroduction prrocess involv ves   hundreds of sample g garments, th housands off people, hu undreds of tthousands of o metres of fabric and d immeasura able hours and a effort. A number of designerrs were aske ed to submitt their vision n for the new w Qantas un niform. After lengthy ev valuation, th he Uniform Panel P (comprised of Qantass staff), Grou up Managem ment Commit tee and CEO O Alan Joyce dec cided there w was a very clear c choice: Au ustralian dessigner, Martin Grant.

The four pillars are und derpinned by y a strong alliances mo odel and pa assionate, hiighly engag ged teams.

Qantas Sustainability Review 2013

23

CUST TOME ER - QAN NTAS S TION AND NE ET PROMOTTER CUSTOMER SATISFACT S) SCORE (NPS

In 2012/20133 Qantas Do omestic and d Qantas internationa nal achieved d their highe hest levels o of Customer S Satisfaction and the hig ghest NPS results eve er achieved.. A range of c customer iniitiatives were e implementted in FY13 (see e page 26) su upporting Qantas Domestic’s a and Qantas Internationa al’s strategyy and driving towards continuous improvement a and associated increase in customer ad dvocacy. Qantas continues to tra ack Net Prom moter Score (NPS) to as a measure of advocacy y for the airliine.

Qantas’ New Look – A Truly Conte emporary Australian Story S Employee Engagemen E nt A key focus during the ffocus was on o engaging our people – ensuring th hat all of our uniforme ed employe es could ha ave meaningful input in the design. See the Peo ople section on page 31 to read about how our o employe ees were pa art of this exciting jourrney.

Customer Sa atisfaction highlights h du uring 2012/20 013:

− − −

Satisfac ction scores for the reco onfigured B7747400s in line with A38 80 scores Australia a-Dubai/Du ubai-London n were the highest rating route es at launch New Sin ngapore Lou unge rating significantly s higher tthan before refurbishme ent

The record NPS results and custom mer satisfactiion ratings refle ect the hard work and dedication d o f all our people as well as th he continued focus on g customer se ervice throug gh investme ent in training and techno ology to enable continuo ous service improvemen nt. The results also show th hat the Grou up’s productt, service and d network en nhancementts are having ga meaningful impact. ERFORMANC CE ON TIME PE

Qantas was as the most on o time maj ajor domestiic airline for 22012/2013, an nd outperfo ormed our major dome estic compe etitor. On time perrformance (O OTP) is one of o the Group p’s most importtant operatio onal measurres and hass a significant im mpact on effficiency, cos st, customerr experience and custom mer satisfaction. ourth consecutive year Qantas This is the fo Domestic ha as won OTP and it equa ates to nearlly 14,000 more on time flights than ourr major competitor iin the last fo our financial years.

      The Uniform m Journey Since comin ng on board d, Martin Grant has sourced and d selected ffabric - testing fabric scientifically y and with tririal wears; co ompleted colour matching and pa attern makin ng; made sample garm ments; conssulted with OHS; O and above all, completed a full uniform range. And the who ole time Marrtin has worked with the uniform panel to ge et feedback which he d to and inco orporated. has listened Immediately y following th he unveil, there was an ordering period follo owed by a le engthy manufacturing process . Refer to the Procuremen nt section on n page 47 fo or further information on the man nufacturing process. p de, it will be packed Once everytthing is mad according to o every indivvidual’s orde er and bundled up for deliveryy. It’s been a long process with h the uniform ms expected d to be worn from early e 2014.

Qantas Sustainability Review 2013

24

CUST TOME ER - QAN NTAS S K CUSTOMER FEEDBACK Qantas’ New Look – A Truly Contemporary Australian n Story

Closed Loo p Feedbac ck Qantas continues to utilise its Close ed Loop Feedback p program acrross the customer experience elements off airport, lounges and in nflight service e in order to o allow direc ct communication betwee en customers s and front lline g continuous s improveme ent. managers – supporting Qantas Freq quent Flyerss are invited d to participa ate in the Close ed Loop Feedback pane el, providing g feedback evvery second d time they fly with Qant as. The panel c currently con nsists of 12,70 00 Qantas Frequent Flyers ranging g from Bronze to Platinu um One status. Around 900 0 surveys completed eacch week – app proximately 85% 8 domestic and 15% internationa al. Survey resu ults and custtomer comm ments are immediatelyy available to frontline managers, m enabling them to discusss this feedb back with th heir teams to ma anage any performance p e gaps. Wha at’s more, they c can speak directly d with customers t o er. help resolve e particular issues in a timely t manne In this way, frontline ma anagers are given more e of the custom mer’s experiience. ownership o

Woolmark The fine Merino wool w woven into the t new Qantas un niform design ns has been n sourced from over 50 wool grow wing properties around Au ustralia, inclu uding flocks from close to where Qantas Q bega an at Longre each in Queenslan nd. A sustaina ably produce ed natural fibre, fine d breathablle, keeping Merino wool is soft and Qantas sta aff comforta ble in both cool c and warm clima ates; perfecct for wearing g anywhere the world. The combination of Me erino wool and a Qantas is a natura al fit given th he place botth hold in Australia’s national ch haracter; botth are central to the fabric off our nation..

     

Customer C Care ers Qantas is co ommitted to listening to our custome and respon nding to their needs. Qantas wants its customers to become advocates a – but this is o only possible by delivering the highest standards s o of care and se ervice throug ghout the cu ustomer jourrney. Qantas’ ded dicated Custtomer Care departmentt aims to maxximise advoc cacy and loy yalty throug h recovering c customers who w experience a flight disruption o or product/sservice failurre. Qantas’ recovery strate egy is design ned to resolvve and recover any produ uct or service e failure as close to the e occurrence e as possible e. This is achieved byy providing front line sta aff with toolss, such as the e RED app, to o take imme ediate action n and share ffeedback wiith the Custo omer Care te eam. Social media is an incre easingly imp portant chan nnel for commun nicating with our custom mers, with Qantas mon nitoring and responding g to posts on n Qantas med dia sites including Facebook, Twitte er, You Tube and online fo orums.

Limiting th he Footprintt The creatio on of a new w uniform is a significant undertakin ng. As well a as incorpora ating sustainable Australian n Merino wool in its suiting, the e hat that wiill be worn by b our cabin crew is ma ade from reccycled plastic bottle tops, in a first f for the a airline. Not only o is the material su ustainable b but it also se erves a very functional purpose: th he hat can be b folded away when not used rrather than taking up limited ove erhead locke er space on board the aircraft. e Qantas Fo oundation In conjunction with the and Group p Environme ent, we are exploring e opportunitties to recyc le and re-us se the old uniform ins stead of rele egating it to landfill.

Qantas Sustainability Review 2013

25

CUSTOMER - QANTAS CUSTOMER EXPERIENCE INITIATIVES

QANTAS INTERNATIONAL

Investing in Customer Service

Continuous investment in product and network is key to enhancing customer experience.

 14,000 Qantas front-line staff completed intensive customer service training with a focus on delivering more personalised and responsive service in the airport and on-board. iPads and the RED customer service app were introduced for Customer Service Managers (CSMs). These products are enhancing service in lounges and on-board Qantas’ fleet.

Investing in Aircraft and Network − − − −



A330 fleet being refreshed to include lie-flat beds in business 9 x B747 aircraft reconfigured with A380 product 12 x A380 aircraft reconfigured with optimised seat mix Through our new partnership with Emirates, more than 65 destinations are available to our customers via Dubai At the same time Qantas has added more seats to Asia.

Investing in New Experiences Chauffeur Drive was introduced to First/Business customers on flights to and from London, Dubai, Los Angeles and Dallas Fort Worth.

QANTAS DOMESTIC Qantas Domestic is continually investing in product and network to provide exceptional customer experience. Investing in Aircraft and Network During 2012/2013: −



− −

15 x B767 aircraft refreshed with modern interiors and Q-Streaming inflight entertainment 8 x QantasLink B717 aircraft refreshed (with further 5 to be completed). Additionally the next 5 B717 aircraft deliveries will include Business Class. B738s to fully replace B734s by early 2014. Launched Sydney-Gold Coast service

 Investing in East-West services On Qantas’ East-West services, every weekday Perth-Sydney and Perth-Melbourne flights is now operated with an Airbus A330. Additionally, international standard menus have been introduced in business class on all east-west flights.

Business Class customers can now order meals before boarding, thanks to the introduction of Select on Q-Eat. Select on Q-Eat guarantees meal selection and can also let crew know that a customer wants to sleep first and eat later. The RED app can also alert crew when customers have chosen to sleep first and dine later in the flight

Select on Q-Eat also support the Sleep Service introduced for Business customers. Sleep Service includes a new mattress, duvet and turndown service. The new Singapore Lounge reflects the Group’s commitment to Asia, and has been achieving customer satisfaction ratings significantly higher than before the refurbishment.

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CUST TOME ER - LOY YALTY Y OYALTY QANTAS LO Unlocking th he value of Qantas Q Loya alty is one o f the four keyy pillars of th he Qantas Group strateg gy. Qantas Loya alty is a major asset for the Group, generating profit and adding a value e for our customers. Success is b built on deep p consumerr knowledge e which in turn is informin ng a long-term strategy to engage cusstomers thro ough their sp pecial intere ests.

NET N PROMO OTER SCORE E

In I 2012/2013 3 Qantas Loy oyalty achie eved a recorrd Net N Promote ter Score (w which measu ures custom mer satisfaction s n). Record R satis sfaction hass been driven by the righ ht rewards, r the e range of w ways to earn n points and customer c se ervice.

Qantas Loya alty is a stro ong, sustaina able and growing bussiness, evide enced by, member m grow wth, partner grow wth and a continuous c in ncrease in reward rede emptions. Members

Members (millions)

With 9.4 milliion memberrs, the Qanta as Loyalty member base continue es to grow - increasing b by 700,000 mem mbers since e June 2012. MEMBER M EN NGAGEMENTT

10.0 10m tarrget  for FY114 

9.0 8.0 7.0

Growth in Frequent embers Flyer Me

6.0

Qantas Q Loya alty is comm mitted to driviing memberr engagemen e nt. During 20012/2013 mem mber engagemen e nt highlights included:



5.0 2009

2010

2011

2012

2013

2014

Partners



QFF has hu undreds of partners p who o pay QFF to o issue pointss to memberrs when mem mbers purchase partner produ ucts or serviices, creatin ng loyalty to the partner an nd rewardin ng the memb ber for that loya alty. The com mbination of a wide partner netw work for earrning, and a large memb ber base, make es the QFF program p morre valuable to both partne ers and mem mbers. Rewards 5.6 million re ewards were e provided to members ar. during 2012/ /2013 – up 10 0% compare ed to last yea Members ca an use pointts with over 30 partner airlines to m more than 1,0 000 flight destinations a nd over 3,500 p products in the t Qantas store. s



Increase ed relevant ccommunications to memberrs – based o on specific customer c behaviours and pro ofiles. This re esulted in record high h email op pen rates. Increase ed member fface to face e engageme ent via natio onwide mem mber roadshows, Qantass epiQure and Platinu um One even nts and experien nces. Memberrs are increa asingly demo onstrating striving behaviour b to o retain and d attain recognittion tiers, inccluding Platinum One

ment was also a key Lifting L memb ber engagem outcome o forr the new ‘Fo or every journey’ campaign. c During D the c ampaign ov ver 600,000 members m en ngaged with h campaign microsite an nd over o 100,000 0 new memb bers joined during d campaign c period. p

Reward highlights in 20 012/2013 inclu uded:

− −

Flight Siimulator – ‘m money can’t buy’ experien nces More than 26 million n points rede eemed for Unicef ssince Octobe er launch. Qantas Sustainability Review 2013

27

CUSTOMER - LOYALTY 2012/2013 CUSTOMER INITATIVES

Qantas Cash

Qantas Emirates Partnership

Qantas Cash was announced in the year and is due to launch in 2013. In addition to faster, smarter check-in, boarding and lounge access, the prepaid multi-currency travel card will give members new ways to earn points and the ability to hold up to nine different currencies on one card.

