A massive narrowbody order by will be used to push further into lucrative Asian markets, with this growth to be channeled through the group’s Jetstar subsidiary as well as two startup carriers in major Asian cities.
Qantas announced it will acquire up to 110aircraft – including 78 – as part of a sweeping international transformation plan unveiled Aug. 16.
The total includes 106 confirmed orders with Airbus, with another four to be purchased or leased “subject to availability,” Qantas says. The aircraft will cover fleet renewal and growth for the next 10-15 years, and the deal also comprises up to 194 purchase rights and options. Qantas Group CEO Alan Joyce describes the order as the largest in Australian aviation history, in terms of aircraft numbers. An engine choice for the NEOs has yet to be revealed.
The first of the A320s will go to the new low-cost Jetstar Japan operation, which was also announced Aug. 16. This will be a joint venture with Qantas Group carrier Jetstar,and Mitsubishi Corp. It will launch by the end of 2012 with an initial fleet of three A320s, flying from Tokyo Narita and Osaka Kansai airports.
Of the total A320 order, 24 are earmarked for the Japan LCC, and eight for a new Asia-based full-service carrier Qantas intends to establish. These aircraft will be the current-generation A320, and will be delivered from fiscal year 2013 to FY2016. The A320 NEOs are all for the existing Jetstar operation, replacing aircraft currently being leased and providing for network growth. These will be delivered from FY2016 to FY2021.
Joyce says the new full-service carrier will initially have up to 11 A320s, with eight of the new orders and three more sourced from the group’s existing orders if needed. Qantas is yet to reveal the base for this operation, but negotiations are underway, says Joyce. Singapore and Kuala Lumpur are both leading contenders. Singapore is already a base for Jetstar Asia, and the linkup betweenand opens more potential opportunities for Qantas there, according to Joyce.
Qantas’ new fleet plan also includes deferral of Airbusorders. The carrier is delaying its last six A380 orders by 5-6 years, so they will now arrive after FY2019. However, Qantas will still have a fleet of 12 A380s by the end of 2011 and 14 by mid-2013. The deferral better aligns the delivery schedule with planned -400 retirements, Qantas says. The new plan calls for four additional 747s to be retired during the current financial year.
orders are unaffected by the changes, and the first is now expected to arrive in early 2013. However, the carrier stresses that it has previously cut its 787 orders, and “like all aircraft orders, [787 deliveries] will be reviewed as required.”
The five-year transformation plan will mean the loss of about 1,000 jobs, resulting from fleet and network changes. The transformation plan will add up to AU$450 million ($468.8 million) in cost for Qantas, says CFO Gareth Evans. More than half of this will be in non-cash charges, such as impairment costs for aircraft being retired. The cash portion includes redundancy payments and the cost of establishing the new carriers.
In addition, the fleet plan changes will see Qantas taking on about AU$600 million in debt over the remainder of this decade, Evans says.
Other big changes announced by Qantas involve its relationships with Oneworld partners. A restructured agreement withmeans that from early 2012, each carrier will operate only one sector of the routes between Australia and London via Bangkok and Hong Kong. Qantas will eliminate sectors from Hong Kong and Bangkok to London, focusing instead on Australian routes to these points, and BA will end its flights to Sydney from the two Asian cities. BA will increase frequencies on the London-Hong Kong sector from 14 to 17 per week.
However, both will continue to operate flights between the two countries via Singapore, which will be their main hub for this route. BA is to upgauge from ato a 747 on London-Singapore-Sydney flights.
This move allows Qantas to advance the retirement of the four 747s, and will also mean that “valuable landing rights at Heathrow will be retained for future requirements.” In a presentation to investors, Qantas says these will be leased to BA.
Another significant move will see Qantas end Buenos Aires service and instead launch flights to Santiago. This will become Qantas’ gateway to South America, linking with Oneworld partner.
In announcing Jetstar Japan, Qantas and Japan Airlines confirmed one of the worst-kept secrets in the aviation industry. Startup capital for the carrier will be 12 billion yen ($156.1 million), of which Qantas will contribute AU$63 million ($65.7 million) in three tranches. Qantas and JAL will each account for 42% of the initial investment, with 16% from Mitsubishi. Voting rights will be split equally among the three.
The plan is to grow to 24 A320s within a few years of launch. Jetstar Group CEO Bruce Buchanan says that Airbusor A320 NEOs are future prospects for Jetstar Japan, although the initial focus will be on short-haul A320 routes.
Destinations will initially be domestic, but international routes within the A320’s range are also in the plan. Buchanan says Chinese destinations are particularly attractive.