Project Sunrise: 5 Key Takeaways from Toulouse

Research evidence excerpt

Project Sunrise: 5 Key Takeaways from Toulouse

IdeaM

4) Financial targets reiterated, but further detail required: QAN reiterated its target of

~A$400m of incremental EBIT at scale. The earnings are roughly split one-third each

across: (1) new markets, (2) network diversification/redeployment, and (3) freight growth.

QAN is targeting a 30% RASK premium vs. 1-stop routes (SYD-LON) supported by higher

premium cabin mix, but slightly lower load factors (~85%). However, it is still not clear

what the base is for the incremental earnings (QAN International EBIT A$906m FY23; A

$556m FY24; A$596m FY25; and A$388m in FY26E), the cascading impact from

redeploying or retiring other aircraft and the magnitude/timing of Entry-into-Service (EIS)

costs. More details are expected at the FY26 result in Aug-26.

5) Better appreciation for the intangibles: There were several elements from the PS

showcase which can’t be put in a spreadsheet, but gave us more confidence in the

financials, including the strength of the QAN/Airbus relationship (important for future

aircraft deliveries and access to innovation), the ability to create media hype/excitement

around product launch, the quality of the product having seen mock-ups of the cabins, and

QAN’s heritage in ultra-long-haul flights (QAN first launched the "Kangaroo Route" from

Sydney to London in 1947; QAN still holds the record for the longest non-stop commercial

passenger flight by duration, the Perth/Ceylon, operated in 1943-45, with flights taking

around 27-33 hours; QAN made a non-stop London-Sydney flight with no passengers in

1989 using the B747-400).

Key risks to Project Sunrise: On balance, we are positive on PS; however, several risks

remain. These include further aircraft delivery delays, which could defer revenue and