During the year, Emirates and Malaysian Airlines were welcomed to Qantas’ airline partner network. The addition of Emirates gives Qantas frequent flyer members the ability to redeem points for 175 worldwide destinations across the Qantas and Emirates network. Members’ tier status is recognised with both airlines when flying on the Qantas-Emirates network and Gold members (or above) have access to global Qantas and Emirates lounges.

Building Communities Jetstar Enhancements During 2012/2013, Qantas Loyalty strengthened its partnership with Jetstar, increasing opportunities for members to earn and spend points across Jetstar’s pan‑Asian network, at a lower rate - 20% points price reduction for Jetstar Classic Award flights.

As Qantas Loyalty expands the scale of the frequent flyer program, and develops growth opportunities, exclusive new services are being added for members, such as the Qantas epiQure food and wine community.

International Hotel Group Partners Qantas Loyalty expanded its international hotel group partners with the introduction of Jumeirah Hotel Group and Atlantis The Palm Hotel, two of the largest hotel groups in Dubai.

 

   

Financial Card Products New financial card products were launched with David Jones, Westpac and Macquarie bank. Search Toolbar In June, Qantas Loyalty launched a new search toolbar with Yahoo 7. Over 25,000 members are now earning points when they search the internet.

Qantas epiQure is the program’s online food and fine wine community exclusive to Qantas Frequent Flyers. At Qantas we take great pride in the quality of our on-board wine selections of which are chosen by our Qantas Wine Panel. EpiQure offers Qantas Frequent Flyer members the opportunity to enjoy a selection of these fine wines at home plus exclusive access to events as well as products you won't see anywhere else, from a wonderful array of wineries and winemakers. In 2012/2013 sales were up 292 per cent and the number of members increased 63 per cent.

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CUST TOME ER - JET STAR R JETSTAR

20 012/2013 HIG GHLIGHTS

ares Jetstar’s vision is to be the World’s Best Low Fa Airline.

Je etstar was re ecently awa arded the Be est Low-Cosst Airline A - Austrralia/Pacificc 2013 in the annual Skytrax World d Airline awa ards.

v based d, low fares The Jetstar Group is a value airlines operrating in the e leisure and d network of a value based d markets. Jetstar is focused on:

Skytrax classifies airlines by the quality of their oduct and sttaff service standards s and frront-line pro iss recognised d as a leadin ng global Be enchmark off airline standa ards.

ering commiitment to be eing a low An unwave fares leade er and a commitment to lowest co ost to enable d delivery of lo ow fares Jetstar’s misssion is to offfer all day, every e day lo ow fares to ena able more pe eople to fly to more placces, more often. Jetstar custtomers only pay for wha at they need – and have the t flexibility y of adding checked ba aggage and d/or a bundlle of extras. Hassle-free e and enjoyyable customer experience e Through inn novation and d cutting ed dge technolo ogy Jetstar offerrs customerss a range off services to o make their e experience as hassle fre ee and enjoyable a as possible. These T includ de SMS boarding pa asses, Call centre c chat and a Skype integration, payment methods such h as PayPal.. On-board c customers ca an used iPads to view th he latest releasse movies, TV T shows, mu usic and a liineup of the latest generation games, e-magazin nes and e-bookks. An extensivve network to the mostt popular leisure marrkets Jetstar is the largest low w cost carrie er in the Asia a 1. Pacific regio on , and hass a growing network – currently 129 9 routes acro oss the Jetstar businessses. Consistentlyy deliver on n schedule Jetstar unde erstands the e importance of getting you to your chossen destination on-time e, every time e. We strive to ope erate every flight and meet m every departure a and arrival tiime shown in our publisshed schedule an nd to do so without com mpromising safety. 1

NET PROMOT TOR SCORE

In n 2012/2013 Jetstar J reco orded stron ng customerr advocacy a ac cross all Jet etstar airline es. Je etstar measures Net Pro omoter Score (NPS) to determine ad dvocacy for the airline. vocacy unde erpins Jetstar’s strategyy Customer adv or sustainab ble revenue g growth. fo The building blocks to de elivering cus stomer advocacy in the Jetstar b businesses are: a

− − − −

P e (OTP) On Time Performance apabilities Problem resolution ca Investing in Jetstar’s front line teams Customerr Experience e

Each of these e areas of fo ocus is discu ussed in more detail on the following pa age.

Based on gross reven nues of the Jetstar conssolidated entities for the e 12 months to March 20113.

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CUSTOMER – JETSTAR 2012/2013 CUSTOMER EXPERIENCE INITIATIVES On Time Performance OTP has been identified as a major driver of Net Promoter Score and has continued to be a focus for improvement with key initiatives being implemented across the Jetstar Group, including: − − − −

Live Chat Customer Service Jetstar became the first airline in Australia to introduce live chat customer service, as part of a customer service drive looking at all parts of the airline’s operations.

Schedule design to better accommodate infrastructure constraints Improvements in engineering reliability Improved boarding technology Better communications to customers.

Problem resolution capabilities Focus on problem resolution capabilities with the Contact Centre Turnaround Plan is being driven by a refresh of Jetstar policies, including escalation policies, decision making and empowerment, These enhancements are already starting to make a difference for both our people and our customers. Additionally, management oversight, better training, KPI alignment, and systems improvements are further assisting problem resolution capabilities.

LOOKING FORWARD B787-8 Dreamliners Jetstar will be the first low-cost carrier in the AsiaPacific to fly the B787-8 Dreamliner, with the first flight planned by the end of the 2013 calendar year1.

Investing in Jetstar’s front line teams Investments in training and tools will enable 'our people to shine'. Investing in the operational tools and the ‘people skills’ training of our front line teams will play a very important role in delivering on Jetstar’s customer and brand ambition. Customer Experience Jetstar is also working towards customer experience alignment across the Jetstar Group to ensure consistent delivery of products across its different airlines. This includes alignment in checkin close times, self-service product availability and consistency in cabin baggage management.

1

Subject to regulatory approval.

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PEO PLE VISION ntas Group is s underpinn ned by The successs of the Qan our people being skilled d, motivated d and suppo orted to do great things. STRATEGY oup People Strategy Qantas Gro At the heartt of our Peop ple Strategy y is the belie f that improving b business perrformance is s successfullly achieved th hrough effec ctive management and leadership. ople Strateg gy focuses o n a To achieve this, the Peo pillars to build capability y and create ea number of p great place e to work. Qa antas aims to o create a h high performing environmen nt through em mbedding organisation nal behavio ours, develop ping our peo ople leaders and d investing in n critical skills and capa ability in our people for today and tomorrow. GOVERNAN CE oup Human Resource Policies P Qantas Gro The Group h has a suite of o Human Re esource Pol icies which outlin ne Qantas’ minimum m req quirements fo or conducting business an nd the stand dards to be upheld by a all employee es. Additionallyy, all Qantas enterprise bargaining b agreementss (EBAs) outtline employe ee work entitlementss and beneffits. 70 per ce ent of the Q antas Group workforce is cove ered by EBA As. AREAS OF FOCUS F MATERIAL A Page Employee Engagement

32

Employee Communication n

33

Diversity and d Inclusion

34

People Deve elopment

35

Talent Attrac ction and Rete ention

36

Recognition

36

Industrial Re elations

37

Supporting E Employees

37

e Qantas Group employys more than n 33,000 The em mployees, witth 93% of em mployees loc cated in Ausstralia. As at 30 June 2013, 2 the Qan ntas Group community was made up of o people w with 99 nation nalities, who o spe eak 51 langu uages and a are from 157 countries off orig gin. New Qantas Uniform – E Engaging our People We W used a su urvey to eng gage our peo ople im mmediately after a the initiial announc cement en nsuring all of o our uniform med employ yees could ha ave meaningful input in nto the desig gn. Our people nominated th hemselves to o be part of th he uniform panel. They w were then se elected by bu usiness man nagers to crreate a grou up re epresentative of our em ployee popu ulation with members m from m each area a of the busiiness and a va ariety of loca ations. Th hey participa ated in the d design and de evelopment process, ad dvising on te extile   se election, garrment style d developmen nt and ga arment func ctionality/pra acticality.

 

Affter significa ant clinical te esting of fab brics, a grroup of emp ployees were e asked to select s their   prreferred fab bric from a ra ange of diffe erent fa abrics. In n addition, 36 6 of our peo ople were ch hosen to model m the new uniform o on the day of the la aunch. They represented d all parts of the bu usiness and d a number o of locations..

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PEO PLE EMPLOYEE ENGAGEME ENT Having an e engaged wo orkforce is directly linked d to improved co ompany perrformance over time.

The e CEO recen ntly announcced the 20133 Employee Eng ngagement survey s resultlts, which sho owed an inc crease of 8 percentage p p points comp pared to the e prio ior year.

As Qantas iss a custome er service organisation, having an e engaged wo orkforce dire ectly benefitss customers, w who will notice the extra a effort that Qantas stafff provide to them, their general leve el of happiness w when coming to work, and a the passsion or Qantas when they show fo w interac cting with oth hers.

The ese fantastic c results dem emonstrate th he Group's foc cus and inve estment in pe people, and improving i Qa antas for eve eryone.

Qantas hass an annual employee engagement e t survey to:

— Internal communicatio on has been a key area of foc cus and hass improved substantially in 2012/20013. Roadsho ows, webinars and a video up pdates from m Senior Leaders arre used regu ularly to com mmunicate key decisio ons and pro ogress. Referr to the following page p for dettails.

— Provide employees with an opp portunity to vvoice their opinions and have h a ‘say’ on how to m make Qantas a better pla ace to work — Understtand how en ngaged Qan ntas employ ees are and d identify are eas for impro ovement — Provide sufficient in nformation to o develop ro obust engage ement action n plans for each e businesss area — Create a baseline fo or measurem ment of manage ement’s perfformance on n employee engage ement An extensive process iss undertaken n which follo ows the following g steps: g, including Manager briefing and — Planning employe ee communiication — Survey iis open for approximate a ely one mon th — Results are processsed by the external e provvider — Reportss are release ed to Manag gers, results are cascade ed and team ms are briefe ed by mana agers and sup pervisors thrroughout the e business — Results are analyse ed and actio on planning commen nces — Action p planning acttivities/initiatives are impleme ented and progress p is monitored m

Exxample of in nitiatives imp plemented as a result of 2012/2013 Engagemen E nt Survey ressults:

— Pilot Leade ership and C Cultural Change program la aunched witth the intention of improving the relationsships with our pilots as well as dev veloping colllaboration, decision making and long-term m leadership p with our pilots. — Intensive Customer C Tra aining for Ca abin Crew with proven results sho own through h   increased customer NP PS and custtomer satisfaction n scores.

 

— Service Qu uality activityy within Engineering, focused on n building  cu ustomer focus, removing waste, w deve loping leade ership capability and a creating g strong tea amwork. — Service Culture progra am within Gro ound Operations s which has driven NPS up by 9 per cent across all porrts. — Domestic ‘L LIFT’ strateg gy that focus ses on six key pillars to drive perrformance and culture across the Domestic b business. — Internal communicatio ons improved d methodolo ogy including g ‘In The New ws’ available to all employyees and ‘Le eaders Talking Points’ specificcally aimed at a managers to brief theiir teams. — The Financ ce communiity “Your Voice” Council, wh hich has bee en tasked with w developing g ideas and initiatives to o address the key foc cus areas fro om the enga agement survey.

