Qantas Cancels 787 Order, Posts $256 Million Loss
A Dreamliner landing at DFW in May
Australian flag carrier Qantas has cancelled its initial Dreamliner order and taken a number of measures to restructure and ensure long-term viability. Citing rising fuel costs, labor disputes, and increased competition from Asian carriers in international markets, the airline scrapped its firm order for 35 Boeing 787 Dreamliner aircraft and the option to purchase 50 more has pushed back two years to 2016.
Qantas Group CEO Alan Joyce calls the cancellation is a “prudent decision” that will facilitate a US$8.5 billion reduction in capital expenditure and help the airline regain profitability and continue to grow long-term. Additionally, Qantas said it will cut unprofitable routes, reorganize maintenance and operations costs, and eliminate 2,800 positions across the company.
Despite the cancellation of these 35 aircraft, Joyce maintained the importance of the Dreamliner to the airline’s long-term growth and particularly its competitiveness in international markets. Even without the Dreamliner, Qantas’ international fleet is still being refreshed thanks to 12 new Airbus A380 aircraft and the refurbishment of nine of its Boeing 747 aircraft, with a process that is expected to be completed by the end of this year. Qantas’ low-cost Jetstar subsidiary will still take delivery of 15 787-8 aircraft starting in the second half of 2013, and will shift its Airbus A330 aircraft to Qantas’ domestic fleet. The airline plans to retire the last of its Boeing 767 aircraft by 2015.
In his mid-year results speech, Joyce said that Qantas has been extremely successful to date in reducing the average age of its fleet and is still on track with its overall corporate goals. The US$256 million loss mirrors a similar profit in 2011 and is largely blamed on the A$450 million loss in Qantas’ international division and the A$645 million increase in fuel spending across the group.
Qantas is a member of the OneWorld alliance, a group which includes American Airlines, British Airways, and Iberia.
