Qantas Airways Limited

Good morning, and welcome to the First Half Financial Year 2026 Investor and Analyst Results Briefing. My name is Filip Kidon.

I'm the Group Head of Investor Relations at the Qantas Group. I'd like to now hand over to our Chief Executive Officer, Vanessa Hudson, to take you through the results.

Thank you, Filip, and good morning to everyone. Thanks for joining us today at the Qantas Group Half Year 2026 Investor and Analyst Briefing.

I am joined by Rob Marcolina, our CFO, who will be assisting me in presenting the results today, but I'm also joined by our entire leadership team. Today's briefing will only be in audio format, and Rob and I will take you through a number of the key slides in our materials that we lodged today, but then we will open to questions.

We will start on Slide 4 of our presentation with our results highlight. This has been another half year defined by execution.

Our focus continues to be on delivering for our customers, our people and shareholders. By delivering these strong results for earnings, we can invest in the largest fleet renewal in our history.

In summary, our underlying profit before tax for the half was up $71 million on last year. Our earnings per share at $0.68 was up 7%.

Operating cash flow was strong at $1.8 billion, and we are delighted to announce that the Board has also improved an interim shareholder distribution of up to $450 million. This includes a fully franked base dividend of $300 million, an increase of $50 million and an on-market share buyback of up to $150 million.

Our performance is driven by 3 factors: one, the strong demand for travel across Australia and internationally; two, the reinforcing strength of our integrated portfolio, which includes our premium and low fares airlines alongside a world-leading loyalty program; and three, the emerging benefits to our customers, people and shareholders as we execute one of the largest fleet renewal programs in our history. Fleet.

The renewal of the Qantas Group fleet is accelerating. In this half, we invested $1.8 billion in fleet and other projects.

This included 18 aircraft joining the fleet. Of these, 9 were new aircraft, including 2 A321XLRs for Qantas, 4 A220s for QantasLink, 2 A321XLRs and 1 A320neo for Jetstar.

With Jetstar's fleet of A321s now at scale, we are seeing significant benefits in financial performance, customer experience and emissions reduction. In this half, our investment in A321LRs contributed to 60% of Jetstar's earnings uplift through efficiency and better aircraft utilization.

This gives us confidence in the benefits that will flow once the Qantas fleet reaches scale. We remain incredibly focused on all customer metrics, and it is pleasing to see this reflected in our operational and reputational scores.

Our Qantas Net Promoter Score lifted 5 points and Jetstar lifted 4 points. Operationally, Qantas delivered 70% on-time performance, the highest of any major domestic airline, while Jetstar improved to 71%.

Our customers have more to look forward to over the next 12 months. Fleet deliveries, including our first Project Sunrise aircraft, cabin refresh programs on our A330 and also Jetstar 787s, refreshing our international lounge in Los Angeles and also Sydney, rolling out WiFi across our Qantas International fleet and progressive rollout of changes to our frequent flyer announced today.

Turning to our people. None of this would have been possible without the dedication and the professionalism of our 30,000 team members across the group.

During the half, we increased our frontline workforce by 4%. We are investing in our people through leadership programs, improved staff travel and creating opportunities for development and career progression.

Eligible employees are on track to receive another $1,000 in Qantas shares later this year. And we are excited to open a new Jetstar Perth cabin crew base later this year, creating 90 new roles.

And Qantas will also reestablish a crew base in Singapore, supporting our growth in our international network. Now turning to Slide 5.

The strength of today's result reflects the deeply integrated value across our group. I'll now provide an overview of business performance and the CEOs of each segment will be here with me to give their perspectives during Q&A.

So firstly, Qantas Domestic or Group Domestic. Group Domestic delivered strong performance with an EBIT of over $1 billion, up 14% last year and an EBIT margin of 18%.

Group domestic capacity grew by 5% and RASK was up 3%. This reflects the strong demand across both leisure and business purpose travel.

Our dual brand strategy drives strong performance across all market segments, including business purpose, premium and low fares leisure. Jetstar Domestic had an outstanding half with earnings up 38%.

EBIT margin was above target at 22%. Once again, the fleet renewal is a key driver behind Jetstar's success with its A321LRs and A320neo fleet now at scale.

