QANTAS cancels 787 orders

[Captain Capstan]

Report on the BBC that QANTAS has cancelled its 787 orders
BBC News - Qantas cancels plane orders amid mounting losses (http://www.bbc.co.uk/news/business-19352412)

[Airbubba]

Didn't AJ say he had the 787 price locked in until 2016? That is if QF is still around in 2016.

Time for another round of pay cuts for the pilots.

I can remember when those QF folks strutted around Asia like they were Delta pilots or something.

Times change with an OGA (Once Great Airline), don't ask me how I know.:(

And, just to clarify, are the orders for 15 787-8's still on track and just the -9's are canceled?

[Machaca]

The BBC article states:
Qantas also cancelled orders for 35 Boeing Dreamliner jets...

Qantas had ordered a total of 50 787's:
30-Mar-2006 15 787-8
30-Mar-2006 15 787-9
30-Nov-2007 20 787-9

I'm not sure which LN's and series (mix?) will be received.

[Localiser Green]

Qantas cancels $US8.5bn 787-9 order after making $245m FY loss (http://www.theaustralian.com.au/business/profit-loss/qantas-makes-254m-net-loss-in-fy/story-fn91vch7-1226456360477)

The decision to cancel the Dreamliner orders will still see 15 787-8s delivered to Jetstar in the second half of next year, but it means an effective two-year delay in arrival of the bigger 787-9s. The airline has kept 50 Boeing 787-9 options and purchase rights and brought them forward by almost two years for delivery from 2016.

Another nail in the coffin for Qantas, if I were a betting man I'd say not only the first 15, but all the (eventual) 787s will be operated by Jetstar. It's what Joyce wants :oh:

[Ye Olde Pilot]

Like many flag carriers they have lost the plot. For passengers there are far better airlines out there. I'd rate Quantas cabin crew on a par with BA in that they consider their customers to be an inconvenience.:=

[1Charlie]

I think the crew are good. It's the piece of **** 767s they still fly between capitals that puts me off

[EW73]

Well, I travel on business and leisure on Australia's domestic system, and have been doing so for some time!
Qantas is so-so OK to travel with, Virgin are also so-so OK to travel with, but I will not fly in an Airbus anywhere, which cuts out Perth trips (my home town) with Virgins A330s, and completely blacks out Jetstar and the other minor A320 players.

So, with this upgrading of Jetstar to Boeing 787, it looks like I will be able to try out their services, which will greatly enhance my choices!

Sounds good to me....

[Delight]

OT but I have to ask, EW73 - do you really refuse to fly anywhere on an Airbus aircraft? I'd be interested to know your reasons. What would you do if the plane was changed at the last minute - would you refuse to board?

[Evanelpus]

but I will not fly in an Airbus anywhere

Without turning this into an A v B debate, would you care to elaborate?

[Tableview]

Quote:
but I will not fly in an Airbus anywhere
Without turning this into an A v B debate, would you care to elaborate?

http://t3.gstatic.com/images?q=tbn:ANd9GcT3GSZAfoI9IDiYg-35aKCOrd8gAFrQFoFbKEJysYqv_7Tg_GEjXHT9XwOf1A

[WHBM]

At the rate Boeing is going with 787 development and deliveries, Qantas probably calculated they were going to be delivered about 2040 anyway .....

[Zoyberg]

Are Quantas really in that much trouble. The penalty clauses for backing out of a contract are huge... unless it suits Boeing (delivery schedule wise) and / or they have signed up for another Boeing.

[gas path]

We will take them please as long as they are post line number 111 (B.A.s first hull).:}
Oh and the engines will have to swapped out for Trents.

[alainthailande]

I'm not suprised. Frequent flyer EU <-> Asia here, mostly using gulf companies (cattle class). I once flew Qantas via Heathrow and this was a really poor experience: worn-out 747 with very visible maintenance issues inside the cabin, seat pitch felt really small, terrible IFE (screens so tiny that no one over 40 can watch a movie) and the food was plain awful. Cabin crew really seemed to be hiding away from us passengers most of the time. Qantas might have the greatest pilots, I think they've handled the very serious A380 incident really well, but the rest is not up to par. I won't fly them again.

