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Qantas cancels Boeing 787 Dreamliner order

By David Flynn     Filed under: qantas, Jetstar, Boeing 787

Qantas has cancelled its order for 35 Boeing 787 Dreamliners as the airline restructures its fleet plan to rein in costs.

"Fifty B787-9 options and purchase rights will be retained and brought forward by almost two years, available for delivery from 2016" the airline said in a statement.

"However, firm commitments for 35 B787-9s will be cancelled. The restructure means a two-year delay in the Group’s first B787-9 delivery."

Deliveries of the first 15 Boeing 787-8 Dreamliners for Jetstar will continue on schedule, with the first of the next-gen jets due to arrive in the second half of 2013.

This will enable the transfer of Airbus A330 aircraft from Jetstar to Qantas Domestic, and the eventual retirement of Qantas’ Boeing 767 fleet.

"The Boeing 787 is an excellent aircraft and remains an important part of our future" said Qantas Group CEO Alan Joyce.

"However, circumstances have changed significantly since our order several years ago. In 2004, when these aircraft were ordered, nobody saw the global financial crisis arriving" Joyce told a Sydney media conference.

"Our Boeing 787 option aircraft have firm delivery dates and we have to action them at a certain amount of time before that date, so you're guaranteed a particular delivery slot at a particular delivery price" Joyce said.

"Part of this deal is to bring them forward to 2016, so they are guaranteed for us if we want them for 2016."

Elaborating on the move, Qantas CFO Gareth Evans explained that the new date "aligns to the turnaround plan we have for the Qantas International business, so  when we hit that milestone we will have a stream of 787s."

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Also in AusBT's extensive coverage of the Boeing 787 Dreamliner...

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About David Flynn

David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

 

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1 on 23/8/12 by Thecdec1308

Good bye Qantas 

2 on 23/8/12 by tonywills

Virgin, get the orders in and firm up the 787 slots that are now available!! Maybe the 767 refurbishment will last another 10 years for Qantas - I have heard of Airlines keeping aircraft in their fleet for 30 years. As their old aircraft show more signs of fatigue, the pilots will have more to argue about. Jetstar will be larger than Qantas - wait - maybe they are close already?? Virgin and Qantas maybe swapping their original roles completely if this continues. I can see it now - the line up for take off at Sydney and Melbourne - Emirates, Etihad, Singapore Airlines, China Southern, Malaysia, Thai - all with near new A380's, 787's and 777-300ER's and then a Qantas 20 year old refurbished interior 747. Fabulous

1 on 23/8/12 by aero-seat

I agree with you Tony! Jetstar carried 9.84 million domestic passengers while on Qantas carried 20.25 million this year, but yes, I think Jetstar has the potential to match Qantas one day. I still think Qantas made a poor decision keeping their 767s. I heard that they will be keeping the refurbished ones even if Jetstar hands over their A330s. This is the best time for Virgin Australia to step in. 

2 on 24/8/12 by John

I wouldn't be surprised if Boeing's breathing a sigh of relief that it can ditch the Qantas 787s from its list and move other airlines up, avoiding the late penalties it's been assessed, rather than looking to flog off the early slots, to be honest.

3 on 23/8/12 by DGP

So effectively...the retirement of the B767's from QF fleet will take longer than planned?  Originally and still happening is that QF are getting the 2nd hand Jetstar A330's.  But with the B787's arriving as well for QF, it would have meant a quicker retirement of B767's.  Am I right or did I miss something?

What a joke!

4 on 23/8/12 by tomcow767

ansett all over again

5 on 23/8/12 by tonywills

Actually NO - the Jetstar A 330's - well most of them - were Qantas domestic 'Cityflyer" marked aircraft - before they were sent to Jetstar International - so when they go back to Qantas they will be 3rd hand. Maybe that is why the refurbishment of the 767's in black leather and orange is happening - either they will match the ex-Jetstar A330 interiors - OR the 767's will end up as Jetstar aircraft as Qantas dissolves. I think you will find all of the 787's in silver with orange stars on their tails if things stay on the current track.

6 on 23/8/12 by cdirnber

Alan Joyce must have a death wish for QF! - What a mistake to appoint him rather than Borghetti (see what he does to Virgin!)  But I would not be surprised to see QF doing a Swissair-Crossair, or Austrian-Tyrolian, swap in the future, just to bring costs down and force staff to accept the lower Jetstar conditions.  

7 on 23/8/12 by kenner

How much longer do you expect Qantas to last? If it is making decisions like this the airline must surely be in trouble.

1 on 23/8/12 by aero-seat

I agree! Hardly any of Qantas' passenger and financial figures are heading up. My workplace was talking about this a few days ago, I think maybe 5-10 years, but after that Virgin has got the spotlight.