Qantas Domestic also saw strong demand, contributing to RASK growth of 2% as capacity grew by 4%. This was underpinned by business purpose travel growth and premium leisure growth supported by strong event demand.

Qantas Domestic achieved an operating margin of 16% despite the ongoing investment into entry into service of its new fleet. Group International, excluding Qantas Jetstar -- sorry, excluding Jetstar Asia and Jetstar Japan, saw its underlying EBIT impacted by 6%.

This was due to cost escalations, including higher engineering and industry pressures, higher operational wages and commencement of training for new aircraft into Qantas International. We are offsetting these costs where possible and working across the industry to address what can be done to ensure this doesn't impact the affordability of air travel.

Capacity for Group International Airlines increased by 3%, reflecting the impact of the closure of Jetstar Asia in July. Jetstar International performed strongly with earnings from its Australian international operation up 9%.

Jetstar International reached an operating margin of 14%, also above its margin target. For Qantas International, we continue to see strong demand, particularly in premium cabins on our long-haul routes.

This half also saw the return of our final A380 to service, continuing to restore our U.S. market capacity.

Now to Loyalty. Underlying EBIT for loyalty was $286 million, up 12% on the prior year.

Points earned were up 10 points and points redeemed grew by 17%. The program is growing at pace with Qantas Frequent Flyer membership now exceeding 18 million members.

Engagement across our partner network remains a key driver with the number of members earning across 2 or more categories up 8% on prior year. Today, we are thrilled to unveil the most significant change to status in the program's history.

For the first time, we are giving tiered members the ability to roll over unused status credits into their next membership year. Even more exciting, we are breaking new ground by allowing members to earn status credits through everyday spending on the ground.

This represents a new era for Frequent Flyer program in the face of changing loyalty landscape. I am now going to pass to Rob to overview our financial performance.

Thanks, Vanessa, and good morning, everyone. We'll now turn to Slide 16 for a more detailed look at our financial metrics.

Underlying profit before tax for the half was $1.46 billion, up 5% versus first half '25. Statutory profit after tax was $925 million, flat versus first half '25.

Underlying earnings per share reached $0.68, a 7% increase, and the group's operating margin was 12.3%. For the half, operating cash flow was strong at $1.8 billion, providing a solid foundation for our ongoing capital requirements.

Net debt ended the half at $5.6 billion. This remains at the bottom of our FY '26 target net debt range of $5.6 billion to $7 billion.

Net capital expenditure was $1.8 billion. There were $400 million of dividends returned to shareholders in the half.

Total unit revenue and total unit cost both increased by just over 2%. This was driven by several factors, which I'll now explain as part of the group profit bridge.

So if we now move to Slide 17. On this slide, I'll walk through the key drivers behind the year-on-year increase of $71 million in our underlying profit from first half '25 to first half '26.

For the half, group capacity increased 4% and coupled with a moderation in oil prices, saw $122 million in contributions during the period. Group RASK grew by 3% across both domestic and international.

As previously guided, our transformation program is weighted to the second half, and we remain on track to target $400 million for the full year to offset ongoing CPI pressures. Depreciation and amortization increased $89 million, reflecting the acceleration of our fleet renewal program.

The ramp-up in fleet renewal saw the business incur fleet-related EIS costs. These increased by $10 million for the period.

Net industry costs increased by $40 million. Underlying airport security and navigation charges continue to escalate above the rate of inflation.

Profit was impacted by $76 million from unfavorable foreign exchange movement across nonfuel costs during the period and Jetstar Japan's lease liability. Turning now to Slide 25.

We want to highlight the important role that the new fleet is playing to grow our profitability. Jetstar has delivered a stellar performance in the half and fleet investment is a key driver.

The 321LR and the 320neo aircraft are providing significant replacement benefit. This includes lower fuel burn per seat and reduced maintenance costs.

However, the fleet renewal extends beyond replacement benefits. Because these aircraft are more efficient and have longer range, we are seeing a step change in utilization, allowing us to launch new short-haul international routes.

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

This gives us confidence as the Qantas fleet renewal reaches scale. Now turning to Slide 31.