[Romulus]

Are Quantas really in that much trouble. The penalty clauses for backing out of a contract are huge... unless it suits Boeing (delivery schedule wise) and / or they have signed up for another Boeing.

Or not.

Joyce is pocketing $100M in this financial year and he can cancel his options with no cost apparently.

[Raggyman]

Will never fly Qantas again, and if they pair up with emirates, won't be flying them either, and I really like flying emirates.

[Guglielmo]

For a while we saw Qantas ordering lots of new fuel efficient 787 aircraft well suited for long sectors, etc. A stark contrast in never taking up the opportunities to buy 777's but instead buying (cheap) A330's which never suited QF requirements.
Now the scene is set, the shining light Jetstar will get the 787's, leaving the Red (Internationbal) part of Qantas to struggle further into oblivion with inefficient large and not so large Airbus equipment to service less and less routes.
Meanwhile many airlines, including direct competitors, will see their 787 deliveries advanced thanks to Qantas, and run away with the prize.
QF have preserved many 787 options though, but let's see if they're taken up by whoever becomes the new Jetstar owner.

[cym]

Flew 4 sectors with QF earlier this year including LHR SIN on A380. Thought they provided excellent service on A380 and good service on 767 and 747 sectors.

Wish them all the best in resolving their problems

[PAXboy]

The company is 91 years old so they are already in the most dangerous phase for a mature company. It is very difficult for a company to live beyond 100 years. I do not enjoy saying that but it is what I have observed in the world. From all that I have heard they are in a very similar position to their friends in BA.

For the record, I do not work in the industry and have never flown QF for the simple reason that I have never had the opportunity.

[Shamrogue]

Paxboy,

The age of the company has bugger all to do with anything. AJ currently calls the shots, now either A: he's doing what he's doing because his back is against a wall or B: Some of the other wizards are right and there is a financial stroke going on.
All companies life changes - perhaps faster now than ever before, the sandpit airlines are putting it upto more established carriers - but that's a mindset of the carrier - how downtrodden the staff feel etc etc.
QF did a very good job when launching the 380 - in public at least it appeared very positive. The issue with the SIN A380 engine again handled well. The competition is there - the new guys from the sandpit are hitting hard on OZ land. It's upto QF management to stand up against the tide and get on with it. BUT AGE has shag all to do with it.

Regards
Shamrogue

[JimNich]

Yeah, I think the age of a modern airline is a bit like Triggers broom.

[Guest 112233]

I take that to mean short - so with 40 years for an engine design to mature 20 years for an airframe to mature - we will be flying around in HP42's or similar equivalents depending on lease rates.

? CAT III

[PAXboy]

ShamrogueThe age of the company has bugger all to do with anything.The older a company is the 'heavier' is the company. This means the accretion of people doing jobs that may nolonger be strictly needed, or too many people doing jobs now more fully automated. It means too many buildings and leases to be maintained into the future.

It also means the people who fondly remember what the company was 20 years ago when it was a different world. Those people may be staff, directors and pax but they may not have accepted where commercial air passenger transport is these days.

Who would have thought that Kodak would have gone bankrupt? But they did not change. Who saw PanAm/TW and all the rest? Ask (in the UK) Woolworths. I am NOT saying that QF is a basket case - but any company that is over 90 years old has a specific problem to deal with, on top of all the regular 21st Century trading problems..

[1pilot]

Anybody got any info if the delay of 787s for QF will affect Jetstar?

[viking767]

Delay? Was it not a cancellation?

[Romulus]

Here's one of teh best articles I have seen on this.

Times of Oman (www.timesofoman.com/innercat.aspx?detail=10562)

The aircraft weren't to be delivered until 2016 anyway, and that assumes Boeing get the delivery schedule right from this point forward.

I wonder if it has anything to do with the changed business case for the aircraft?