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PEO PLE EMPLOYEE COMMUNIC CATION Checking In

on Internal Co mmunicatio ations team The Group’ss Corporate Communica provides a sstrong found dation for internal communication across the business. 

 

Qantas people to t 'check' in Checking in is the place for Q about what's going on acrosss the company. This is us sharing our stories s with each h other so that we w stay up to date with ourr latest news.

Visit Checking In at http:://www.checkingin.com.au/

of formats are utilised, an nd strength has A number o ed in a consiistent look and feel. An been gaine e internal communicatio n example of some of the channels arre described d on this pag ge including g the newly launc ched ‘Checking In’ webs site, People Leaders Forum, Qantass News, Friday Flyer and d Employee R Roadshows. Additionally y, all Qantas employees receive a da aily ‘In The News’ N updatte – keeping eve eryone up-to-date about Qantas in n the media. mestic Qantas Dom In 2012/2013,, the Qantass Domestic CEO C Lyell Strrambi and his lead dership team m held more e than 100 Roadshow ssessions throughout the e year, in ne early 50 locationss around the e country, re eaching abo out 4000 of our people. Add ditionally, the senior leadership tteam of Qan ntas Domesttic made mo ore than 38 vide eo updates which are available to a all employees.

People Lead ders Forum The People Leaders L Forum p provides an opp portunity for the Group Ma anagement Com mmittee (GMC), in ncluding the CEO to comm municate directlyy with over 500 people p leaders in the e business. Foru ums are held tw wice a year and the format includes an a address from the Qantas Group CEO, business b update es from the GMC C, and key themes which h are relevant to o the business at a that point in time, for ex xample, introduccing new adverttising campaigns, rolling r out Group p-wide initiatives such as actioning the e results of enga agement surveys. The people le eaders who atte end the course are expected to share their experience of the day with the eir teams, materials which are a made and to raise awareness of m F available on the Group’s intrranet from the Forum, esentations, vide eos and tools. including pre Qantas News Qantas News   s is a bi-monthlyy newspaper forr Qantas Group emplo oyees. It is availa able to all emplo oyees worldwide bo oth online and in n colour print. Qantas Q News   aims to provide balanced co overage of busin ness and people storie es from across th he Group, ackno owledging achievementts, performance and   communityy involvement. All employees are welcome a and encouraged to contribute ite ems of interest fo or publication in n Qantas News.

ernational Qantas Inte In 2013, bi-m monthly dial--in/webinars s were introduced to provide an a update to o our people e on progress ag gainst Qanta as Internatio onal’s turnarround plan and th he freight business from Qantas Internationa al and Freight CEO Simo on Hickey an nd his leadership tteam. Appro oximately ha alf of the web binar is allocated for employe ees to ask questions. q en to all Qan ntas employyees These sessions are ope a the w world and currenttly around 600 people across are participate in each session, witth a cross se ection of employee es from pilotts, cabin cre ew, freight, airports and d commercia al teams. Feedback from the web binars is cap ptured and h has been extrem mely positive e.

Friday Flyerr Friday Flyer is i a weekly elecctronic bulletin fo or Qantas Group emplo oyees. It is distrib buted to employees worldwide ev very Friday. Frid day Flyer aims to o provide a snapshot of current c major evvents, issues and initiatives around the Qantas Q Group. Employee Ro oadshows The Qantas Group G CEO and the Executive Committee C deliver emplo oyee Roadshow w presentations across a Australia and d key internation nal ports during the year. The Roadshows are a designed to o give employees an opportunity to hear first-han nd information about Qantas' f business direction, its stra ategy, current and future financial resu ults and major in nitiatives. Employees are encouraged to ask question ns of the Group CEO or Group Manage ement Committe ee members.

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PEO PLE DIVERSITY A AND INCLUS SION

Internationa al Women’s Day Event

Qantas take es a holistic approach to o diversity a and is committed tto a diverse and inclusiv ve workplac e. A diverse worrkforce supp ports Qantas s business objectives a and delivers competitive e advantage es and benefitts to customers. Diversity y is promote ed through leadership, tale ent and dev velopment programs, rrecruitment and a selectio on processess and flexible workk arrangeme ents.

The T Group’s Internationa al Women’s Day 2013 event e featured guest sp peakers Ita Buttrose B AO, A Paralympic athlete KKelly Cartwright and Dr D Julia New wton-Howes, CEO of Care Australia. A The event wass supplemen nted by a ‘ttrade show’ promoting sservices which support s wom men, includin ng Expect a Star, CARE C Austra alia, BUPA an nd Breast Ca ancer Awareness. A

Diversity Co ouncil The Diversityy Council prrovides leadership on diversity and inclusion across a the Group. G The Council hass a Charter and a serves as a an adviso or to the CEO and d Group Management Committee C (G GMC). During 2012/ /2013 the Co ouncil focuse ed on three diversity and inclusion pillars: p

— Gender d diversity — Cultural a awareness and a talent developmen d t relating tto our people in Asia an nd the Emira ates — Indigeno ous diversity

 

Male M Champ pions of Cha ange

Diversity Sta atement The Qantass Diversity Sta atement pro ovides an overview of Qantas' policy relating to diversity.

 

Ita Buttrose speaking g to Qantas Group G nal Women’s Day 2013 employees on Internation

The Qa antas Diversity State ement is available at a Qantas.com: http:// /www.qantas.com.a au/infodetail/about/ /corporategovernan nce/ diversiityStatement.pdf

argets Diversity Ta In line with tthe requirem ments under the ASX Principles, Q Qantas has established e targets for gender dive ersity. The fo ollowing dive ersity-related d measurable e objectives supporting gender dive ersity have been endorsed by the Board Nomination ns Committee:

— Management Representation – senior execcutives targets o of: • 35 per cent wome en by 2015 • 40 pe er cent wome en by 2018 Diversity Pe erformance The percentage of wom men in Senio or Executive roles as at 30 Jun ne 2013 is 31.33 per cent (2 2012: 31.5 perr cent).

  ural memberr of the Alan A Joyce is s an inaugu Male M Champ pions of Cha nge, founde ed and Chaired C by the Federal Sex Discrimiination Commissione C er, Elizabeth h Broderick. It ernment Department comprises c 22 2 CEOs, Gove ive Directors Heads H and Non-Executi N s advocating a and a agreein ng to commit to gender g polic cies to increa ase women in executive e ma anagement.. The T Champio ons have ag greed to a 10 0 point action a plan shared s amo ongst the various member m organisations, ffour of which Qantas has h committe ed to workin ng on:

— Public and transpare ent gender reporting r — A supplier code of co onduct that specifically highlightss gender div versity expectations — Developin ng a toolkit o on the Role of the Leader who w promote es gender eq quality — Developin ng a Parenta al Leave Strrategy

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PEO PLE PEOPLE DE EVELOPMEN NT Leadership p Capability The Qantass Group's ap pproach to developing d o our People Lead ders is to focus on cons structive leadership c capabilities. Leadership capabilitiess are underly ying characteristtics that lead d to superior performan nce and include e behaviourss, qualities, attributes a an nd traits that en nable leade ers at all leve els to be successful a and meet bu usiness challenges. The ey supplementt (but do nott replace) th he traditiona al focus on ac cademic qua alifications, technical t skiills and experie ence providiing a framew work for assessing a and develop ping deeper seated perssonal characteristtics. Performanc ce and deve elopment acrross the leadership c capabilities is facilitated d by investm ment and development of lea adership, feedback and d coaching skkills for all managers. Performanc ce Management Managing p performance e is a continuous processs which involvves objective e setting, pe erformance measureme ent, the prov vision of regu ular feedbacck and coaching with remedial action being undertaken where appropriate. This process iss crucial in allowing Qanttas to reach its goal of b being a high perfo orming orga anisation fos stered in an environmen nt of collaboration, trans sparency an nd effective ma anagement and leaders ship. Developme ent Plans The Group e encouragess our employ yees to have e Developmen nt Plans – to o establish priorities p for career deve elopment byy identifying any gaps between ca areer aspirattions & curre ent capabilitty. Templates, tools and re esources are e provided o on the Qantas Intra anet.

Mandatory M Training Qantas Q has developed a numbe er of mandatory y training courses c that are e required to be completed by all a employees e on co ommencing emp ployment and every 2 or 3 years y (dependin ng on the course e) while employe ed at Qantas. Q This training enables em mployees to dev velop an understanding u of o Qantas, its po olicy framework and a workplace w stand dards. Mandatorry training comp pliance is monitored m through a biannual sself-assessmentt governance g process and perforrmance objectiv ves. Qantas Q College Qantas Q College is the Learning a and Developme ent hub for the Qantas Grou up and providess quality training g and administrative a so olutions for emp ployees. The College has extensive e experience in the end d to end provisio on of development d fro om initial needs a analysis through to implementation and ongoing su upport and evaluation. The College C designs and delivers fle exible blended and a online training courses for our industryy operations, sup pervision and a management, legislation an nd compliance. Crew C Training Flight F and Cabin n Crew must adh here to stringent training standards s which h are overseen b by Flight Trainin ng. The primary p role of Flight F Training is to ensure that Cabin and Flight F Crew are developed d to su ustain a high sta ate of proficiency p and readiness to op perate Qantas aircraft in a safe s and efficien nt manner. The T Qantas   Grouup employs worrld class instructors who are capable c of tailorring training to e ensure that each trainee has h the best opp portunity to succceed. The Flightt Training department d works closely with  th he Cabin Services and Flight F Technical departments, in n addition to Qantas maintaining m a close working rela ationship with CASA, to   are ensure e that train ning programs a rigorous, con ntemporary and a regulatory compliant. c Registered R Training Organisattion As A a Registered Training Organiisation Qantas College C is able a to offer nationally recognissed qualification ns and certification c packages accordin ng to the Australian Qualification Q Fra amework. Deliverry methods inclu ude classroom, c workplace, online an nd blended solu utions carefully c chosen n to deliver nece essary learning outcomes o to the business. Engineering E Ap pprenticeships Qantas Q Engineering offers a nu mber of indentu ured maintenance m an nd trade appren nticeships to allo ow the opportunity o to work for a world cclass organisation while undertaking u training to achieve e a nationally rec cognised qualification q in th he aerospace in ndustry. A varietty of apprenticeships a are offered acrross various maintenance facilities in areas s including: — Aircraft Trad des (Avionics, Me echanical & Stru uctural) — Electrical — Heavy Vehic cle Maintenance e Qantas Q Centre of o Service Exce ellence

Training at Qantas The Qantass Group supp ports and en ncourages personal an nd professio onal develop pment of its employees through identifying talent, maintain ning professiona al qualificatio ons and sup pporting employees w who wish to o undertake approved external training and ed ducation co ourses.

The T Qantas Centre of Service Exxcellence is a A$10m state of o the art facility providing an exxperiential envirronment for service s excellence learning and d development to t enable the Group to rea affirm the importa tance of exceptional service.

Qantas Sustainability Review 2013

Qanta as’ Centre of Servicee Excellence is profiiled on Qanta as.com: http:/ //www.qantas.com.a au/travel/airlines/e excellence/ globa al/en

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PEOPLE TALENT ATTRACTION AND RETENTION

RECOGNITION

The Qantas Group is committed to strategically managing our talent pipeline to enable the business to engage and retain talented individuals, to develop high performing teams, to drive organisational change and effectively deliver to our customers.

Our people are one of the many great reasons our customers fly Qantas. It is important that we recognise each other and show our appreciation for colleagues who go above and beyond to help us build a stronger Qantas.

Qantas’ goal is to ensure that the business has an identified group of future leaders and is considering current and future capability as a business imperative.

Qantas is a great place to work, where our contributions are proudly recognised. Recognition helps to bring out the best in our people and create a culture we can all be proud of.

Qantas Talent Council

There are a variety of internal recognition programs across the Group including Recognition-on-Q and the eXcel awards program.

