Australia’s flagship carrier Qantas Airways cancelled orders for 35 planes yesterday, delaying delivery of its first Boeing 787-9 aircraft as it seeks to cut costs after swinging to a second-half net loss.
Qantas chief executive Alan Joyce said the fleet restructure would result in an unspecified “reduction in our forward capital expenditure commitments”, noting the aircraft are worth $8.5 billion at list prices.
Mr Joyce said Qantas was cancelling firm orders to buy 35 Boeing 787-9s “given lower growth requirements in this uncertain global context”, while options and purchase rights for another 50 B787-9 aircraft would be brought forward by two years to 2016.
The moves mean a two-year delay in the delivery of the carrier’s first B787-9.
The airline currently has 308 aircraft.
Qantas posted a second-half underlying loss before tax of AU$107 million (€89 million) compared with a AU$135 million (€103 million) profit a year earlier, dragged down by a soaring fuel bill and its underperforming international division.
However, that beat analysts’ expectations for a loss of AU$128.4 million (€106.7 million).
As expected, Qantas reported a full-year net loss of AU$244 million, (€203 million) its first loss since privatisation in 1995.
Mr Joyce said it would be “imprudent to offer any guidance at this time” for the coming year.
Investors were looking for signs that Qantas is managing its costs, particularly the fuel bill, which the carrier had warned would be its highest ever in the 2011/12 financial year.
The bill came in at AU$4.3 billion, (€3.6 billion) up 18 per cent on the previous year. Qantas forecast underlying fuel costs for the first half of 2012/13 at AU$2.3 billion (€1.8 billion), suggesting the potential for another record year.
Benchmark jet fuel prices in Asia have risen seven per cent to €105.18 a barrel in the past year. The surge in oil prices has highlighted the disadvantage Qantas has as a so-called “end-of-line” carrier.
Qantas, nicknamed the Flying Kangaroo, has to spend more on fuel than other airlines in Asia to carry passengers on inter-continental routes as its aircraft are based in Australia. A loss of market share in international passenger traffic on its home turf has also been another thorn in its side.
Qantas has embarked on a five-year turnaround strategy announced last year to improve its sagging fortunes amid tough conditions for international travel and rising competition at home.
The carrier is separating its loss-making international business from its profitable domestic unit, eliminating loss-making routes, axing 2,800 jobs and slashing capital spending over two years by AU$700 million (€582 million).