One theory has it that the actual fuel performance is nowhere near as advantageous as the theoretical model predicted due to the 787 weighing more than originally envisaged as a result of the use of carbon fibre panels over a metal frame rather than all carbon fibre tube structure. That lack of fuel performance means that the business case for switching to the 787 is nowhere near as compelling as the savings just aren't there. Unless Boeing can do something to reduce the weight or otherwise garner the savings they predicted then there will be more cancellations to follow.

Refer also to the China Eastern cancellation of 24 aircraft in March. In some ways that is a more serious event than the Qantas cancellation as CE is widely seen as one of the potential huge growth stories in world aviation.

Alternatively it may be that Boeing and Qantas have worked a mutually agreed exit strategy for Qantas. The advantage to Boeing being that other customers have less uncertainty in their delivery schedule as those 35 Qantas aircraft represent 3.5 months of full scale production. As the article notes that will almost certainly mean less penalties for late deliveries, and even more importantly it removes a degree of leverage those airlines have over Boeing.

What it is likely to do however is drag forward similar decisions from other airlines. Whereas they have been able to sit back and take payments and other offsets from Boeing they are now faced with a lesser time period in which to make their minds up. If they want the aircraft they are now more likely to get them on time so if their economics don't stack up then more rejections may occur.

Interesting times.

[Romulus]

Anybody got any info if the delay of 787s for QF will affect Jetstar?

The cancellations are for 787-9 aircraft.

Jetstar is getting 787-8, scheduled for next year.

From the same article quoted above:

"The airline's budget arm Jetstar will still receive 15 of the smaller 787-8s starting next year."

[Guglielmo]

"Shamrogue re your option B: Some of the other wizards are right and there is a financial stroke going on."
This might be a lot closer to reality.
Why is it that so many institutional investors are remaining so quiet about not receiving a dividend for the past 3 years, and after AJ's announcement the other day not likely of getting one this year either?
Surely these companies and institutuions have the responsibility of being good stewards of their own company/institution funds?
Not only that, under AJ's watch the share value has more than halved. Institutions should have bailed out of Qantas shares long ago? Maybe, just maybe, they've been advised to 'hold tight' for the takeover bid??
In the meantime Jetstar is being made to look the real star performer and there'll be a huge push for the new owners to sell it (with them assuming it's outside of the Qantas Sale Act), and that sale could well recoup all of their investment.

[QF94]

Shamrogue
Quote:
The age of the company has bugger all to do with anything.
The older a company is the 'heavier' is the company. This means the accretion of people doing jobs that may nolonger be strictly needed, or too many people doing jobs now more fully automated. It means too many buildings and leases to be maintained into the future.

It also means the people who fondly remember what the company was 20 years ago when it was a different world. Those people may be staff, directors and pax but they may not have accepted where commercial air passenger transport is these days.

Who would have thought that Kodak would have gone bankrupt? But they did not change. Who saw PanAm/TW and all the rest? Ask (in the UK) Woolworths. I am NOT saying that QF is a basket case - but any company that is over 90 years old has a specific problem to deal with, on top of all the regular 21st Century trading problems..

Really???? PanAm had a bad history of maintenance and accidents and Lockerbie finished them off. Kodak didn't go digital which finished them off.

QANTAS, by choice of management, are not giving QANTAS International new aircraft to expand the network. 12 A380's and 9 747's doesn't really constitute a TRUE International airline of the future, and with only 21 international destinations today as compared with 37 in 1973 shows where the International side of QANTAS is heading.

From mid 2013 Jetstar get the 787's and start handing back old, flogged A330's to replace 767's that have had interior upgrades from October this year for domestics, only to be phased out upon the return of the A330's.

Can anybody guess where the cost of the upgrade is going to be allocated against? QANTAS International, to justify it's losing money, and can no longer be sustained as an ongoing concern.

[PAXboy]

QF94Really???? PanAm had a bad history of maintenance and accidents and Lockerbie finished them off. Kodak didn't go digital which finished them off.Correct. Both of these things had nothing to do with the companies being old, getting complacent and unable to change?