8 on 23/8/12 by aero-seat

I wonder if this has got anything to do with Alan Joyce pissed off at the 787 delays. Virgin Australia can now take the unfilled spots. 

9 on 24/8/12 by John

Okay, armchair CEO time. I actually think that keeping the newer (post-2000 delivery) 767s makes a lot of sense, both from an airline point of view and from a passenger experience perspective.

For the airline, these 767s are basically paid off now, and there's a healthy market in spare parts -- not to mention that Boeing is still producing them as the next generation of US tanker aircraft. Many airlines are extending the life of their 767s, in fact. So it's not like they're going to be falling out of the sky. Remember, the "buy/lease new aircraft and flip them quickly" is not the only airline model out there. One might even say that that's the Jetstar model, while the Qantas model is different. From a balance sheet perspective, there's a lot to be said for strongly depreciated assets that basically cost you just the fuel. Speaking of fuel, there's also the point that early 787s are still overweight and the fuel economy compared with a late-model 767 for ANA has reputedly not been as stellar as everyone might have thought.

For you and me on the plane, let's not forget that the 2-3-2 configuration on the 767 is basically the best thing that ever happened to economy class passengers. A maximum of one person climbing over the aisle passengers, and the seats:aisle ratio is very good for thee and me getting on and off the plane quickly.

The real problem with the 767 was the old seats and overhead monitors. With new seats and iPads? This'll be a really competitive product on the Triangle, and I'd pick it over a 737 to Perth too.

1 on 24/8/12 by tonywills

 Well CEO John, I actually have the 767 as one of my preferred Aircraft. Unfortunately, most see the 787, 777-300ER or the A380 as the preferred choice - both for modern comfort and that 'new' technology feel that the world demands. I have sat quietly listening to other passengers after boarding a Qantas 737-400 or older 767 - many comments about the age and condition of the aircraft. All well and good for the Qantas balance sheet to keep older aircraft. From a PR/Marketing perspective - not so good. The average travelling Australian sees; Strikes, $250 million losses, Aircraft cancellations, International route cancellations and re-structures, staff/base cutbacks, aircraft re-furbishments (to Jetstar black leather and Orange), Jetstar expansion and Qantas shrinkage. At the same time, everyone can see a very steady and robust expansion and improvement across everything Virgin is doing domestically. Then of course there is International - Emirates, Etihad, Singapore Airlines - all premium products with better fares and destination offerings then Qantas to Europe. Asian carriers with the same - all of which have modern fleets of A380's and 777-300ER's and 787's on the way. The USA is really all that Qantas may be in front with, as the American products are generally very average - although there is United news on the horizon with 787's coming aboard. If I was planning to travel to say NYC or Boston for example - I would choose a 787 via Houston any day than endure a LAX connection on Qantas. If Qantas choose to replace the 747 with an A380 to Dallas, then they would be clearly back in contention. Honestly though from a CEO perspective, not ordering the 777-300ER - has been one of Qantas' worst mistakes. Instead of using the 787 delays as an excuse, strategy has seen most other airlines filling those gaps with alternative orders that have yielded positive results - A330's and 777's

2 on 24/8/12 by Al

Good analysis, John. Everybody seems to be focusing on Qantas cancelling the 787s and keeping the 767s as bad news but what you say on the 767 makes sense, the main issue for Qantas with the plane is its fuel consumption.

Also judging from the AusBT article, Alan joyce has actually cut a decent deal with Boeing, he gets to cancel the firm order to buy 35 787s and keep his money, but also keep the additional 'option' order for 50 787s and keep his slot in the delivery queue and have these options available from 2016 onwards, same delivery timeframe as the 'firm' orders they gave up.

People need to get that this is not as much an aviation decision as it is a financial decision, and right now the financials are what matter to Qantas because they are losing money. Cancelling the 787 order puts a lot of money back on the books and this means fewer cuts will need to be made in other areas like routes etc, which would more directly affect travellers and potentially QF's revenue, in order to get QF back into decent profit.

10 on 24/8/12 by ezihose

Alan Joyce is an idiot! Thats why many companies are taking their 1 Million plus per year spend to Singapore and Virgin Airlines

1 on 24/8/12 by Al

"Alan Joyce is an idiot" - wow, very insightful. Thanks for raising the level of debate, ezhouse.

11 on 24/8/12 by tagle

Being critical here but was any of this from the fallout of Air Pacific?

1 on 24/8/12 by Al

Not sure what you mean by that, tagle? Do you mean, did QD cancel its 787s because Air Pacific and the Fiji Govt are narky with the red roo?

12 on 27/8/12 by Southland

Easiest way to make some profit next year QF. Joyce is a good at maths and is this all smoke and mirrors next year. He must need his bonus next year.

Qantas yesterday revealed it would receive $433 million in compensation from Boeing for the late arrival of its much-vaunted 787 Dreamliners, $355m of which will be paid this financial year.

 

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