The Group has a Talent Council which serves as an advisor to and holds the authority of the Qantas Group Management Committee.

Recognition-on-Q and eXcel Awards Program

A number of supporting processes and tools exist, including the Group Interim and Annual Talent Reviews, which help the business to identify and plan the development of talent as well as identify successors for key roles.

Qantas Talent Vision To have a healthy, diverse leadership and succession pipeline developed, ready and capable to lead the Qantas Group, now and in the future.

Talent Council Mission We will drive a full cycle Talent approach that is metrics driven and business outcomes focussed and include career management and development of in-scope Talent. We will align our Talent Strategy to meet our business needs and integrate robust performance management.

Recognition-on-Q is about thanking our colleagues instantly for a job well done. It provides an opportunity to show appreciation to colleagues in a simple, fast and meaningful way. The aim of Recognition-on-Q is to further assist Qantas in recognising employees displaying Qantas behaviours and values and to assist in building a more engaged workforce. The program has allowed more people to be recognised more often. Recognition-on-Q and eXcel work together by allowing Recognition-on-Q nominations to be elevated to an eXcel nomination where an employee’s performance has been outstanding. There are two levels of eXcel awards – eXcel Business Awards and eXcel Annual Awards. Winners of the business awards become eligible for consideration for the eXcel Annual Awards – which culminate in a gala dinner with members of the Group Management Committee and Senior Leaders from across the business in attendance.

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PEOPLE INDUSTRIAL RELATIONS

SUPPORTING EMPLOYEES

In order to position itself for future challenges and to avoid compromising the long-term sustainability of the organisation, the Group seeks to deliver fair and sustainable wage settlements for its employees and maintain flexibility for the company.

The Qantas Group provides a series of free and confidential support services through the Employee Assistance Program, which help employees balance work and life, comprising:

49 collective agreements are in place with employees and unions across the Group.

Life Assist offers free, confidential, independent counselling service for Qantas staff and their families. Counselling services are run by an external provider.

Life Assist

Family Assist Family Support is designed to assist parents with children aged 0-18 years, those with elderly loved ones and employees in the lead up to retirement and/or life after work. Family Assist offers a range of assistance including help in sourcing emergency/ongoing child and aged care, a support network and access to a variety of informative and practical resources. Health Assist The Qantas Group is committed to providing safe and healthy workplaces and to helping our staff lead happy and healthy lives. The Health Assist program provides staff with the opportunity to participate in health and wellbeing events and programs. The program also offers a range of resources to assist in attaining a healthy lifestyle. Money Assist Money Assist can help employees if they are worried about debt problems, inability to pay bills and credit cards, coping with the financial impact of separation/divorce, serious illness, gambling problems and other life events that cause financial strain. Manager Assist Manager Assist is designed to give managers options to assist them in deciding on practical plan of action. It is also there to help managers with their own emotions and stress levels in relation to these situations. Trauma Assist Trauma Assist provides assistance to employees in the event of a traumatic incident. Qantas Sustainability Review 2013

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ENVIRONMENT VISION

GOVERNANCE

A leading airline group committed to environmental sustainability.

Board Safety, Health, Environment and Security Committee

STRATEGY

The Qantas Group’s progress in relation to climate change and environmental performance is escalated through Business Unit Safety and Operational Committees to the Board’s Safety, Health, Environment and Security Committee (Committee).

Qantas Group Environment Strategy The Group's Environment Strategy comprises four key elements: — Continuous improvement in environmental efficiency — Early adoption and persistence in innovative fuel and carbon management — Embedding environmental values to increase marketability and strengthen belief in the brand — Influencing global regulators to achieve sustainable lowest cost carbon compliance The Qantas Group Environmental strategy articulates the key global strategic drivers that influence the Group’s environmental risks and opportunities. The strategy considers external drivers, such as climate change, the rapidly changing regulatory landscape and stakeholder expectations, as well as internal behavioural drivers that influence the Group’s performance. The strategy is developed on an annual basis in conjunction with business units throughout Qantas Group and focuses on opportunities to improve environmental performance and manage risks associated with the Group’s environmental impact. MATERIAL AREAS OF FOCUS Page Direct Greenhouse Gas Emissions: —

Fuel (Fuel efficiency and fleet renewal, Biofuel, Carbon Offset)



Utilities and Resources (Electricity, Water and Waste)

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The Qantas Group Environmental Management System (EMS) The EMS has been designed to align with both the Qantas Management System (QMS) and the requirements of the International Standard for Environmental Management (ISO14001:2004). This approach ensures that the business has a consistent approach to environmental management both at a strategic and operational level. It also assists the Group’s implementation of a best practice approach to the management of environmental impacts. The Qantas Group Environment Policy The Qantas Group Environment Policy exists to define: — The Qantas Group’s commitment to continual improvement in environmental management throughout all levels of the organisation — The minimum requirements for identifying, assessing and managing environmental aspects and impacts — The framework for setting and reviewing objectives and targets — The requirements to maintain legislative compliance — The roles and responsibilities for environmental management

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Noise Impacts

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Environmental Engagement

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ENVIRONMENT DIRECT GREENHOUSE GAS EMISSIONS The Qantas Group’s Carbon Footprint Aviation fuel constitutes over 94% of the Qantas Group’s domestic carbon footprint. As such, the reduction of carbon emissions from aviation fuel is a core environmental priority for the Qantas Group. Fuel optimisation and fuel efficiency improvement continue to be key focus areas for the Group’s energy conservation measures and are key elements in the Group’s environmental improvement strategy. Fuel Efficiency Targets Qantas is targeting an average improvement in fuel efficiency of 1.5 per cent per annum to 2020 (measured as litres of fuel per revenue tonne kilometre (RTK) against a 2008/2009 baseline). This goal is consistent with that set by the International Air Transport Association (IATA) for the industry. In addition, the Qantas Group has committed to achieve carbon neutral growth by 2020 and to see a 50 per cent reduction in carbon emissions by 2050, relative to 2005 levels. The Qantas Group believes this goal is achievable by embracing technological innovation in efficiency and by securing commercially viable alternative fuel sources that are genuinely sustainable. Fuel Efficiency Performance By 30 June 2013, the Qantas Group has achieved 3.2 per cent improvement in aviation fuel efficiency against the 2008/2009 baseline. Activities such as international fleet reconfiguration, fleet renewal and ongoing fuel optimisation activities have a positive effect on fuel efficiency.

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ENVIRONMENT Fuel Efficiency and Fleet Renewal Fleet renewal offers the greatest benefits to fuel efficiency. Over the next 10 years, Qantas is planning to invest in more fuel-efficient next generation aircraft. Additionally, specific initiatives are in place: B767 The B767 fleet is being retired as B787 Dreamliner’s start to arrive from late 2013. B787 The Group has 14 B787s on order and up to 50 options and purchase rights. B734 The B734 fleet is being retired and will be replaced by next generation B738 aircraft by the end of 2013. B738 The B738 engine refresh program (30 engines in program) will deliver approximately 1.5% fuel savings. Estimated completion date of engine replacements is mid-2014. B717

The B717 fleet (13 aircraft) are undergoing a reconfiguration project taking the seat count from 115 or 117 to 125, improving fuel efficiency on a per seat basis.

A320 The A320 fleet are undergoing a reconfiguration from 177 seats to 180 seats, improving fuel efficiency on a per seat basis.. B744 All B744s will be retired except for our youngest 9 aircraft, which have an average age of 11½ years. These 9 aircraft have undergone a significant reconfiguration program, increasing seating from 307 or 353 seats to 364 seats – improving fuel efficiency on a per seat basis.

Fleet renewal is being complemented by the following additional fuel efficiency activities: — Improved flight procedures including Mid Segment climb. — Optimised flight planning over individual sectors, including dynamic route planning and ‘Flex Tracks’ — Required Navigation Performance (RNP) implementation in 5 Australian ports, resulting in smoother and shorter take-off and landing — Rigging (control surface) check optimisation — Participation in the METRON air traffic management system (real time capacity management). — Permagard application for improved aerodynamics — Optimisation of potable water loads carried by aircraft — Improved pantry weight estimates across all fleet types. — Reweighing A380 to optimise payload capability — Upgraded hardware on A380 and B738 fleet — Continuing reduction in on-board APU use by increasing use of Ground Power Units, including the introduction of new lightweight ground power leads — The introduction of iPads for Pilots (replacing large and heavy paper manuals) - projected to remove 20kgs from each of our 737s and 767s, saving approximately $1.5M per annum

A380 All A380s are being reconfigured from 450 to 484 seats, improving fuel efficiency on a per seat basis.

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A dedicated page on Qantas.com outlines the Group’s fuel efficiency measures: http://www.qantas.com.au/travel/airlines/fuel/global/en

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ENVIRONMENT Sustainable Aviation Fuel

Carbon Offset

In April 2012 Qantas was the first Australian airline to operate a commercial flight using Sustainable Aviation Fuel (SAF). We are a member of the Sustainable Aviation Fuel Users Group (SAFUG) and a founding member of the Australian Initiative for Sustainable Aviation Fuel (AISAF).

Qantas has a number of Carbon Offset initiatives:

Building on the commercial SAF flights in April 2012, Qantas announced a feasibility study into an Australian-based sustainable aviation fuel industry, in partnership with Shell Australia and supported by a $575,000 grant from the Australian Government. The study aims to identify the conditions under which a sustainable aviation fuel industry in Australia would be commercially viable. The study commenced in June 2012 and was completed in June 2013. Full results will be released later in 2013.

 

A dedicated page on Qantas.com outlines the Group’s commitment to Sustainable Aviation Fuel: http://www.qantas.com.au/travel/airlines/sustainable-aviationfuel/global/en

Carbon Credits The Qantas Group has an off-take agreement to purchase carbon credits from Henbury Station property in central Australia – a former pastoral property being regenerated to restore natural vegetation and remove carbon dioxide from the atmosphere. Credits will support both the voluntary carbon offset program, and will be used to offset part of the Group’s Australian carbon price liability. Carbon Neutral Program Since 2007 Qantas has offered customers the option to offset their flight through our voluntary carbon offset program, Fly Carbon Neutral. The program is now the world’s largest airline offset program by volume and uptake. Approximately 5 per cent of passengers offset their flights when booking through Qantas.com and since 2007 over 1.2 million tonnes has been offset - the equivalent to taking 260,000 cars off the road for a year. Fly Carbon Neutral is certified under the Australian Government’s National Carbon Offset Standard (NCOS) Carbon Neutral program, which ensures the methodology behind the program is robust and the offsets we source are of the highest quality. Corporate Customers Supported by Fly Carbon Neutral, Qantas also facilitates detailed emissions reporting and offsetting for Corporate Customers to fulfil their own offsetting or carbon neutral commitments. A dedicated page on Qantas.com outlines the Group’s voluntary carbon offset program: http://www.qantas.com.au/travel/airlines/fly-carbonneutral/global/en

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ENVIIRON NMEN NT RCES UTILITIES A ND RESOUR gets Utilities targ In 2011/2012 the Group re efreshed its utility reducction strategy mo oving to new w business unit specific 22020 targets thatt aggregate at a Group level for electricity, w water and wa aste diverted directly fro om landfill of 10, 10 and 20 per p cent respectively (se et 009/10 base eline). against a 20 Utilities Per formance Electricity

5 5.3% progress to owards the 2020 target of 10%

Water

9 9.8% progress to owards the 2020 target of 10%

Waster

19 9.7% progress to owards the 2020 0 target of 20%

Electricity As a major e electricity usser and prop perty owner in Australia Qa antas is com mmitted to en nergy efficie ency. The Group m measures en nergy consu umption and d is achieving re eductions th hrough the systematic s identification of opportu unities in are eas such ass lighting, air conditioning g, and motor upgrades.. http://w www.qantas.com.au u/travel/airlines/ele ectricity/global/en

