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QANTAS Airways, reporting its first annual loss in nearly two decades, has cancelled orders for 35 of Boeing's more fuel-efficient 787-9 aircraft in a bid to save $US8.5 billion.

Australia's flag carrier is fighting to hold on to its coveted investment-grade credit rating as a robust performance from its domestic flights operation is offset by heavy losses at its international division. Based deep in the southern hemisphere, Qantas is an end-of-line carrier that's more exposed to soaring jet fuel costs.

The long-delayed arrival of Boeing's 787 class of aircraft has lumbered it with fuel-guzzling 747s longer than it expected.

Qantas said today that it had retained options and purchase rights for 50 of the 787-9 aircraft. There has been no changes for the group's plans for the 787-8 version, 15 of which will be delivered as planned from the second half of next year.

..."However, firm commitments for 35 787-9s will be cancelled. The restructure means a two-year delay in the group's first 787-9 delivery," the company said in a statement.

The changes will result in a reduction in capital expenditure that would equal $US8.5 billion at list prices, Qantas said.

The Sydney-based company booked a net loss for the year to June 30 of $245 million, compared to a $250 million profit a year earlier.

Underlying pre-tax profit of $95 million was at the top end of company guidance of $50 million to $100 million and beat the $65.9 million average of seven analysts' forecasts compiled by Dow Jones Newswires.

Qantas had indicated to investors in June that it would report its first statutory loss since privatisation in 1995, sending its shares to an historical low below $1.

The group's embattled international operations have been under siege as new carriers flying to Australia in recent years from the Middle East and China have been ramping up capacity.

It has also been under attack on the domestic front from a rebranded and restructured Virgin Australia under former Qantas executive John Borghetti.

Earlier this week Mr Joyce revealed that the board had accepted his decision to forgo any short-term and long-term incentive payments that would have been awarded for the 2012 financial year because of the airline’s poor share price and profit performance

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Earlier this week Mr Joyce revealed that the board had accepted his decision to forgo any short-term and long-term incentive payments that would have been awarded for the 2012 financial year because of the airline’s poor share price and profit performance

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Why announce qf internationals loss on its own, but combine qf domestic and Jetstar ? Hiding something Alan?

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Deliveries of 15 B787-8s to Jetstar will continue as planned, with the first aircraft to arrive in the second half of 2013. This will enable the transfer of Airbus A330 aircraft from Jetstar to Qantas Domestic, and the eventual retirement of Qantas’ Boeing 767 fleet.

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“We have 12 A380s in service across our long-haul network and the reconfiguration of nine B747s will be
complete by late 2012. Boeing 737-800s will continue to enter the Qantas Domestic fleet as part of the Group’s existing fleet plan, while Airbus A330s will transfer from Jetstar as B787s are delivered. And Jetstar’s domestic and pan-Asian fleet requirements will be met over the long-term by our existing A320 order book and the arrival of B787-8s.

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What happen to the 747 retirement,

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Quote:
Deliveries of 15 B787-8s to Jetstar will continue as planned, with the first aircraft to arrive in the second half of 2013. This will enable the transfer of Airbus A330 aircraft from Jetstar to Qantas Domestic, and the eventual retirement of Qantas’ Boeing 767 fleet.
Why is money being spent on refurbing 767 aircraft if they're going to start retiring them within 18 months?

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It is interesting to not that oil price per barrel is currently $97 per barrel, a price at which airlines like WestJet removed fuel surcharges totally back in 08.

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An airline has a problem when its non-flying segments are more profitable than its flying segments because the flying segments are at the core of its business, and the non-flying segment performance depends heavily over a long term on the strong performance of the flying segments.
It is unlikely that the Qantas frequent flyer program can hold the ship upright for a long period if the flying segment of the business continues to perform poorly.

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