Our long-standing financial framework is core to maintaining our financial strength. It's designed to structurally maintain low leverage, strong liquidity and an investment-grade credit rating.

It also guides capital allocation, including opportunities for capital recycling to maximize group value through the cycle. An example of this is the closure of Jetstar Asia in July.

And recently, we announced our intention to sell our stake in Jetstar Japan. This allows us to focus on our core business in Australia.

As previously guided, capital expenditure for FY '26 is expected to be $4.1 billion to $4.3 billion. Today, we are also providing guidance for FY '27, which is expected to grow to $5.1 billion to $5.4 billion.

This reflects the acceleration of our fleet renewal program, including the arrival of the first 4 Project Sunrise aircrafts. We are confident in the earnings and cash flow growth from this fleet and our Jetstar result demonstrates this.

We are committed to a base dividend that is sustainable through the cycle. And as Vanessa mentioned, we are delighted to share that the Board has approved an interim FY '26 shareholder distribution.

This includes a fully franked base dividend of $300 million, which is a $50 million increase over the first half '25 base dividend. This demonstrates our commitment to delivering sustainable value to our shareholders.

We've also announced an on-market share buyback of up to $150 million. So whether it's the decisions about which routes to fly, which brands to fly or how to adjust the portfolio, we remain focused on ensuring optimal capital allocation across the group.

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

Thanks, Rob. So we're now on Slide 35.

The Group continues to see strong travel demand across the portfolio. We expect Group RASK to increase in the second half compared to the prior year, made up of the following.

So Group RASK is expected to increase approximately 3% versus last year, while Group International RASK is expected to increase between 1% and 3%. This includes the impact of Qantas International capacity growing at a faster rate than Jetstar International.

Entry into service and fleet-related transitionary costs will increase by $20 million versus the second half of '25. The gross impact of Same Job Same Pay in the full year '26 is now expected to be approximately $95 million, a $15 million increase on the second half of '25.

This is expected to be mitigated over time. Qantas Loyalty is expected to grow underlying EBIT between 10% to 12% for the full year '26.

And finally, net freight revenue in the second half of '26 is expected to be in line with the second half of '25. Our outlook slides provide further detail on specific line items, including fuel cost depreciation, transformation and the latest estimates on the closure cost of Jetstar Asia and restructuring costs.

We also have our latest capacity guidance on Slide 36 of the investor material. So in closing, this is an exciting new era for the Qantas Group.

We're seeing the benefits of our fleet renewal flow through to customer experience, operational performance and financial results. We're investing in our people and our network, and we're building on the momentum that we've created.

By consistently delivering strong earnings growth through our dual brand strategy, we can invest in our customers and our people while also rewarding shareholders. I would like to close again by thanking our 30,000 team members for making this result possible.

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

If we can start with Domestic. I think strong Domestic capacity growth we've seen across the market, particularly in that December quarter and particularly on the triangle.

Just referencing back to obviously the AGM commentary around corporate yield or corporate RASK slowing. Just talk to what you're seeing as far as corporate growth and the outlook for second half '26, please?

Yes. Thanks for that, Anthony.

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

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

Thanks, Vanessa. Anthony, just on demand, we continue to see strong demand, both as Vanessa mentioned, premium leisure as well as business purpose travel.

And when you look at business purpose travel, it's really the small and medium enterprise market as well as resources market in WA that is particularly strong. So -- and we see that continuing to the second half.

So we're confident with the capacity we're putting in, in the second half, it's going to address that demand.

And I think just some of the comments that I'd make on business purpose travel. I think what we are seeing in this market is the small to medium-sized business really growing and outperforming.

And that was a result of the 6% increase in revenue that we saw for business purpose travel. As you say, in November, when we did update around the AGM, there was in the non-resource corporate market, there has been some lower-than-expected growth.

However, that has been offset by the strong performance in the SME market and also resource and mining market. But Steph, on Jetstar?

Yes. And I will just -- before I talk about low fares demand, also just say from a small business perspective, which is really important is we also look at how the dual brand plays into that.

So Jetstar, obviously, if there's price sensitivity for business purpose, small business, particularly, how Jetstar plays a role in supporting Qantas with that is really important. But on the more price-sensitive leisure and we've seen really strong demand continue through this half, very strong events calendar that looks strong into the second half as well.

