QANTAS has shown a loss for its 2nd Quarter results and in the process announced a cancellation of its orders for the 787-9.  Nominally, the basis for this is to reduce spending and QANTAS has already deferred some A380 deliveries for the same reason.

Reasons for QANTAS’ losses are in its international division and include very high fuel costs in that region.  This begs the question as to why QANTAS would want to give up aircraft that would improve its position on fuel costs considerably.  The international division relies upon a lot of 4-engine airliners presently and older Boeing 767 aircraft as well.  While it has reduced its average fleet age, that has come about primarily through purchases of a few A330 aircraft and new Boeing 737-800 aircraft.

It’s notable that the 737-800 becomes less than desirable with the 737-8MAX on the horizon.

I would think that by now QANTAS would have come up with a rational fleet approach for its international long haul flying.  While it has some critical mass on the A380, it still is operating an ever aging 747-400 fleet with some of those aircraft not due for retirement until 2018.  The 767s can be improved upon massively with the 787 and that would help considerably.

The age of 4-engine airliners for even QANTAS’ trans-Pacific flying is ending in many respects.  Virgin Australia is using the 777-300ER for similar routes to the US West Coast now and likely seeing far better CASM than what QANTAS experiences with the 747-400.

In a tiered approach, one would expect the 787-8 to replace about half of the 767 aircraft.  The 787-9 could replace another 1/4 to 1/3 of that 767 fleet.  The 777-200/300 could replace the remaining 767/747 flying easily and that leaves the A380 for high demand, trunk routes.  With a 787/777 fleet, QANTAS would also experience better flexibility in its pilot group since a pilot can transition between either aircraft in just a handful of days.

It’s possible that if Boeing got off its delay in offering the 787-10, this aircraft could provide QANTAS with a nice fleet for medium to long haul travel at a fuel cost that would not be beat by any other airline.

A part of me sees QANTAS becoming a smaller and smaller player in the international domain.  It lacks good partnerships with other airlines and the partnerships it does have sees those partners leaning heavily on QANTAS to do much of the expensive flying.  It needs partnerships that are more equal in scope and which allow the airline to perform successfully on routes it can fly while offering customers options on routes it cannot fly.

It feels as if QANTAS and its leadership are simply managing the airline to mediocrity and you quickly become irrelevant in the marketplace that way.

Filed under: Airline News by ajax