Qantas to get A321 NEO
That’s going to be the conundrum with the 797.
The A321neo can carry over 200 in a dual class layout, and can do up to 4000nm. The 797 will have to be keenly priced and offer significant savings for it to be worthwhile.
The A321neo a very capable machine. Which is why I think the days are numbered for 787s at JQ.
The A321neo can carry over 200 in a dual class layout, and can do up to 4000nm. The 797 will have to be keenly priced and offer significant savings for it to be worthwhile.
The A321neo a very capable machine. Which is why I think the days are numbered for 787s at JQ.
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In a expected dense configuration HNL would be an issue westbound. Cairns to Japan would work.
PR have been flying it MNL-SYD/MEL which is the longest in this part of the world.
Still an an absolute weapon on long distance range over the MAX 10. But I don’t think Virgin intended to use it on 7-10 hour trips so will just carry higher loads domestically which is probably a wise call after seeing recent profit numbers.
They did state they also intend to use them domestically to relieve some of the demand pressure with Sydney which is still over half a decade away from Western opening.
PR have been flying it MNL-SYD/MEL which is the longest in this part of the world.
Still an an absolute weapon on long distance range over the MAX 10. But I don’t think Virgin intended to use it on 7-10 hour trips so will just carry higher loads domestically which is probably a wise call after seeing recent profit numbers.
They did state they also intend to use them domestically to relieve some of the demand pressure with Sydney which is still over half a decade away from Western opening.
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It has been communicated to the JQ pilot group in a video with Airbus representatives and JQ flight ops management late last year that the JQ A321neoLRs are only being configured with one additional fuel tank and its range will be enough to fly Sydney Bali with winter jet streams and around 90 mins fuel over destination. Hence a useable range of around 2,500nm.
This won’t be enough range to allow the LR to replace the 787-8 on most SE Asian routes.
The 4000nm range quoted by airbus is with 3 additional centre tanks and a light cabin configuration.
Don’t forget those 232 pax on the JQ A321neoLRs have to put their bags somewhere and for every additional centre tank that is put in the aircraft a ULD position is taken away.
This won’t be enough range to allow the LR to replace the 787-8 on most SE Asian routes.
The 4000nm range quoted by airbus is with 3 additional centre tanks and a light cabin configuration.
Don’t forget those 232 pax on the JQ A321neoLRs have to put their bags somewhere and for every additional centre tank that is put in the aircraft a ULD position is taken away.
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He's also confirmed that they'll make a decision on narrowbody replacement next year.
They also have B787 options that can be used to replace the A330s for Asia flying, if required, depending on whether some of that flying goes to B797s or A359/Ks.
In other words, there is a timeframe to begin replacing almost the entire fleet (barring QFLink). We can continue chipping management for not having replaced the fleet sooner, if we like, but surely the more interesting and relevant discussion is what decisions they should make over the next 18 months.
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He's confirmed that QF will order its ULH aircraft this year, and that they will use the non-ULH version of the same aircraft family for thicker, shorter routes.
He's also confirmed that they'll make a decision on narrowbody replacement next year.
They also have B787 options that can be used to replace the A330s for Asia flying, if required, depending on whether some of that flying goes to B797s or A359/Ks.
In other words, there is a timeframe to begin replacing almost the entire fleet (barring QFLink). We can continue chipping management for not having replaced the fleet sooner, if we like, but surely the more interesting and relevant discussion is what decisions they should make over the next 18 months.
He's also confirmed that they'll make a decision on narrowbody replacement next year.
They also have B787 options that can be used to replace the A330s for Asia flying, if required, depending on whether some of that flying goes to B797s or A359/Ks.
In other words, there is a timeframe to begin replacing almost the entire fleet (barring QFLink). We can continue chipping management for not having replaced the fleet sooner, if we like, but surely the more interesting and relevant discussion is what decisions they should make over the next 18 months.
Let's say it's a fuel-efficient twin, massive fuel savings (until frequency is increased but ignore that for a second) but also: cap raises on market, interest, depreciation - all of which hasn't been happening for years until the handful of 787s turned up.
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Plastic, you're right - to an extent. The question is, how much is this going to cost?? Goyder and the next CEO are copping the biggest hospital pass in QF's history.
Let's say it's a fuel-efficient twin, massive fuel savings (until frequency is increased but ignore that for a second) but also: cap raises on market, interest, depreciation - all of which hasn't been happening for years until the handful of 787s turned up.
Let's say it's a fuel-efficient twin, massive fuel savings (until frequency is increased but ignore that for a second) but also: cap raises on market, interest, depreciation - all of which hasn't been happening for years until the handful of 787s turned up.
That Little Napoleon has with the fossil Clifford sat idly by as the rudderless ship drifted ever closer to the lee shore, they quietly loaded up on options with interesting vesting dates. The strategy is either abject stupidity or simple greed. It could be a little from column A and a little from column B.
The cycle drag of the capex is very important and unfortunately if Mr Goyder chooses to sit idly by he may well wake to a nasty surprise.
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Agreed, capex will have to increase quite a bit over the next decade. But, I'm not as concerned about that as some.
Qantas has paid back about $3b in debt over the past few years, giving it room to take on new debt if required. It has also bought out a number of leases, and paid cash for most (all?) of the new 787s, freeing up cashflow. It has regained an investment grade rating, and has gone to pains to demonstrate that it can produce strong returns for shareholders over time.