And when we look at all of our data around intention to travel, the Australian love affair and prioritization of travel has certainly not waned. So we're seeing really strong demand for low fares travel.

I had a 2-part question on the distribution. The first is just, I guess, motivations around the buyback, whether that had anything to do with franking balances or just the decision-making around that.

And then the second part of that is maybe just to understand your messaging around the dividend and the buyback. I think if we go back to sort of the pre-COVID period, you were paying a base dividend and then you top up with buybacks depending on where you ended up with free cash.

Is that the same sort of methodology that we should be thinking about from now on?

Yes, Matt, thanks for the question. So I think the first thing to say is that we're obviously continued to be guided by the financial framework.

So we were delighted today to be able to announce an increase in the base dividend. And the way that we've described the base dividend previously is the same, which is we expect that, that will be sustainable through the cycle.

So moving that up to $300 million per half or $600 million per year was really important. I think the point on additional distributions, we've always said we would stare into the decision around whether that would be paid through dividends or whether it would be paid through a buyback.

Obviously, different shareholders have different perspectives. We absolutely have franking credits that can continue to be utilized, but at this point in time, we saw value in the share price with regards to doing the buyback.

So it will be consistent and it has been consistent, and it will be consistent in the way we consider it going forward.

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

Could you just help tie all those together for me, please?

Yes. Look, I might just make a few comments broadly on Qantas International and for the specifics, I'll pass to Cam.

You mentioned, Jake, ASK growth. And I think it's really important to mention in this moment that the A380 is a critical part of Qantas International ASK production.

And that is a really important part of the integrated value and the value that Qantas International provides across the group. Bringing back 10 A380s, we believe, was the right decision and obviously was contributing to the capacity growth that you saw this year for Qantas International.

The reason why those 10 A380s are important, it is important for scale. It's important for resilience, and it was important for us to finish reestablishing our network post COVID, which has only really just happened.

And I think that, that is a really important part of the overarching narrative for Qantas International until we can renew the international fleet, that A380 fleet is going to be a core part of that ASK production. So I'll now pass to Cam to just talk a little bit about how we're seeing the A380 deployed, how we're pivoting some of that capacity in the light of some demand and also cost.

Yes. Thanks.

I mean I think it's a good question. And -- you'll see from the outlook and the announcements we've made, we're making some material changes to where we deploy that capital and capacity in the near term.

So having A380 come back has given us the flexibility. We positioned that into Dallas because that's second largest airport in the world, 930 connecting flights on AA every day.

So it gives us a diversified revenue pool. But clearly, when we look at the U.S.A., we're going pretty well out of point-of-sale U.S.A., we're making significant gains in that market.

And actually, premium travel is holding up pretty well. Where we're seeing some suppressed demand is ex Australia and the leisure segment.

So we are making some capacity adjustments as we should do. We're going to be quite nimble and fluid on that.

So we're switching 3 A380s from North America into Singapore. We're also redeploying some capacity from L.A.

into Vegas from December to March. Now in terms of the net impact of capacity into North America, we'll be actually down 2%.

So we're managing our capacity into that market given the conditions. But also the market between Australia and U.S.A.

is only at 88% of COVID. So it actually hasn't come back at the moment as well as the one-stop capacity is not as frequent as it was before COVID as well.

So we think we're going to manage that well. The other thing I'd say is where we're seeing really, really strong results is when we do get the benefits of new technology.

So a proof point of that is Brisbane to L.A. So we swapped out not an A380, A330 for a 787.

We've seen a 15% increase in the margin of that, and we expect to see a better increase in the second half of the year. So the incremental proof points from Jetstar from Domestic are coming through even in the International market.

And we remain confident that we have the right aircraft on the right route. And importantly, with the right configuration to absorb that premium demand that we can get good demand and good returns.

Just following on from the discussion about the International Market. I'm wondering if we just understand a bit more of the Sunrise economics based on the information you've shared today.

There's a comment about the RASK premium, for example, that you're getting on the direct Heathrow services. Can you just remind us, is that the level of RASK premium that you require on the Sunrise ultra-long-haul services?

