Rivals may fill shortfall left by Qantas A380 deferrals
Qantas will defer delivery of its 13th and 14th Airbus A380s deliveries by three to four years from early next year as it moves to slash capital expenditure this financial year by a further AUD400 million.
A statement by the airline said the spending reduction was “in addition to the AUD500 million announced in February”, as it pursues “competitiveness in all business areas”.
Analysts believe that foreign competitors such as Emirates may move to fill any shortfall in international capacity to and from Australia deriving from the Qantas decision.
Qantas says it will take delivery of a further six A380s from 2018-2019, taking its A380 fleet to 20, and will beef up domestic capacity in 2013/14.
The statement said that between now and 2013-2014 Qantas would achieve international services benefits of between AUD280-365 million from “improved fleet economics, deepening international alliances, withdrawing from loss-making routes and modernising operational practices”.
The carrier said capital expenditure in 2012/13 would now total AUD1.9 billion compared with the AUD2.3 billion previously planned, “consistent with the group’s commitment to disciplined capital management. Capital expenditure in 2013/14 would be AUD1.9 billion or less.
“Progress continues on the Group’s international transformation initiatives, with benefits of AUD280-AUD365 million to be realised across financial years 2012-14 from improving fleet economics, deepening alliances, withdrawing from loss-making routes and modernising operational practices,” the Qantas statement said.
It added that consultation on the future of Qantas’ heavy maintenance operations in Australia had concluded and a decision will be announced by mid-May.
“Our priorities remain to build on our strong domestic business, enhance Qantas Frequent Flyer, turn around Qantas International and grow Jetstar in Asia,” Qantas chief executive Alan Joyce said.
“Today we announce significant capacity increases and product upgrades for the Qantas, Jetstar and QantasLink domestic networks in 2013/14, focusing on core business and leisure routes. This will ensure that the Group retains a profit-maximising 65 per cent domestic market share while delivering the best customer experience in the market.
“We have made substantial progress in our fleet renewal program – our average passenger aircraft age is now 8.3 years, which is highly competitive with other major global carriers.
“As a result we are in a good position to reduce capital expenditure, targeting investment at business areas that deliver sustainable returns while maintaining flexibility in forward fleet commitments. With 12 A380s now in service and our Boeing 747 reconfiguration program well underway, we have made the financially prudent decision to reschedule a further two A380 deliveries – enabling significant capital expenditure savings.
“We are focused on making changes that will increase productivity and competitiveness in a range of areas, including modernising and consolidating our catering operations, streamlining heavy maintenance and introducing new engineering processes. Further updates on these initiatives will be provided in the coming weeks.
“Jetstar continues to expand across Asia, with Jetstar Japan to commence services ahead of schedule in July 2012 and Jetstar Hong Kong expected to do so in mid-20131, in the first ever joint venture with a Chinese airline. Airlines and investors in Asian markets recognise the value of partnering with the Qantas Group to capture growth opportunities.
“The Group’s balanced portfolio and clear strategy makes it well-placed to manage the challenges of ongoing high fuel prices and the changing global economy, while also taking growth opportunities in Australia, Asia and elsewhere. We are acting decisively now to position ourselves for strong, sustainable growth over the long term.”
Edited by : Peter Needham