Water Australia is a vast dry la and and at Qantas Q we recognise th he need to use u fresh wa ater sensiblyy and efficien ntly. Between n 2007 and 2011 2 the Grou up successfullyy reduced annual total water w consumption by 19% ass a result of our o 'begreen n' program, de espite growtth in operatiions. Qantass’ journey j of im mprovement continues. Reductions are being achie eved through opportunities such ass the of water efficient equipm installation o ment includiing new dishwa ashers at catering facilities. http://w www.qantas.com.au u/travel/airlines/wa ater/global/en

Waste Qantas clossely monitorss waste sent directly to landfill and is working hard h to redu uce this impa act. Reductions have been achieved th ght hrough in-flig recycling on n domestic flights, recyc cling facilitiess in all domestic c airports an nd Qantas Club loungess and the use e of an alternative waste e treatment facility, whic ch diverts [65 5% of all Syd dney waste from landfill]. http://w www.qantas.com.au u/travel/airlines/wa aste/global/en

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ENVIIRON NMEN NT UTILITIES A ND RESOUR RCES CAMPUS RE EDEVELOPM MENT AND TRIGENERATIO ON CASE STU UDY Qantas is pa art way thro ough a comp plete redevelopm ment and refurbishment of our entire e corporate h headquarterrs in Sydney. This projecct will deliver a number off environmen ntal benefitss, including re eductions in water and electricity e through more efficient fittings f and fixtures, f maximising the use of natural n light, and the adoption off new techno ology. are As part of our “Workplace Transform mation” we a also building Australia’ss largest com mmercial tri-generation plant. Phase e one of the e project at o our Sydney offic ce campus has h been co ompleted an nd is now providing electricitty, hot and chilled c waterr to the Qantas office camp pus, catering g centre and d jet base.

 

 

Phase two w but will see the installation i of o a similar, b smaller, plant at the Qa antas Domes stic Terminall (T3) in Sydney this year. Combined,, the two site es will have an n installed ca apacity of approximatelly 12 megawatts and will be Australia’s la argest commercial scale tri-ge eneration op peration. The plant at our Sydneyy office cam mpus will low er energy conssumption byy 30 per cent during its operating h hours, lower our greenho ouse gas emissions b by 23,000 ton nnes per yea ar and lowerr our water use by 6 millio on litres per year.

 

Combined, tthe refurbish hment of our office buildings an nd the use of o tri-genera ation will res ult in our four m multi-story buildings b risin ng from an average NA ABERS’ Energy 1.5 Star ra ating to an average NA ABERS Energ gy 5 Star rating.

 

1

National Australian Built Environment Rating System

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ENVIRONMENT NOISE

EMPLOYEE ENGAGEMENT

Qantas is committed to being a responsible member of the community, considering the environmental and social impacts of operations wherever the Group flies. Continuing to reduce the impact of aircraft noise on communities is a high priority and forms a significant component of the Group's Environmental Strategy.

Our people are vital to improving our environmental performance. We engage our employees through companywide hands-on volunteer initiatives such as ‘begreen Day’ (our annual environmental celebration day that coincides with World Environment Day), Clean Up Australia Day, Great Northern Clean Up, Earth Hour, the ZooX Great Barrier Reef Ambassador Program and Landcare Week.

The aircraft noise standards for new aircraft are set by the International Civil Aviation Organisation (ICAO). Over time these standards have become more and more stringent with the most recent standards, being Chapter 4, applicable for new aircraft types from 1 January 2006. ICAO provisions for aircraft noise are outlined in Annex 16 Volume 1 of the Chicago Convention. Currently, chapters 3 and 4 are in force and all Qantas aircraft meet or exceed these standards. The Group works with the aircraft manufacturers to continually improve the noise performance of the aircraft above and beyond the standards. The Qantas Group operates aircraft in ways that minimise noise impacts, without compromising safety. Qantas uses special take-off and landing procedures to minimise aircraft noise. In addition, pilots adhere to any additional airport-specific noise abatement procedures, (for example, noise abatement zones, engine run up restrictions and preferred runways or flight paths). Seeking better ways of managing aircraft noise is one of the many ways Qantas continues to develop strong relationships with communities. The Group believes that the best solutions emerge through collaboration. Qantas is a key participant in Community meetings around Australia. At these meetings, residents, the Airport and Air Traffic Control work to find noise improvements. Noise improvements should never compromise aircraft safety and should balance financial and customer impacts.

 

A dedicated page on Qantas.com outlines the Group’s commitment to Noise impacts: http://www.qantas.com.au/travel/airlines/communitycommitment/global/en

The Qantas Green Team Within the Qantas Group we have an environmental sustainability focussed volunteer network made up of one thousand employees. The team comprises of dedicated, engaged and sustainability conscious people. The team, which is open to all employees, works hard to raise environmental sustainability awareness and make a difference at home and at work. Excel Environment Award As part of our strategy to support and recognise our employees' commitment to environmental sustainability, the internal eXcel Environment Awards rewards positive action. These awards are given to employees who have demonstrated proactive leadership to implement environmental projects throughout the business. Projects usually focus on improving our business' impact in regards to waste-to-landfill, resource consumption (water, electricity, fuel), noise, air quality, soil or water contamination, flora and fauna or land management. Each year, the Group highlights exceptional initiatives through the Annual eXcel Environment Award. COMMUNITY ENGAGEMENT While the Qantas Group supports a vast number of community organisations (across the areas of health, education, community, humanitarian, environmental sustainability, reconciliation and arts) our key partners in relation to environmental sustainability include Clean Up Australia, The Great Barrier Reef Foundation, Cairns Turtle Rehabilitation Centre and Landcare Australia.

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PROCUREMENT VISION

GOVERNANCE

The Group is committed to ensuring supplier relationships are managed in a competitive, fair and ethical manner. STRATEGY Qantas Group Procurement Strategy Qantas Procurement has an overarching strategy to delivering real, sustainable value through best-in-class procurement. To achieve this, Qantas Procurement focuses on five key pillars: — — — — —

Safety is our First Priority Alignment with the Business Procurement as a Value Driver Operational Excellence Governance and Accountability

Safety is always Qantas’ first priority, and Procurement has an unwavering commitment to the purchase and supply of quality goods and services that are fit for purpose. This ensures that safety, on the ground and in the air, remains a key consideration in what we buy and how we buy it. Procurement supports the business in identifying suitable goods and services that meet Qantas’ high standards and continue to protect our people and our customers from safety risk. Qantas Procurement works closely across all business areas, aligning with Qantas’ business objectives to deliver business value. Qantas Procurement has a continuing focus on improvement and driving operational excellence, ensuring that consistent approaches are applied across all Procurement activities by standardising our processes and supporting our people to apply them.

Qantas' Procurement Policy The Qantas Group Procurement Policy outlines the minimum requirements and responsibilities in relation to the governance of the procurement of goods and services by the Qantas Group and aims to ensure that in all procurement activities: — Qantas obtains goods and services that meet specification and are delivered on time at internationally competitive prices from financially stable suppliers. — Qantas obtains best value for money on a total cost basis. — Consistent procurement processes are followed in accordance with Qantas policies. — Commercial, financial, legal and operational risk is reduced. — Supplier Relationship Management is effective, collaborative and focussed on winwin outcomes. MATERIAL AREAS OF FOCUS Page Supplier Requirements

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Sustainable Procurement Procedure

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Sustainable Sourcing

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Sustainability Assessment

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Supplier Relationship Management

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Supplier Diversity

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Governance and accountability are core to the work of Procurement, including the governance of supplier assessment and selection. We aim to bring 100% of spend under management, which provides us with assurance on how we are buying and from whom. Qantas Sustainability Review 2013

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PROCUREMENT SUPPLIER REQUIREMENTS

SUSTAINABLE SOURCING

Qantas requires its Suppliers and their personnel to comply with certain requirements regarding Occupational Health and Safety, Standards of Personal Behaviour, Equal Opportunity, Harassment and Bullying, Theft, Attempted Theft, Fraud, Attempted Fraud or Removal of Property, These requirements are set out in Qantas’ Supplier Requirements.

The Qantas Group includes sustainability questions in its market-facing sourcing events. Key areas covered by these questions include: — Supplier sustainability policies — Workplace conditions — Supplier Diversity — Environmental impact — Forced, Involuntary or Child Labour

 

http://www.qantas.com.au/infodetail/about/purchasing/ SupplierRequirements20121127.pdf

SUSTAINABILITY ASSESSMENT SUSTAINABLE PROCUREMENT PROCEDURE Qantas’ Sustainable Procurement Procedure contains our formalised Environmental, Social

The Qantas Group, as a major purchaser of goods and services, recognises the impact its procurement and supply chain can have.

and Governance (ESG) objectives, and links directly to the Group’s Procurement Policy and Procurement Procedures. Qantas’ Sustainable Procurement principles are:

The Group is working closely with key suppliers to understand their long-term sustainability. This activity includes supplier self-assessment as well as supplier site inspections, where required.

— Qantas will strongly contribute to the advancement of corporate, community, local industry and environmental sustainability outcomes through its procurement activities. — Procurement activities will be undertaken in

Qantas selects suppliers to assess on a riskrated basis, applying the Group’s organisational risk rating standards to assist in determining an appropriate audit schedule.

accordance with the Qantas Procurement Policy and Procurement Procedures. — Sustainable procurement initiatives will substantially align with Qantas strategic objectives. — All procurement and category specifications will include appropriate ESG requirements.

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PRO CURE EMENT SUPPLIER R RELATIONSH HIP MANAGE EMENT Qantas Proc curement ac ctively mana ages relationship ps with manyy of its key su uppliers through its S Supplier Relationship Managementt program. curement’s Supplier S Relationship Qantas Proc Management program is focussed on working collaborativvely with sup ppliers to imp prove performanc ce and address issues, across a a bro oad range of Ke ey Performan nce Indicato ors (KPIs). Th his program en nables Qanta as to identify y innovative e solutions, working in pa artnership wiith our suppliers. Through our Supplier Relationship Manageme nt antas workss collaborativ vely with program, Qa suppliers to reduce wasste to landfill for key nd goods, an e example of this t is tyres. Contracts an incentives a are structure ed to supporrt the supplie er reducing wa aste, whilst maintaining m a commercially beneficiall outcome fo or both partiies. ognises a ke ey opportunity to Qantas reco contribute to o supplier developmentt by expand ding its Supplier Relationship p Management program m to include sup ppliers of indirect goods and service es.

QANTAS’ NEW N UNIFOR RMS: ASSES SSING SUPPLIER SUSTAINAB BILITY As Qantas prepared to o launch a new n uniform forr the first tim me in 10 years, the Qantas Pro ocurement tteam was ha ard at work supporting g the sourcin ng, production and delivery of 400,000 ga rments to 11,,250 staff. Selecting the t garmentt manufacturers for Qantas’ ne ew uniform w was a core part p of the process, and Qantas w was keen to o ensure that the un niforms were e produced in a safe, socially res sponsible an nd sustainable environme ent. Qantas Pro ocurement w worked in pa artnership with our un niform suppllier to carry out site uction facto visits to ga arment produ ories in China and Indonesia d during 2013. Four key sites were reviewed ag gainst a num mber of criteria, ba ased on SA88000, a key social s responsibility standard d, with indiviidual audit reviews produced for each sub-contracted factory. Based on findings from m these site inspections, remedial a actions were identified with suppliiers and acttion plans ag greed. Progress against a thesse action pla ans will be monitored throughoutt the coming g year, with the first rev view visit ha aving occurre ed in July 2013. Qantas ha as clear, Non n-Negotiable e Business Principles, and expectts its supplie ers to align with these. Qantas sup pports a ‘de evelop not desert’ prin nciple with kkey suppliers s, encouraging supplier development by working ac ctively with tthem to imprrove their environme ents, with a ffocus on sup pporting long-term change.