And how much of that is likely to be explained by just a favorable mix towards the premium cabin as opposed to a like-for-like change in the ticket price that Sunrise customers are paying?

Yes. So let me answer a few of those questions, and then I'll pass to Cam just to give an update on where we're at with Project Sunrise.

We are continuing to be really optimistic around the proposition of Project Sunrise. And as you say, it is confirmed by what we are seeing on those longer haul routes that we are flying, both Perth to London and also Auckland to JFK.

We are not seeing the demand abate in terms of customers seeking not just that premium experience, but that proposition that, that ultra-long-haul point-to-point flying delivers, particularly out of Perth, but now we're seeing the same thing out of Auckland. The 2 things on the business case or what do you need to believe for Project Sunrise.

It is the most significant uplift is not about a fare increase. So we're not increasing our fares, but what we are going -- what we do believe is that we are going to be able to have more of the higher fare classes available for longer.

So you'll actually get an effective premium uplift from the demand that we expect to see. It's not -- it's a very small component on the uplift, which is driven by the cabin seating mix.

And let me just kind of give you a sense of what -- when we did the Project Sunrise business case, London was attracting around about a 10 -- 19 to 10-point uplift in premium yield versus the one-stop either via the Middle East or Singapore. We've actually now seen that improvement on Perth London, and it's now at around about 22%.

That is basically in line with what you need to believe and is what we assumed in the business case for Project Sunrise. So again, I think it gives us ongoing confidence that Project Sunrise is going to really hit a very premium part of the market that we know our customers are seeking.

But do you want to give an update on Sunrise?

Yes. I mean I think 2 things I'd say.

One is we're seeing incremental confidence internally about the modeling and the yield premium given the density of the premium cabin will have on that aircraft. And we have now got more and more data on those ultra-long-haul point-to-point services, not just actually London, whether it's JFK, whether it's Melbourne, Dallas, whether it's Perth to Rome.

Those are the city pairs that are performing well for us with the right technology and the A350 ULR just takes that to the next step. The other thing I'd say is given the capacity of that aircraft, which is only 238 seats, it's going to be complementary to what we do, complementary to Perth London, complementary to our flights over Singapore to London, complementary to the services we have over Dubai with our partner with Emirates.

So we're going to be able to offer our customers a whole raft of options, one stop as well as a premium service, which is the only one in the world, which will be nonstop. And we talk a lot about integrated value, but integrated value is going to be incredibly important for Project Sunrise because the Qantas Frequent Flyer program is a premium demand engine for us, and it does create that self-reinforcing customer loyalty, which is very hard to be replicated in this market.

So all our proof points give us incremental confidence about, one, the business case, but two, the customer proposition.

I just wanted to ask you about your long-term margin targets for your airline businesses that you raised at the 2023 Investor Day. I just wanted to ask, has there been any consideration around, I guess, reconsidering them going forward?

Jetstar seems to already, I guess, be there. You've got improving reference points, I guess, from the benefits of the new fleet in that business and how that could pertain to your Qantas business.

And then obviously, it sounds like the outlook for Project Sunrise is relatively encouraging as well. So I just wanted to see if there's been any thought around reconsidering those long-term targets?

Justin, thanks for your question. And I think we continue to reiterate the targets because they remain the targets.

So I think if you think about the Jetstar performance and as you've just articulated where they're at against their targets that we're already there. And so now it's absolutely about growing the bottom line with regards to those targets within Jetstar Domestic, but both in Jetstar Domestic and also International.

I think on the Qantas side, if you think about Qantas Domestic, that 18% target, we still maintain coming in at 16% for this particular half. But what we've said is as we move through from an EIS temporary and transitionary cost perspective that we expect to be at that 18% for Qantas Domestic.

And then I think from a Qantas International perspective, obviously, we're at 6% now. We have put out there that 8%.

We still believe in that. That is in a pre-Sunrise environment.

We're obviously now cycling through Same Job, Same Pay. There were a number of other costs which we would say are transitory in the QAI business that gives us confidence to get to that 8%, but we have to go through the EIS.

And then obviously, Cam has just talked to Project Sunrise, which we've said before is an incremental $400 million of EBIT, which would get us up to that 10% to 12%. So we remain committed to those targets.