All of those things mean that Qantas has a range of options to finance, lease or tap shareholders to pay for its fleet, and can likely do so on reasonably favourable terms - it doesn't have to pay for all of it from cashflow.
Qantas has paid back about $3b in debt over the past few years, giving it room to take on new debt if required. It has also bought out a number of leases, and paid cash for most (all?) of the new 787s, freeing up cashflow. It has regained an investment grade rating, and has gone to pains to demonstrate that it can produce strong returns for shareholders over time.
All of those things mean that Qantas has a range of options to finance, lease or tap shareholders to pay for its fleet, and can likely do so on reasonably favourable terms - it doesn't have to pay for all of it from cashflow.
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Agreed, capex will have to increase quite a bit over the next decade. But, I'm not as concerned about that as some.
Qantas has paid back about $3b in debt over the past few years, giving it room to take on new debt if required. It has also bought out a number of leases, and paid cash for most (all?) of the new 787s, freeing up cashflow. It has regained an investment grade rating, and has gone to pains to demonstrate that it can produce strong returns for shareholders over time.
All of those things mean that Qantas has a range of options to finance, lease or tap shareholders to pay for its fleet, and can likely do so on reasonably favourable terms - it doesn't have to pay for all of it from cashflow.
Qantas has paid back about $3b in debt over the past few years, giving it room to take on new debt if required. It has also bought out a number of leases, and paid cash for most (all?) of the new 787s, freeing up cashflow. It has regained an investment grade rating, and has gone to pains to demonstrate that it can produce strong returns for shareholders over time.
All of those things mean that Qantas has a range of options to finance, lease or tap shareholders to pay for its fleet, and can likely do so on reasonably favourable terms - it doesn't have to pay for all of it from cashflow.
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Certainly not suggesting cashflow should fund capex - that would be nuts from a tax point of view alone; but all of these scenarios (to fund new aircraft) are going to decimate the balance sheet. Have a look at where the margins are: QF International is profitable on fuel price and (little) depreciation alone. Add in there funding costs and the whole thing falls apart. What happens at QF Domestic at the same time? They don't even have the massive fuel benefit (25-30% of all costs) of switching from 4-engine to 2-engine.
That said, the point you make about new planes putting pressure on QFi's balance sheet in particular, is important. Based on Joyce's public statements, ASX statements, and QF's investments over the past few years, I think that it is fairly clear that QF has been trying to figure out whether buying new planes for QFi would create value, or whether QFi's competitive position is so weak that it would lose money on every new plane. The good news seems to be that QF has figured out how to fly QFi profitably again, and by:
- lowering fuel and mx costs by replacing 747s and 767s with 787s - as you say, that can cut costs a lot on its own, but that obviously hasn't been enough on its own, or they would have gone a lot harder on purchasing 787s
- flying routes that other airlines can't compete (heavily) on, such as LHR-PER, SYD-DFW, SYD-SCL etc - boosting revenue and reducing the risk of capacity wars
- focusing on capturing more of the high-yielding traffic, by investing in products that corporate customers want (seats, service, lounges etc), using premium-heavy configurations, flying direct to business-heavy destinations, strengthening QFF, and leaving low-yield pax for JQ, EK, VA and NZ etc to fight over
- flying smaller, more flexible planes, which give them more options if a market sours, and
- lowering staff costs, by reducing headcount in headquarters, cheaper EBAs for pilots, crew, and ground and front-line staff, and outsourcing.
I don't think domestic will be as hard to replace. It's highly profitable, and has almost always been that way (except when there is a capacity war on with VA/AN etc). The benefits of moving from 738NGs to A320/1neos, B797s or 737MAXs will probably be fairly significant - upgauging will help a lot, and some of those new planes will open up interesting opportunities for regional international flying as well. Fairly easy to see a world in which QF puts a regional product on some 737MAX-10s, A321neos or 797s, and uses them for transcontinental, as well as SIN/CGK/DPS/AKL etc flying, as well as fairly happily rotating them through the triangle during peak periods.
TLDR: I'm optimistic.
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QF International is profitable on fuel price and (little) depreciation alone. Add in there funding costs and the whole thing falls apart. What happens at QF Domestic at the same time? They don't even have the massive fuel benefit (25-30% of all costs) of switching from 4-engine to 2-engine.
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What is the difference in cost to operate for the 320 neo vs 321?
Would a fleet of solely 220, 321 and 350 work?
I'd imagine a lot of cost savings - and the three types could replace the 73, 71, 78, 332, 333, and possibly 74.
The 220 could possibly even replace a lot of Dash and Fokker flying.
Being the one manufacturer, surely a good deal could be done to transition.
Would a fleet of solely 220, 321 and 350 work?
I'd imagine a lot of cost savings - and the three types could replace the 73, 71, 78, 332, 333, and possibly 74.
The 220 could possibly even replace a lot of Dash and Fokker flying.
Being the one manufacturer, surely a good deal could be done to transition.
Being the one manufacturer, surely a good deal could be done to transition.
That's why, except for some VLC operators who operate a single type, you seldom see an operator who has an all Airbus or all Boeing fleet.
I'd imagine a lot of cost savings - and the three types could replace the 73, 71, 78, 332, 333, and possibly 74.
This years iPhone may be better than last years, but probably not worth replacing it for.
Actually locking yourself into one manufacture makes it far harder to get a 'good deal'
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true, it'd be interesting to see how this pans out for Boeing and the 737 MAX program, and whether it'd be an extra incentive for QF to switch to the 320/1 NEO, with some of its advantages in the container loading, and future engine upgrade capabilities.