News

Qantas defers A380 deliveries to save costs

4 May 2012

Qantas has announced another round of revenue-boosting initiatives that include deferring deliveries of Airbus A380 aircraft, investing in new lounges or lounge renovations at key overseas hubs, and focusing on its successful low-cost carrier Jetstar and profitable domestic routes.

Alan Joyce, chief executive of Qantas, said that one way they are reducing 2013 capital expenditure by AU$400 million (US$410 million) is rescheduling deliveries of two new A380 aircraft from 2013 to 2017, while the remaining six A380s will be delivered in 2019. 

This decision runs parallel to the carrier’s previous announcement of deferring Dreamliner deliveries, which were scheduled for mid-2013. The carrier has not announced a new delivery date but the deferral is projected to help the carrier reduce expenditure from AU$2.5 billion (US$2.6 billion) to AU$2.3 billion (US$2.4 billion) (see story here). 

To enhance the carrier’s competitiveness and “as part of our continued commitment to our high value customers,” added Joyce, “we are investing AU$15 million (US$15 million) in new First Lounges in Singapore (to open by the end of 2012) and Hong Kong (to open early 2013).” The carrier is also opening brand new lounges in Los Angeles, the first of which will open next year. Consistent with the carrier’s other flagship First Lounges, the new lounges will feature Neil Perry dining options and Sofitel concierge services (for more information on the Qantas First Lounge or other lounges that offer great levels of comfort, click here and here).

On the brighter side, Joyce announced that the new Jetstar joint ventures in Asia – Jetstar Japan (see story here) and Jetstar Hong Kong (see story here) – are expected to be high-performers. That is reflected in the fact that when seats for Jetstar Japan went on sale in April, “tens of thousands of seats were sold in the first 24 hours” and “at our peak, we were selling over 4,000 seats per hour,” claims Joyce.

Both Jetstar Japan and Jetstar Hong Kong will allow “the Qantas group to pursue growth opportunities in a capital-efficient manner.” The Jetstar ventures will also mean that the carrier can allocate some of its aircraft to Jetstar and thus reduce the related “capital commitments.” Lessor mandates have been issued for 24 Qantas aircraft to be allocated to Jetstar Japan, while another 18 A320s will “move out of our capital commitments” to be used by Jetstar Hong Kong. 

Another area of growth that the carrier will focus on is its domestic market by increasing capacity and frequencies on high-demand routes. The carrier will add extra services between Sydney, Melbourne and Brisbane while reintroducing the B747 aircraft on the Sydney-Perth route and an A330 on the Melbourne-Perth route to increase capacity.

When Qantas first announced its losses and resultant cost-saving strategy (see story here), Joyce announced the cessation of loss-making routes. These included London-Bangkok and London-Hong Kong – which ended in the last week of March – and Auckland-Los Angeles and Singapore-Mumbai, which will finish tomorrow. These initiatives “will bring additional benefits of between AU$100 and AU$120 million,” added Joyce.

For more information, visit www.qantas.com.au 

Alisha Haridasani

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