The businesses were at almost different perspectives with regards to the targets, but they remain the targets.

Just a couple of questions from me. The first one is just on the earnings skew first half, second half, whether you're expecting a more normalized 60-40 skew in the profit before tax for this year?

And second question is just on -- thanks for the net CapEx guidance for '26 and '27. I'm just wondering what you're assuming for asset sales in both of those years and particularly given the Jetstar Japan proceeds are probably going to be received in '27.

Yes. So just on the -- firstly, on the earnings in terms of the seasonality, we are expecting sort of that 60-40 sort of returning to that.

So that would be the first question. In terms of net CapEx, we're not making an assumption with regards to proceeds from asset sales.

With regards to Jetstar Japan, we've talked about the fact that we have signed a nonbinding MOU. That will be finalized over the next few months up to July, but then probably would not be closed until the end of the next financial year.

So we wouldn't be expecting anything material to come in, in FY '27.

Just a quick question on Loyalty. Just noticing your redemption stepped up quite materially there in the first half of '26.

Potentially, if you could just give us some color on that and what's driving that? And then just any update on the surcharging?

Yes. Thank you.

I'll pass it to Andrew.

Thanks for the question. Half-on-half redemptions, the primary driver around that is the full half impact of the rollout of Classic Plus on the Domestic network.

So that's why you're essentially seeing the increase half-on-half towards sort of 18%. In terms of the RBA, look, I think for us, we wait like other interested parties in terms of what the RBA handed down in March of this year.

In terms of speculating what may come of that from a surcharge and interchange perspective, I don't think I need to do that. I think for us, it is waiting until what comes of March, and then we're happy to have the conversation from there.

Yes. And I think just to add to what Andrew said, we remain really confident in the program.

And based on whatever the RBA does, we remain really confident to be able to manage through that with our partners. We've also clearly continuing to invest in members, and we -- we'll see and -- from the results of Classic Plus, but also today, a lift in Loyalty and hopefully share of wallet.

And then finally, I think when the RBA does make their announcement, we continue to be committed to the 2030 overall margin target. So I think that we feel confident where we're at.

Maybe just a question on seat loads. Can you just talk about what's driving those softer loads, both on Qantas Domestic and International?

And would you characterize this as normalization? Or are you hoping to call some of this back in the future?

Markus?

Yes. Great question.

Thank you. So when you said seat factor had slightly dropped, it's a combination.

Yes, it's back to where it's been in the long term. But what's really driven this is 2 things for us.

One is we cancel less flights as our operations got better. So you don't have that consolidation on the day of travel into fewer flights drive seat factor.

And second, also, we continue to grow in the resource market. That market is quite different and operates in about 10, 15 points lower seat factor.

So as that becomes a bigger part, it also drives down the average. Yes, and for international, the primary drivers in the economy class, Kevin, with the A380, given the size and unit of that capacity, it's more at a normalized level.

But I would say we are looking at ways and means in terms of digitalization and new tools to stimulate load factors. So it is an opportunity.

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

Yes. Look, we see Western Sydney Airport as a great opportunity.

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

Yes, absolutely. So I think as Vanessa said, I mean, we haven't had a new airport in Australia for decades.

So we're really excited about the opportunity. This particular part of Sydney is a growing metropolitan area, so -- which is great.

On freight, we have -- we're just about finalizing the build-out of the shed there, 24-hour no curfew airport. So I think that's going to really assist the freight business.

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

Just on Qantas International, I appreciate the sort of the color on the slide. But can we get some more granularity around the cost performance given that's what seems to have driven the sort of the less-than-expected performance out of that division?

And how much of those costs will repeat in the second half and then potentially drop out in the full year when we look into FY '27?

Yes. So the kind of 3 primary drivers of cost.

One was labor, and that includes Same Job, Same Pay, but it's broadly across many of the operational areas. The second one is engineering investment.

So obviously, with the age of the A330s and A380s, we have been investing more to ensure our engines and our airframes have enough resilience to meet our on-time arrival objectives, and that's been pleasing that those have been met, and that's actually coming through in our Net Promoter Score. So that's pleasing.

And then the last one is the start of our entry into service costs. Firstly, for the Finnair aircraft that are coming into the fleet.

