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Old 27th Aug 2018, 06:50
  #22 (permalink)  
ebt
 
Join Date: Feb 2006
Location: Perth
Posts: 234
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IFRS 16 is not going to be a problem for Qantas as they have already been reporting their lease obligations for some years now - and frankly it's not a killer for any airline as most banks and financiers have wanted to see those "non-cancellable lease obligations" on the books anyway. Currency-wise it helps to be getting US dollars to act as a natural hedge, but that's getting off-topic.

All bar two of the 717s (YQW & YQV - leased from Boeing Capital) are now owned by Qantas, having been bought out at the end of their leases. Given only a portion of those were bought/leased by Impulse, the AD theory doesn't hold water. Rather, they intend to hold onto them for a while, and where values were, it was probably cheaper to buy them out rathrer than re-sign leases or pay the restoration costs for something that you want to hold onto anyway. Plus, the ratings agencies like to see aircraft on the balance sheet at the moment, and with a lot of cash available, Qantas has been buying up the 737s, A330s and A320s as they come off-lease to improve their credit metrics and bring down debt costs.

But, like any aircraft, at some point they will need a replacement, especially if they need something to run up and down the coast all day between the 737-800s, not just out West on the mining runs twice a day. And with fuel getting more expensive, the life of the F100s (especially on RPT) gets shorter, hence the look at E2s and A220s.

Qantas will need a new fleet, but it's not like they have to rush out yesterday and buy them. Their sights are on the NMA and A321LR for the prime domestic networks, and they are some way off. Virgin will get its first 737 Max next year, but it won't be until they get some scale with those that it makes Qantas fleet replacement a bit more urgent. And while replacing all those 737-800s will be a big order, there will be lessors and financiers lining up before the ink is dry on that order to do sale-and-leasebacks or debt financing - assuming that they don't pay cash for them, as they are with a number of the 787s.
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