Qantas Loyalty won't be sold off, confirms Joyce

Annual financial results show customer loyalty program division to be the bright star in an "unacceptable" underlying pre-tax loss of $646 million and a multibillion dollar statutory loss

Qantas has confirmed it will not sell-off a portion of its highly lucrative Qantas Loyalty business even as it reports a multibillion dollar net loss in its 2013/2014 annual report.

The Qantas Group reported an underlying loss before tax of $646 million and a net statutory loss after tax of $2.8 billion in the 12 months to 30 June, off the back of a $566m decline in revenue over the same period.

Qantas CEO, Alan Joyce, described the results as both “unacceptable” and “confronting”, and blamed the cumulative effect of two years of market capacity growth outstripping demand, record high fuel costs of $4.5 billion (up $253m year-on-year), and weaker consumer confidence and demand for the poor results.

The statutory result of $2.8bn encompasses costs associated with the $2bn Qantas Transformation program including redundancies and early aircraft retirement, and a $2.6bn non-cash write down of the international fleet following the group’s structural review.

“There’s no doubt that today’s numbers are confronting,” Joyce told investors. “But they represent the year that is past, and we have now come through the worst.”

Qantas Loyalty was the shining star in the otherwise troubling financial statement. The customer loyalty program division reported underlying pre-text earnings of $286 million, up 10 per cent year-on-year, and its fifth consecutive year of double-digit growth.

Rumours have circulated for months about a potential sale of Qantas Loyalty as a way of raising cash for the business. Various media reports have suggested the business could be worth $2.5bn to $3bn.

In his presentation, Joyce confirmed the group had considered a partial sale of Qantas Loyalty but said the structural review, which commenced last December, found there was insufficient justification for a partial sale.

“Due to the strong support of our customers and partners, Qantas Loyalty is a standout business, achieving a new record result for the year with double-digit growth,” Joyce said. “After careful consideration, our judgement was that Qantas Loyalty continued to offer major profitable growth opportunities and there was insufficient justification for a partial sale.

“To continue to realise the value in Qantas Loyalty, we will be innovating, investing, working closely with our partners and rewarding the loyalty of our customers with even more ways to earn and redeem Qantas points.”

Related: Why Qantas is investing into in-house digital skills

The loyalty group attracted 720,000 new members over the past 12 months and now has 10.1 million members. Total billings reached $1.3 billion, and award redemptions lifted 11 per cent to 6.2 million.

Qantas added 14 new program partners in the past year, as well as launched the Acquire loyalty program for SMEs, which has attracted 35,000 businesses to date. It also launched the Qantas Cash travel money card earlier this year. More than 300,000 Qantas Cash activations had occurred by 30 June, and $500m in cash loaded onto the card.

In August, Qantas unveiled the new Qantaspoints.com ecommerce portal as a new way for Frequent Flyer and Acquire members to spend their points. A Qantas Golf Club is also due to launch towards the end of the year.

According to its financial report, new ‘earn’ drove member interaction over the past 12 months, across everyday transaction accounts, mortgages, whole-of-bank suites, restaurants, cruises, parking, health insurance and energy.

Related: 4 brands making customer loyalty programs work

Across the wider business, Qantas reported customer satisfaction was at an all-time high over the financial year and that customer advocacy was at a record level. Key investments over the past 12 months helping to keep customers engaged included new lounges in Singapore, Hong Kong and Los Angeles, and new and expanded codeshare agreements.

Joyce said better in-flight entertainment, cabin upgrades and staff investments in customer service would help keep the customer satisfaction levels up over the next year.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Signup to CMO’s email newsletter to receive your weekly dose of targeted content for the modern marketing chief.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

yes AI should be a course so many People Use AI https://g-techsolutions.com...

M Abdullah Khan

Is AI on course to take over human creativity? - Modern creative - CMO Australia

Read more

Extremely informative. One should definitely go through the blog in order to know different aspects of the top retail technology.

Pooja Gupta

Donut King takes in-store marketing to the next digital level

Read more

this is very benefit for us we can through all the thing in this and its very benefit for city personhttps://g-techsolutions.com...

M Abdullah Khan

What does the Oculus Rift launch mean for marketers?

Read more

as we all known AI is very spread and alot of companies used ai and we take alot of work from AI https://g-techsolutions.com...

M Abdullah Khan

Making sense artificial intelligence - Food for thought - CMO Australia

Read more

virtual marketing have as much benefits as also disadvantageshttps://g-techsolutions.com...

M Abdullah Khan

The ethical debate facing marketers around virtual reality - Data-driven marketing - CMO Australia

Read more

Blog Posts

Brand storytelling lessons from Singapore’s iconic Fullerton hotel

In early 2020, I had the pleasure of staying at the newly opened Fullerton Hotel in Sydney. It was on this trip I first became aware of the Fullerton’s commitment to brand storytelling.

Gabrielle Dolan

Business storytelling leader

You’re doing it wrong: Emotion doesn’t mean emotional

If you’ve been around advertising long enough, you’ve probably seen (or written) a slide which says: “They won’t remember what you say, they’ll remember how you made them feel.” But it’s wrong. Our understanding of how emotion is used in advertising has been ill informed and poorly applied.

Zac Martin

Senior planner, Ogilvy Melbourne

Why does brand execution often kill creativity?

The launch of a new brand, or indeed a rebrand, is a transformation to be greeted with fanfare. So why is it that once the brand has launched, the brand execution phase can also be the moment at which you kill its creativity?

Rich Curtis

CEO, FutureBrand A/NZ

Sign in