I am delighted to hear that QF is in good health (I never said anything else) and that they might be changing their plans for very good financial reasons. BUT they are 91 years old and cannot move without being fully aware of that long and heavy 'tail'.

[QF94]

I am delighted to hear that QF is in good health (I never said anything else) and that they might be changing their plans for very good financial reasons. BUT they are 91 years old and cannot move without being fully aware of that long and heavy 'tail'.

It is the tail that is/was the benchmark of the company. It sits quite high, but unfortunately the head is just about buried in the dirt.

[PAXboy]

QF94 Yes, the 'tail held high' was the benchmark - as it was/is for many others. Swiss? BA? Kodak? Ford? HMV? etcetera.

The problem is keeping that tail aloft (and out of the dirt, as you say!) costs money. In the current era, most pax don't want to pay for the 'tail'. Companies cannot afford it and nor can holiday pax. Those new companies that can provide a reasonable/tolerable service at a price that pax will pay? They have the pax.

Which is why I say (too often I know) that age has everything to do with the company's problems. I hope they get through OK, however, some folks will get bruised before the process is settled - one way or the other.

[QF94]

The problem is keeping that tail aloft (and out of the dirt, as you say!) costs money. In the current era, most pax don't want to pay for the 'tail'. Companies cannot afford it and nor can holiday pax. Those new companies that can provide a reasonable/tolerable service at a price that pax will pay? They have the pax.


Paxboy, I will give a couple of very recent and applicable examples.


After about five years of absence from the Gold Coast, QANTAS has decided to return to it. People weren't really wanting to fly Jetstar, but had to as there was no real other choice other than Virgin, as they offered a premium product. Now that QANTAS will be returning with a premium product, many people I have spoken with say they will gladly fly QANTAS and should never have pulled out of the Gold Coast, and that's only a 1 hour flight from Sydney and a couple from Melbourne.
QANTAS currently fly to HNL three times weekly. They're flying banged up 767's with 1990's IFE. All flights are very much full. When QANTAS pulls out, I am led to believe the passengers won't all go to Jetstar, but Hawaiian, who offer a premium product in newer aircraft, which happen to be A330's, just like Jetstar. There is no other choice on this Pacific run.
The initial cheap ticket price offered by LCC's, are very few and far between, because even the LCC's can't afford to run aircraft on the 10% or so of seats offered at the very low prices. In a lot of cases, by the time you add baggage allowance, movie, meal, blanket, ammenities kit, the price tends to be more than the premium ticket.

The current regime in QANTAS is changing the way they do things, but at the detriment of QANTAS and the benefit of Jetstar. QANTAS left with aging and old aircraft, Jetstar get new aircraft, and competing on the same routes.

No one is saying you shouldn't move with the times, but you can't take a European model and make it work in Australia. We have much further to fly to go anywhere internationally, especially from Melbourne and Sydney, where most of the traffic is concentrated,so people are prepared to pay the extra for their goodies on board. Companies are meant to increase market share and run profitably. This is not the way to do it.

People will tolerate bare minimum for an hour or so sector, but when you're talking 4, 8, 10 hour sectors, the sentiment changes.

[Guglielmo]

Re QF94's comment about flights to HNL....
With QF off the route some will try Hawaiian, but probably only once. Their service is good and the food OK (only out od SYD) but the seats are terrible. Have sampled two of their aircraft and it seems someone forgot to order padding for the seats, not very good for 6 hour sectors.
Getting back to 787's...news today is that Air India are finally to take delivery of their first of three standing at the ready tomorrow, and they've announced that one of the first routes (next month) for them to be used is India to Australia. Oh dear, QF are again left standing without modern equipment to even think about providing some competition.

[QF94]

Guglielmo,

I can't comment on Hawaiian's seats, but I know of quite a number of people, both QF and non-QF people, and they loved it. It was either QANTAS or Hawaiian for them. They wanted nothing to do with Jetstar.

The decisions coming from Coward St, Mascot are certainly hurting the International side of things, and I firmly believe it to be no accident.