Dow Jones
Australia's Qantas: To Decide On Low Cost Fleet
-By Lilly Vitorovich; Dow Jones Newswires;
Wednesday November 12, 10:52 pm ET SYDNEY -(Dow Jones)- Qantas Airways Ltd. chief executive Geoff Dixon said Thursday that the national carrier will make a decision in the next two days about the planes to be used by its low frills operation.
Dixon told reporters that the choice between Boeing Co. and Airbus will be put to the Qantas board early next week.
He said talks are being held with three Australian states as the possible head office of the discount carrier, which is set to begin next May. Dixon has previously said the airline won't be based in New South Wales, which is the home of the parent company.
Virgin Blue, the low-cost carrier that has about 30% of the domestic market, is based in Queensland.
Qantas has said it will buy an unspecified number of Boeing 737-800 or A320 planes for its low-cost operation, with a fleet of 23 aircraft by mid-2005.
"The management will make a decision within the next 48 hours. We'll be putting a recommendation to the Qantas board early next week on offers we have had from Boeing for 737-800 aircraft and from Airbus for A320," Dixon told reporters at a joint briefing with industry group Oneworld.
The branding and naming of the carrier will be finalized around the same time.
Dixon declined to comment on rival Virgin Blue's plans to raise A$500 million- plus via an initial public share offering. "I've got nothing to say about the Virgin Blue float," he said.
Separately, he said bookings are improving and capacity is back to pre-SARS levels.
"Network-wide our bookings are quite good and the market's coming back better than we probably anticipated two or three months ago," he said.
"And our capacity is back now to about pre-SARS levels, so while it's still a difficult industry and a difficult market, things are not looking too bad."
Asked about the airline's results for the six months ending Dec. 31 and the impact of the stronger Australian dollar and the Rugby World Cup, Dixon said: " We anticipate a better overall result this financial year than we had last year. But in the last two months bookings have been a bit stronger than we thought, and we're just quietly confident that the business is returning to some strength."
Dixon said every subsidiary of Qantas is now profitable.
He dismissed suggestions that Qantas may pull out of the New Zealand market because its loads were very low and marketing had declined.
"Nothing could be further from the truth, we have 111 flights a week, our load factors are over 80%...," he said.
Qantas is still weighting up whether to appeal the New Zealand Commerce Commission's decision to reject its strategic alliance with Air New Zealand Ltd.
"It's still very much an open game as far as we're concerned," Dixon said.
Qantas is appealing the Australian Competition & Consumer Commission's decision to reject the alliance, which involves Qantas buying a 22.5% stake in the New Zealand carrier for NZ$550 million.
===========================================