Above, one e of the garment manufacturers viisited during our sustainability assessment.

Through th his process, Qantas has s been able to ensure that our new w uniforms will w be produced in a manne r that aligns s to the way we do bus siness, and tthat is consistent with our busine ess principle es.

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PROCUREMENT SUPPLIER DIVERSITY As Australia’s national carrier, Qantas is well placed to forge innovative partnerships and foster mutually beneficial relationships with Indigenous suppliers across Australia and continues to explore opportunities to better develop and integrate our supplier diversity strategy, with the goal of becoming a leader in supplier diversity in Australia. Supplier diversity and engagement with Supply Nation (formally Australian Indigenous Minority Suppler Council – AIMSC) have the commitment and support of the Chief Executive Officer, Group Management Committee along with advocacy from the Chief Procurement Officer, the Procurement team and Head of Community. Qantas is a founding member of Supply Nation and proudly became the first founding member in Australia to sign an agreement with a Supply Nation supplier, Message Stick Communications. Qantas has contracted with eight Supply Nation Certified businesses over the past year, across a range of goods and services. Under the current Qantas Reconciliation Action Plan, Qantas has committed to introducing Supply Nation certified businesses into three new areas of the business by December 2013, and to have a minimum of ten contracts in place by December 2013.

Qantas, through Chief Executive Alan Joyce, is a founding member of Male Champions of Change. Male Champions of Change, convened by Sex Discrimination commissioner Elizabeth Broderick in 2010, seeks to use the collective and individual influence of its members to elevate the issue of women’s representation in leadership on the business agenda. Amongst the initiatives identified by this group is the Supplier Multiplier, [to be] formally announced in August 2013. This initiative seeks to support the Male Champions of Change agenda, by working with our suppliers to ensure equal opportunities in our recruitment processes and to clarify the expectations we have of our suppliers in this industry. LOOKING TO THE FUTURE Qantas Procurement is committed to further developing its Sustainable Procurement approach. With this in mind, the following areas of focus will see significant activity over the coming year: — Sustainable Procurement Strategy — Sustainable Sourcing Guidelines — Supplier Requirements and Code of Conduct — Comprehensive Supplier Assessment and Sustainability Audits — Supplier Relationship Management Program Enhancement

In addition, the Qantas Procurement policy and guidelines have been amended and now instruct Qantas Procurement buyers to consult the Supply Nation supplier list when developing a list of potential suppliers and, where appropriate, to include capable Indigenous suppliers in the sourcing process. The Qantas Reconciliation and Procurement teams have worked together to establish policies, procedures and mechanisms to ensure that Qantas business reflects the Qantas values of diversity and inclusion.

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COMMUNITY VISION

GOVERNANCE

The Qantas Group has a commitment to strengthen the communities in which we live, serve and work by building relationships and partnerships that benefit all. The Qantas Group works hard to maintain its position as a responsible corporate citizen, an iconic Australian company and a major driver of economic activity.

The Group’s Community governance framework aligns to the Group Community strategy headed by the Brand, Marketing and Corporate Affairs department. Under this umbrella, standalone business units also undertake numerous activities in the community that meet their tailored commercial and reputational needs to create shared value.

STRATEGY Qantas manages its community activities under the banner of "Sharing the Spirit", a series of partnerships, programs and initiatives designed to help Australians connect with their heroes, their loved ones and their dreams. The Jetstar Group operates its own community initiatives to align with its tailored brand requirements as they relate to its unique geographic footprint.

Sharing the Spirit

Page

Qantas Foundation

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Qantas Community Champions

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Jetstar

Building and maintaining our positive connection with all Australian’s including customers, policy makers and our employees, is vital to preserving and reinforcing our competitive position.

MATERIAL AREAS OF FOCUS

Qantas in the Community

Additionally, QantasLink is proud to play an active part in the community by supporting a range of local and global organisations and events and engage with local communities in regional Australia.

Qantas Group employees and family participate in Clean Up Australian Day 2013

Spirit of Community Spirit of the Arts Spirit of Sports

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Spirit of Reconciliation Spirit of Our People Philanthropy 54 Community

Regional Australia

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Qantas Group CEO, Alan Joyce participates in the Indigenous Clontarf Academy

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COMMUNITY THE QANTAS FOUNDATION

Changing Lives

Vision The Qantas Foundation is passionate about creating life changing experiences for the next generation of Australians. The Qantas Foundation defines an experience as something that alters a person’s life or circumstance in a substantial manner, resulting in a significant positive change to their life, situation or the broader community. Strategy In particular, the Qantas Foundation’s efforts focus on two key areas: — Initiatives that provide an immediate experience for those in need (changing lives) — Experiences and opportunities that empower the next generation of Australians to make a difference in the community (empowering change) To deliver this vision, we leverage the diverse resources of the Qantas Group - from our dedicated and passionate employees, the diverse network of suppliers and partnerships and of course, the use of our own airline. Governance

Initiatives that provide an immediate experience for those in need. Make a Wish Through the partnership with the Qantas Foundation, Make-A-Wish Australia is helping to create life-changing experiences for children with life threatening conditions. Kids to Coast Imagine never having seen the ocean, hearing the waves against the beach, collecting shells or searching in rock-pools for marine life – it’s a quintessential Australian experience, a rite of passage for so many of the nation’s children. Since 2011, two groups of outstanding students from the Mutitjulu School, aged between 8-12, have participated in Kids to Coast- a unique educational program that consists of learning about sea and marine life, city living, sporting activities and interacting with students from metropolitan Australia. Qantas and the Qantas Foundation have proudly supported this exciting project in collaboration with the Mutitjulu Foundation and the Foundation For Kids,

The Foundation is governed by a Board of Directors that includes three external independent directors and three Qantas senior executives. The Qantas Foundation is staffed by the Qantas Community Team, reporting to the Group Executive Brand, Marketing and Corporate Affairs.

 

Visit the Qantas Foundation’s website at www.qantasfoundation.org.au

Indigenous children on the Kids-to-Coast program

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COMMUNITY Empowering Change

Experiences and opportunities that empower the next generation of Australians to make a difference in the community. Outward and Upwards Through the Qantas Foundation’s support, Outward Bound and ABCN will develop and deliver a series of leadership courses for aspiring young leaders. Called Outward & Upwards, the course will give young community leaders from disadvantaged high schools a rarely offered opportunity to experience a high quality leadership development program, featuring intensive residential training and corporate mentoring support over a sustained period.

The Qantas Foundation Encouragement of Australian Art Award The Qantas Foundation Encouragement of Australian Art Award recognises emerging Australian contemporary artists and aims to increase awareness of Australian contemporary art and incentivises promising, emerging artists to produce further work. In addition, and in the spirit of giving back to the local community, the award features a community residency, which sees artist engaging with their local community in a unique project that furthers the community’s cultural experience in contemporary art. Over the past five years the award has supported the careers of 46 Australian artists, who have exhibited around Australia and the world.

A young person relishes a Qantas Make-a-Wish experience

Leadership Rewired The Qantas Foundation is excited to again work with the Centre for Sustainability Leadership (CSL), after providing the support needed to develop and launch its award-winning Leadership Rewired program in 2010. Leadership Rewired is an online learning tool available to anyone. The new Qantas Foundation CSL Sustainability Entrepreneurship Award seeks to supercharge the success of CSL’s Academic Fellowship Program by annually providing a member of its alumni with early stage support to scale up an innovative, sustainability-related, social venture. This microscale Qantas funding and endorsement will be used to more rapidly help scale-up this potentially game-changing venture.

The 2012/2013 recipients of the Qantas Foundation Encouragement of Australian Art Award

The total amount disbursed as prizes in 2012/2013 was $144,000 to recipients throughout Australia ($4,000 cash prize, $10,000 travel prize, $4,000 cash for completing a community residency).

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COMMUNITY QANTAS COMMUNITY CHAMPIONS The Qantas Community Team has created a new team called Qantas Community Champions passionate, driven Qantas employees, who are keen to: RALLY together volunteers, workshop community initiatives, learn about community partnerships. RECOGNISE individuals/groups in their department/region for coordinating community initiatives. PROMOTE Qantas’ Community brand internally and externally. Since its launch in early 2013, more than 500 employees have signed on to be Qantas Community Champions. Key highlights include: National Volunteer Week – Qantas annually celebrates volunteering and recognises its volunteers who work to make a meaningful contribution to Australia. NAIDOC Week – Held during first full week of July, celebrations are held around the country to acknowledge the history, culture and achievements of Aboriginal and Torres Strait Islander peoples from all over Australia. Qantas hosts an annual internal event to acknowledge NAIDOC week and celebrate with the Group’s Indigenous employees. Volunteering opportunities – There have been dozens of volunteering opportunities offered to Qantas Community Champions, the broader employee base, and wider community. An example is our annual Clean Up Australia Day campaign for which Qantas has been a cornerstone community partner since 1994. Workplace Giving – Qantas offers all employees the opportunity to salary sacrifice via the workplace giving program with all funds raised going to the charities of the employees’ choice.

Community Conversations – A lunch time lecture series, providing an inspiring and informative way to learn about Qantas’ community partners, how to get involved and how to make a difference. Amongst others, Community Conversations have featured: — Qantas Cabin Crew Team — Royal Flying Doctor Service — Indigenous Running Project

Qantas Cabin Crew Team (QCCT) Manyowa Karimazondo’s success story Manyowa Karimazondo had been living at the Matthew Rusike Children’s Home in Harare, Zimbabwe since 1989 after his mother, a victim of a landmine, was terribly injured. Manyowa showed great academic potential in primary school but needed sponsors to send him to one of the best boarding schools in Zimbabwe. He was introduced to the Qantas Cabin Crew Team in 1995 by the Superintendent at Matthew Rusike Children’s Home and through Qantas Cabin Crew Team Chairman Glenn Price, Manyowa's sponsorship was initiated. Manyowa worked hard and passed his A levels and was accepted into the University of Zimbabwe to study medicine in 2001. During this time, Manyowa was also accepted by the University of Sydney Clinical School to do an elective placement at the Royal Prince Alfred Hospital, while his sponsorship through the Qantas Cabin Crew Team continued. After completing his studies, Manyowa worked in both public and private hospitals in Harare, Zimbabwe. In March this year Manyowa accepted a permanent placement at the Coffs Harbour Health Campus working in the Mental Health Unit. He is now in the process of applying to have his partner and two young children join him in Australia.

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COMMUNITY QANTAS IN THE COMMUNITY Spirit of Sports

Complementing the work of the Qantas Foundation are further key programs, partnerships and events. Arts, Culture and Sports sponsorships are chosen for their importance to the Australian people and must align with the Qantas core values of care, forward thinking, wisdom of experience and contemporary Australia. Spirit of the Arts Qantas is a premium brand and continues to uphold this image through its strong association with the Arts community in Australia. Art is a creative medium that inspires innovation amongst our employees and is consistent with our brand values.