And the second one is the start of the A350 pilot training, which has now started for the entry into service for the Sunrise aircraft. Clearly, we're making moves to do everything possible to reduce those costs.

An example of that would be the announcement we made this morning on establishing a Singapore base, which when it's at full establishment will be up to 650 at the end of year 5. That will help us with cost, but it will also help us with operational resilience as well.

So some of the costs are reoccurring and some of them are one-off.

Yes, there is a component this year of the labor cost that as we enter EBAs, we'll have one-off restatement of leave provisions. So I think that is a key part.

And also as the entry into service costs start to build, as Cam said, these are -- we are going to see this grow. And we are going to make sure that we continue to deploy the aircraft as most efficiently as we can to the markets where we see the highest demand.

And so you are going to see this focus on making sure that we are agile, that we are deploying the capacity to markets where we can get a greater return. Las Vegas being one, I think, is really important and relocating one A380 to Singapore at the second half of this year is going to be a key part of that.

I would actually say that the investment that we're making into the fleet, both A380 and 330 is a critical part of us continuing to generate demand and the premium that we are seeing across our fleets, and that is a really important part of delivering on that customer promise.

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

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

And the other thing as well to say is that we do see this demand effect on the U.S. is short term.

And I think that we remain optimistic in the half that we're in with the Aussie dollar back above $0.70. We know historically in those environments that the U.S.

becomes a much more attractive destination than perhaps where it's been in the past, which has been more costly.

Just had a question. I thought the Jetstar case study was pretty useful.

How should we be thinking about -- and a useful lead indicator. How should we be thinking about the implications for Redtail as it renews its fleet?

Just any considerations versus the chart that you've presented, the splits between cost efficiencies, growth and sort of redeployment flexibility would be great.

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

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

And Niraj, maybe just to follow up. We will bring a case study in the 220s and then the XLRs.

So we'll increasingly bring those proof points as those fleet types reach scale, which is what the Jetstar one has done. And just to Vanessa's point around the utilization advantages around growth, we've today put on Brisbane to Manila on the XLRs, which again is going to be its own proof point within the XLR.

So we will -- as I said, we will bring those to market as we get those aircraft up to scale.

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

I think we've always said that in any scenario, we want these aircraft. They are high-performance aircraft.

We are a country that is a long way away. So this is, I suppose, strategy that we've got, which is to renew the Qantas wide-body fleet to those that have got high-performance, long-range, high premium density seat mix.

In all scenarios that we've modeled, these aircraft are a no-regret purchase. And so we don't believe that the demand is not going to be there from what we're seeing.

But if there were to be some change, we would redeploy these aircraft. And quite possibly, you would see the accelerated retirement of the A380.

So I just want to make the point that we don't see that there is any regret scenario where these aircraft are not going to be a valuable part of the Qantas International fleet. I think that's the last question.

I think it might be pretty quick given the answers you've just given around the context of softer international earnings, the costs you've taken on and some of the capacity. I just wondered, could you just remind us the lead time for managing Qantas' International capacity?

And you give us an outlook, obviously, that's a few periods earlier. But in terms of how you manage internally, how do you think about that?

Yes. I mean we're probably a lot more flexible and nimble than historically we have been.

Usually, the booking period is out to 12 months, but we usually work on a season by season, so 6 months we usually change our settings. But we can be more nimble than that, certainly on short-haul international markets where the booking window is more condensed.

But if you look at our markets, we look at weekly intakes and we're making decisions on capacity, either frequency, gauge of aircraft or redeploying capacity where we see fit. And I think you're seeing that industry-wide.

There's more seasonality coming into International markets. We're seeing good support of the likes of Sapporo.

We think Rome has also done well. We think Las Vegas is going to go.

So you'll see more agile capacity network management and you'll see more seasonality, and we'll be looking to redeploy those 787s, which is our unit of capacity, which is performing really, really well for us. And we see a scenario where the A350s come in with that premium density, that's absorbing the growth that we see in the market.

The market supply for premium seats is under the market demand at the moment.

Thank you. I think that's it for the questions.

Look forward to seeing you all over the next couple of weeks, and thanks for your time.