Sport in Australia is a way of life. Qantas supports a strong portfolio of high profile events and athletes to assist Australia’s best performance. From a reputational perspective Qantas always wants to be associated with Australia’s competitive best both at home and on the world stage. Qantas supports a number of Australian sports, events and athletes including the Qantas Wallabies, Cricket Australia, Qantas Socceroos, Football Federation of Australia, Australian Olympic and Paralympic Teams and Formula 1 Grand Prix. Qantas was recently awarded the Australian Olympic Committee's inaugural Gold Inspiration Award for excellence in Olympic marketing. Spirit of Reconciliation The Qantas Reconciliation Action Plan (RAP) sets the strategic direction for the support initiatives undertaken by the business with Indigenous Australians. The RAP is a publicly available document, endorsed by Reconciliation Australia, the peak national organisation promoting reconciliation between Aboriginal and Torres Strait Islander peoples and the broader Australian community. In May 2012, the third Qantas RAP was released in line with Reconciliation Australia's elements of Respect, Relationships and Opportunities. Qantas reports annually to Reconciliation Australia on progress against the targets outlined in the Qantas RAP – with the next review due for release in August 2013. Spirit of our People In addition to our strong corporate sponsorship program, our people also contribute countless hours of their time and services to many important causes through the Qantas Workplace Giving program and the hands-on help of Qantas volunteers

Qantas Spirit of Youth Awards 365 The Qantas Spirit of Youth Awards 365 (SOYA 365) has been the leading grants program for emerging creative talent for over nine years. SOYA365 is a creative melting pot spanning 11 key creative disciplines including interactive gaming, music, writing, film making, architecture and more. SOYA winners are able to follow their creative dreams with a cash and flight grant. But the real incentive is the opportunity to build a professional mentoring relationship with creative leaders like Polly Borland, Lisa Dempster, Marc Newson, Zimmermann, Lee Groves and Liz Ann Macgregor, helping young innovators expand their horizons, build up their business base, and learn the ropes from leading industry icons and some of the greatest creative minds in the world.

Whether it's Pathfinders' raising money for the Royal Institute for Deaf and Blind Children, our Qantas Cabin Crew Team (QCCT) raising money to help children in need around the world, our Community Team who organise the Good Friday Care Flights, our employees represent the Australian spirit at its finest. UNICEF Change for Good® The UNICEF Change for Good® initiative allows customers to place foreign and local change in envelopes provided on any of the 5,000 Qantas flights. In 2013 Qantas Loyalty enabled a solution for frequent flyer members to redeem their points for Qantas to donate the cash equivalent to UNICEF - the uptake has been significant with over $250k raised through this initiative in the first six months. Qantas passengers have raised an astounding $27 million since the program’s inception, 22 years ago.

Last year SOYA attracted over 20,000 entries submitted by over 2,400 young artists, designers, filmmakers, photographers and musicians.

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COMMUNITY JETSTAR The Jetstar Group operates several of its own community initiatives to align with its tailored brand requirements as they relate to its unique geographic footprint. StarKids – a partnership with World Vision Jetstar and World Vision partnered in 2007 and created ‘StarKids’ to help improve the lives of some of the world’s poorest children. Money raised for StarKids through local staff fundraising activities and website and on board customers donations funds important projects in a number of Jetstar’s destinations including Thailand, Vietnam, Indonesia and even Australia.

Jetstar Flying Start Program Jetstar’s Flying Start Program is a localised grassroots community initiative currently run in the Australia and New Zealand Jetstar markets. Local organisations and charities are invited to apply for a Jetstar Flying Start quarterly grant made up of $15,000 flights and $15,000 cash to help with a project that will benefit the local community. Going forward each quarter, one organisation in New Zealand and one in Australia will be awarded the grant, with the aim of funding a project which will enrich the lives of people. Recent recipients have included:

The aim of StarKids is to raise awareness of the causes and effects of poverty on children and their families through positive stories of hope and change, and to highlight the work World Vision is doing transforming the lives of vulnerable children. The money given to World Vision through StarKids goes towards providing clean drinking water, basic healthcare and agricultural training. NZ OceanKids Swim Series Jetstar celebrates and supports the next generation of Kiwi swimmers through sponsoring the NZ OceanKids Swim Series. The fastest boy and girl in each age group race at each State OceanKids Swim Series event from December 2013 – April 2014, will form the Jetstar Super Swim Squad and win a lifetime experience – a weekend squad camp in April 2014 with New Zealand’s best swimmers including travel and accommodation, special surprises and specialist swim clinics!

New Zealand swimming champions Danyon Loader and Lauren Boyle help teach kids at the Jetstar New Zealand Super Swim Squad

— Bellyful – Volunteer organisation helping support new mums with home-made meals and emotional support. — Mummy’s Wish – Helping families where mothers are being treated for cancer, — Shoes of Planet Earth. — Clown Doctors – Brightening the day of sick kids. — Deaf Aotearoa – Hearing impaired parents support network. — SafeKids – Helping teach kids how to be safe when riding bikes and scooters. Jetstar plans to expand the program to include the Singapore and Japan regions in the coming year.

New Zealand Clown Doctors, winner of a Jetstar Flying Start Grant, aboard a Jetstar flight on national Smile Day

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COMMUNITY REGIONAL AUSTRALIA Supporting the economic development of regional communities continues to be an important priority for the Qantas Group. The Qantas Group’s dedicated regional business, QantasLink, serves as a lifeline to millions of Australians who can live thousands of kilometres from a capital city and hundreds of kilometres from the nearest town. Operating more than 60 aircraft and approximately 2,000 flights each week to 56 metropolitan and country destinations, QantasLink plays an important role in serving regional Australia by transporting farmers, social workers, teachers, medical staff and resource industry workers to outback communities.

In addition to investing in new aircraft and lounges, growing services, and job creation, QantasLink promotes tourism in regional areas and supports charitable initiatives. QantasLink is proud to play an active part in the community by supporting a range of local and global organisations and events and engaging with local communities. During 2012/2013 community initiatives included but were not limited to: — Officially launching Tamworth Country Music Festival as the preferred airline partner — Sponsoring the Geraldton Greenough Sunshine Festival — Sponsoring the 2013 NSW Country Rugby League season — Providing continued assistance in many of the 56 regional communities it flies to for charitable causes as well as promoting and marketing regional communities. QantasLink provides direct employment for more than 1,400 people in metropolitan and regional centres. The following table provides examples of total direct spend within two key Regional Australian communities:

Significant investment in the QantasLink fleet is to see growth in the next 12 months with QantasLink continuing to support Australia’s fly in fly out mining community through operation of the Qantas Group’s Western Australian resources charter airline Network Aviation. During the year QantasLink opened a new lounge at Tamworth to help to meet the growing demand for the region’s travellers and to continue to build on QantasLink’s long history with the Tamworth community.

Tamworth

Dubbo

Local population

50,000

41,000

Passengers carried 2013

138,000

109,000

Spend on local accommodation 2013

$162,000

$160,000

Spend on local catering 2013

$60,000

$33,000

$2.7M

$1.2M

$564,000

$470,000

$3.5M

$1.9M

Aviation charges and fees to local councils 2013 Spend on local ground handling 2013 Total Qantas direct spend 2013

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MEASURES Unit

2013

2012

2011

2010

2009

Financial Underlying PBT Net Underlying Unit Cost

$M

192

95

Cent/ASK

4.99

5.30

552 5.60

377 5.55

100 5.80

$M

372

(472)

(696)

(294)

(14)

Years

7.9

8.3

8.6

8.6

8.8

Total Recordable Injury Frequency Rate

TRIFR

29.5

35.5

34.3

41.5

-

Lost Work Case Frequency Rate

LWCFR

9.6

11.6

9.6

9.9

-

Duration Rate

DR

52.1

53.3

-

-

-

Absenteeism

Days

9.1

9.6

9.3

9.3

-

Free Cash Flow Average Fleet Age – Scheduled Passenger Fleet Safety and Health

Customer Australian Domestic on time departures Qantas Group

%

80.1

80.1

80.4

86.2

81.1

Qantas Airlines

%

84.7

84.4

83.8

87.7

80.8

QantasLink

%

78.8

77.7

78.5

86.8

83.7

Jetstar

%

75.6

76.6

77.1

82.1

76.8 80.4

Australian Domestic on time arrivals Qantas Group

%

78.3

79.1

78.9

85.2

Qantas Airlines

%

82.8

83.4

83.1

87.4

81.0

QantasLink

%

75.4

75.3

74.8

83.7

80.9

Jetstar

%

76.1

77.6

77.3

82.9

78.2

Australian Domestic cancellations Qantas Group

%

1.8

1.8

1.6

0.8

1.7

Qantas Airlines

%

1.6

1.7

1.5

0.8

2.6

QantasLink

%

2.5

2.0

1.9

0.7

1.1

Jetstar

%

1.3

1.6

1.4

1.1

0.9

Community National Export Revenue

$M

5,227

5,372

5,534

5,406

-

Domestic traveller expenditure

$M

22,732

22,255

19,644

19,035

-

Number of full-time equivalent employees

#

33,265

33,584

33,169

32,490

Percentage of women

%

41.2

41.6

41.1

41.7

41.7

Percentage of women in senior positions

%

31.3

31.5

29.9

22.1

24.9

Percentage of women Directors on the Qantas Board

%

22.2

25.0

27.3

20.0

18.2

Number of women Directors on the Qantas Board

#

2

3

3

2

2

Percentage of female graduates recruited

%

57.1

61.5

35.0

-

-

Number of Indigenous Australian employees

#

354

354

338

304

269

Percentage of part-time employees

%

15.5

14.1

13.4

13.1

12.9

People 33,030

Employees by age group (permanent employees) 16-24 Years

%

4.6

4.1

4.2

4.5

5.3

25-34 Years

%

19.9

19.8

20.2

20.6

21.3

35-44 Years

%

29.7

30.4

31.2

32.3

33.0

45-54 Years

%

30.8

30.9

30.4

29.9

28.7

55-64 Years

%

13.8

13.6

13.1

12.0

11.2

65 Years +

%

1.2

1.2

0.9

0.7

0.6

Environment Available Seat Kilometres (ASKs)

139,909

139,423

133,281

124,717

124,594

‘000 Litres

4,834,093

4,877,000

4,790,143

4,570,556

4,695,383

CO2-e emissions from aviation – Group

Tonnes

12,383,245

12,493,157

12,270,660

11,708,155

12,027,918

CO2-e emissions from aviation – Australia

Tonnes

4,625,110

4,375,222

4,255,706

3,914,871

3,963,472

CO2-e emissions from aviation – Rest of world

Tonnes

7,756,250

8,117,935

8,014,954

7,793,284

8,064,446 -

Aviation fuel consumption

CO2-e per 100 RTKs (Group)

Million

Kilograms

99.5

99.3

99.1

98.8

Fuel per 100 RTKs (Group)

Litres

38.8

38.8

38.7

38.6

-

Fuel per 100 RTKs (Qantas)

Litres

39.5

39.6

38.9

38.8

40.1

Electricity (Australia) Water (Australia) Direct waste to landfill (Australia)

MWh

222,667

228,361

231,763

234,989

242,410

‘000 Litres

901,917

975,412

971,151

977,931

1,045,896

Tonnes

22,563

24,306

25,149

28,102

29,838

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GLOSSARY A Absenteeism The average number of annualised days taken as sick leave (including carer’s leave) per employee from 1 July to 30 June for employees who are employed as at 30 June. Scope: All Australian and New Zealand-based employees of wholly-owned entities of the Qantas Group. ASK, Available Seat Kilometre A measure of an airlines’ capacity. Total number of seats available for passengers, multiplied by the number of kilometres flown. Australian Domestic Aviation Fuel Carbon Emissions The amount of greenhouse gas emissions within Australia measured in CO2-e tonnes generated from aviation fuel consumption (as defined above) from 1 July to 30 June that is attributable to domestic coded flights. Scope: Emissions from aviation fuel consumption by domestic flights of Qantas, Jetstar, QantasLink and Network Aviation. Domestic aviation fuel consumption by Australian air Express is included from 1 December 2012, the first full month after this entity was acquired by the Group. Australian Domestic Cancellations The percentage of Australian domestic cancellations from 1 July to 30 June. Any cancellation that occurs within seven days of original scheduled departure time is recorded as a cancellation for on time performance purposes, as per the BITRE Airline On Time Performance definitions. Australian Domestic On Time Arrivals The percentage of Australian domestic on time arrivals from 1 July to 30 June. A flight arrival is counted as on time if it arrives at the gate within 15 minutes of the scheduled arrival time for sectors flown. Neither diverted nor cancelled flights count as being on time, as per the BITRE Airline On Time Performance definitions.

Australian Domestic On Time Departures The percentage of Australian domestic on time departures from 1 July to 30 June. A flight departure is counted as on time if it departs from the gate within 15 minutes of the scheduled departure time and subsequently proceeds to take off, for sectors flown. Neither diverted nor cancelled flights count as being on time, as per the Bureau of Infrastructure, Transport and Regional Economics (BITRE) Airline On Time Performance definitions. Scope: Australian domestic scheduled services. Average Fleet Age – Scheduled Passenger Fleet The average age of the Group’s scheduled passenger fleet based on manufacturing dates. Scope: The scheduled passenger fleet of the Qantas Group, including both owned and leased aircraft. The Qantas Group’s scheduled passenger fleet does not include dedicated freighters and Network Aviation fleet. Aviation Fatality Fatal injuries as a result of being in Qantas Group aircraft or having direct contact with any part of Qantas Group aircraft, including parts which have become detached from the aircraft, or direct exposure to jet blast except when the injuries are from natural causes, self-inflicted or inflicted by other persons, or when the injuries are to stowaways hiding outside the areas normally available to the passengers and crew, or where the fatality is recorded as an occupational health and safety fatality. For statistical uniformity only, an injury resulting in death within 30 days of the date of the accident is classified as a fatal injury (adapted from Australian Transport Safety Bureau (ATSB) and International Civil Aviation Organization (ICAO) definitions for serious injuries resulting from aircraft events). Scope: Qantas Group branded aircraft excluding Australian air Express branded aircraft.

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GLOSSARY Aviation Fuel Consumption The total volume of aviation kerosene consumed by the Qantas Group’s flying businesses from 1 July to 30 June. Scope: Aviation fuel consumption includes Qantas, Jetstar, QantasLink, Network Aviation, Jetconnect and Qantas Freight, for both domestic and international operations. Aviation fuel consumption does not include consumption by Jetstar Asia or codeshare partners. Aviation fuel consumption by Australian air Express is included from 1 December 2012, the first full month after this entity was acquired by the Group. B BITRE Bureau of Infrastructure, Transport and Regional Economics (refer to www.bitre.gov.au). C CO2-e Emissions from Aviation (Group) The amount of greenhouse gas emissions measured in carbon dioxide equivalent (CO2-e) tonnes generated from aviation fuel consumption from 1 July to 30 June. Under the Australian Government’s Department of Climate Change and Energy Efficiency National Greenhouse Accounts (NGA) Factors, emissions incorporated into the calculation include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). The Qantas Group applies the NGA Factors conversions and methodology for the calculation of CO2-e. Scope: As per the scope of Aviation fuel consumption. CO2-e Emissions from Aviation (Australia) The amount of greenhouse gas emissions within Australia measured in CO2-e tonnes generated from aviation fuel consumption (as defined above) from 1 July to 30 June that is attributable to domestic coded flights. Scope: Emissions from aviation fuel consumption by domestic flights of Qantas, Jetstar, QantasLink, and Network Aviation.

CO2-e Emissions from Aviation (Rest Of World) – The difference between CO2-e emissions from aviation (Group) and CO2-e emissions from aviation (Australia) CO2-e Per 100 RTKs Fuel per 100 RTKs (as defined above) converted to CO2-e tonnes by the NGA Factors. Scope: Wholly-owned entities of the Qantas Group, excluding Network Aviation. D Domestic Traveller Expenditure Domestic traveller expenditure is calculated as the number of Qantas Group domestic passengers for the financial year multiplied by the estimated average expenditure per visitor of $681 (Source: Tourism Australia’s March 2012 National Visitor Survey (latest available data)) (2011: $620 (Source: Tourism Australia’s March 2011 National Visitor Survey)). This amount includes the value of related airfares. As it is not possible to disaggregate the data, the calculation should be viewed as indicative only, e.g. the figure may include some international visitor expenditure (where domestic flights are purchased after arrival in Australia) or understate the expenditure associated with domestic flights which are ‘round trip’. Direct Waste to Landfill (Australia) The total solid waste and quarantine waste generated, as measured in tonnes, where this waste is delivered from Qantas premises directly to a landfill site and where the Qantas Group is responsible for the waste removal and is separately billed (that is, where there is a separately identified item on a bill for waste and is not part of a general overhead charge) for the period 1 July to 30 June. Scope: Qantas Group sites within Australia.

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GLOSSARY Duration Rate The average number of lost days per injury/illness with an accepted workers’ compensation claim for Australian-based personnel, or equivalent in other jurisdictions, resulting in partial incapacity or total incapacity. Partial incapacity means any injury/illness that resulted in an injured/ill worker being fit for work but at a reduced capacity. Lost days means the number of medically certified calendar days, including partial days, for which the injured worker is unable to fulfil the duties for which they are employed (partial days are counted as one full day). Journey and slip port injuries are excluded from this calculation. This metric includes embedded contractors. Scope: Employees and embedded contractors of whollyowned entities of the Qantas Group excluding Australian air Express. E Electricity (Australia) The total amount of electricity consumed as measured in megawatt hours (MWh) where electricity is separately billed for the period 1 July to 30 June. Scope: Qantas Group sites within Australia. Network Aviation data is included in 2011/2012 only. Employee by Age Group (Permanent Employees) The percentage by age group of permanent employees of the wholly-owned entities of the Qantas Group in Australia and overseas as at 30 June.

Fuel per 100 Revenue Tonne Kilometres (RTKs) Aviation fuel consumption per 100 RTKs from 1 July to 30 June. Revenue tonne kilometres (RTKs) is the total number of tonnes of paying passengers, freight and mail carried, multiplied by the number of kilometres flown. Scope: Wholly-owned entities of the Qantas Group, excluding Network Aviation. Fuel per 100 Revenue Tonne Kilometres (RTKs) (Qantas) Aviation fuel consumption per 100 RTKs from 1 July to 30 June. Revenue tonne kilometres (RTKs) is the total number of tonnes of paying passengers, freight and mail carried, multiplied by the number of kilometres flown. Scope: Qantas Airlines FTE Full-time equivalent. I Number of Indigenous Australian Employees The number of self-identified Aboriginal and Torres Strait Islander employees across the Qantas Group as at 30 June, including school-based trainees and interns. Scope: Wholly-owned entities of the Qantas Group.

F Free Cash Flow Free cash flow is a measure of financial performance calculated as operating cash flows net of investing cash flows. Scope: The Consolidated Financial Statements for the year ended 30 June 2013 comprise Qantas and its controlled entities and the Qantas Group’s interest in associates and jointly controlled entities.

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GLOSSARY L Lost Work Case Frequency Rate (LWCFR) The total number of injuries or illnesses during work hours (1 July to 30 June) with an accepted workers’ compensation claim for Australian-based personnel, or equivalent in other jurisdictions, which resulted in total incapacity, per million hours worked. Total incapacity is defined as any injury or illness that results in an injured worker being unfit for work. Journey and slip port injuries are excluded from this calculation. This metric includes embedded contractors (as described above). Calculation is based on injury record status as at 15 July 2013 (2012: 13 July 2012). Scope: Employees and embedded contractors of whollyowned entities of the Qantas Group excluding Australian air Express. N National Export Revenue National export revenue is calculated as the number of inbound visitors brought to Australia by Qantas and Jetstar (including Jetstar Asia) for the 12 months to 31 May (latest available data as at 30 June) multiplied by the estimated average visitor expenditure of $3,313. (Source: Tourism Australia’s March 2012 International Visitor Survey (latest available data)) (2011: $3,315 (Source: Tourism Australia’s March 2011 International Visitor Survey)). This amount does not include the value of airfare and freight charges that accrue to the Qantas Group from overseas sources. These also represent export revenue. Number of Full-Time Equivalent Employees The total number of full-time equivalent (FTE) employees as at 30 June, reported in total for each segment of the Qantas Group in Australia and overseas. This is calculated using standard working hours for full-time and part-time employees and actual hours worked by the casual and temporary workforce. Scope: Wholly-owned entities of the Qantas Group as well as Jetstar Asia.

Number of Indigenous Australian Employees The number of self-identified Aboriginal and Torres Strait Islander employees across the Qantas Group as at 30 June. Number of Women Directors on the Qantas Board The number of female Directors on the Qantas Board as at 30 June. Scope: Qantas Airways Limited. O Occupational Health and Safety Fatality The death of an employee or embedded contractor arising from an occupational injury or disease sustained or contracted while working for the Qantas Group in Australia and overseas. Scope: Employees and embedded contractors of whollyowned entities of the Qantas Group excluding Australian air Express. P Percentage of Part-Time Employees The percentage of part-time positions in the whollyowned entities of the Qantas Group in Australia and overseas as at 30 June. Part-time positions include permanent and temporary part-time positions. Parttime employees are defined as those whose assigned working hours (as per contract) are lower than the position’s standard working hours. Scope: Wholly-owned entities of the Qantas Group. Percentage of Female Graduates Recruited The percentage of female graduates recruited into the Qantas Graduate Program during the financial year. Scope: The Qantas Airways Graduate Program. Percentage of Women The percentage of female employees of the whollyowned entities of the Qantas Group in Australia and overseas as at 30 June. Scope: Wholly-owned entities of Qantas Airways Limited.

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GLOSSARY Percentage of Women Directors on the Qantas Board The percentage of female Directors on the Qantas Board as at 30 June. Scope: Qantas Airways Limited. Percentage of Women in Senior Positions The percentage of female employees in senior management positions in the wholly-owned entities of the Qantas Group in Australia and overseas as at 30 June. Scope: Wholly-owned entities of Qantas Airways Limited. R RTK, Revenue Tonne Kilometre Quantifies the amount of revenue generating payload carried, for the distance flown. Total number of tonnes of paying passenger, freight and mail carried, multiplied by the number of kilometres flown. T Total Recordable Injury Frequency Rate (TRIFR) The total number of injuries or illnesses during work hours (1 July to 30 June) with an accepted workers’ compensation claim for Australian-based personnel, or equivalent in other jurisdictions, per million hours worked. Journey and slip port injuries are excluded from this calculation. This metric includes embedded contractors that work exclusively for the Qantas Group and perform work that is considered core business. Calculation is based on injury record status as at 15 July 2013 (2012: 13 July 2012). Scope: Employees and embedded contractors of whollyowned entities of the Qantas Group excluding Australian air Express.

U Underlying Profit Before Tax (PBT) Underlying PBT is a non-statutory measure, and is the primary reporting measure used by the Qantas Group’s chief operating decision-making bodies, being the Chief Executive Officer (CEO), the Executive Committee and the Board of Directors. The objective of measuring and reporting Underlying PBT is to provide a meaningful and consistent representation of the underlying performance of each Segment and the Group. Underlying PBT is derived by adjusting Statutory PBT for the impacts of AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) which relate to other reporting periods and identifying certain other items which are not included in Underlying PBT. A detailed definition, methodology and reconciliation of Underlying PBT to Statutory PBT is contained in Note 2 to the Financial Statements on page 112 of the Financial Report. Net Underlying Unit Cost The Net Underlying Unit Cost of the Group, which is the Underlying PBT less passenger revenue and fuel , divided by the Group’s Available Seat Kilometres (ASKs). Net underlying expenditure is derived from total passenger revenue less Underlying PBT. Scope: The Consolidated Financial Statements for the year ended 30 June 2013 comprise Qantas and its controlled entities and the Qantas Group’s interest in associates and jointly controlled entities. W Water (Australia) The total amount of water consumed as measured in kilolitres where water is separately billed for the period 1 July to 30 June. Scope: Qantas Group sites within Australia.

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