Alan Joyce: Qantas won't rush on follow-up Boeing 787 orders

By Bloomberg News, February 5 2018

Qantas will start to decide this year whether to take up its options and purchase rights for as many as 45 Boeing 787-9 Dreamliners.

“We are just taking delivery of the aircraft this year so we really want to see the case working and business case performing the way we expected to,” Qantas CEO Alan Joyce said.

“Once we’re comfortable with that, then we will put the order in for further aircraft to replace the (Boeing) 747s.”

According to Reuters, Joyce will let the first of the next 15 options lapse in February and decide on some more in a “few more months”.

The fuel-efficient jets will work in Qantas' favour despite the price of cruide oil more than doubling in the past two years.

“The way our hedging works – it typically puts a cap on our fuel expenditure and allows us to participate if fuel was to fall,” Joyce said in a Bloomberg Television interview Monday in Singapore. “And that’s actually helped us to be quite competitive. We are coping quite well with fuel at the moment.”

The airline reports first-half results on February 22 and has said profit may rise as much as 12 percent. Underlying profit before tax will be between A$900 million and A$950 million in the six months ended December 31, the carrier said in October. That compares with $852 million in the same period a year ago.

Joyce is plowing capacity into Asia, the fastest-growing travel market in the world, partly to tap a flood of Chinese tourists into Australia. He’s also rerouting the airline’s classic Kangaroo Route to London through Singapore instead of the Middle East.

Qantas is preparing to start the first direct service between Australia and Europe when it flies a Boeing  Dreamliner from Perth to London in March. That’s a flight of about 17 hours.

Joyce, who led Qantas on a three-year turnaround after axing routes, jobs and costs, has also challenged Boeing and Airbus to make a plane that will allow Qantas to fly from Sydney to London or New York without stopping.

DownSouth

DownSouth

23 Oct 2014

Total posts 106

Sounds like a well thought through plan.

ramius

ramius

10 Jun 2017

Total posts 7

Gee, If Alan Joyce and his management team can't make a business case for replacing 747s with 787s then Qantas is in serious trouble. If that's the case, time for new management!

Ian_from_HKG

Ian_from_HKG

CX

05 Jun 2012

Total posts 119

Aren't you forgetting the alternatives? The 787 is MUCH smaller than the 747. 777s or A350s are much closer in size, and would seem to be a more natural replacement.

And FWIW, as a passenger, give me an A350 over any competing Boeing any day...

aniljak

aniljak

15 Sep 2012

Total posts 84

No we wont order them now, we will wait another 10 years! Then we weill get aircraft everybody else has had for years, promote them as something new, and watch every other airline operate new aircaft. We're Qantas!

AJW

AJW

16 Nov 2011

Total posts 511

Think the profit results speaks volumes.

reeves35

reeves35

24 Aug 2011

Total posts 553

Sounds like they have a few issues with the existing fleet they are not 100% happy with and they want Boeing to address before further orders are forthcoming.

It'd be astonishing if more orders were not made given the current fleet size is sub-optimal for an airline Qantas' size but it may be a few months yet before they activate these options.

Bob Burgess

Bob Burgess

13 Sep 2016

Total posts 184

How on earth do you get "Sounds like they have a few issues with the existing fleet" from that? There's ZERO evidence of this, Qantas has had NO problems with the 787s, there's barely three in service! Once again "amrchair experts" looking for problems when the logical answer is very straightforward! Non-stop flights to Europe are central to Qantas rationale for the 787s. There is no drama over using them to replace old 747s so this is all about being sure enough passengers will want to fly from the east coast cities to Perth and then non-stop to London especially in he premium cabins where QF makes the most money. If that's not the case then the prospects for new non-stops from Perth to Frankfurt and Paris which Joyce has already said Qantas wants to do, the prospects for those flights will look dim and that would mean not as many 787s need to be ordered because those non-stop routes were designed with the 787 in mind.

deanr

deanr

04 May 2015

Total posts 231

Actually, Qantas has been experiencing a range of ongoing issues with their current 787s that they're keeping quiet about. Flights departing LAX typically depart at least an hour late each night for one reason or another even after the aircraft have been sitting on the ground all day (just look at the performance of QF96 in Flightradar or Flightaware...). In one case, electrical problems on board also resulted in power being cut to the refrigerators and the crew having to discard all of the cold catering, with passengers served only the snacks that weren't temperature sensitive. Plenty of reports on other websites about this.

John Phelan

John Phelan

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 322

Yes. but the main reason for the delays ex-LAX continues to be the late inbound of the flight from JFK with connecting pax. The 94 leaves on time, but the 96 is held for the connecting pax to MEL.

Joshb

Joshb

Qantas - QFF Platinum

20 Mar 2012

Total posts 213

Currently, I am fairly certain, all QF95/6 operations are via remote stand. Had a 40 min delay the other night due to errant passengers. Hardly QFs fault.

deanr

deanr

04 May 2015

Total posts 231

I took QF96 home from a holiday recently in the US and we had an aerobridge, but were delayed for around 90 minutes due to "engineering". Their on-time performance out of LAX is shocking, and my flight was but one of the many delayed departures Qantas has had there. If some of the delays are due to late inbound passengers because Qantas can't time QF12 correctly or doesn't allow enough turnaround time at JFK for it to stay on schedule, that's another problem, beyond the 787 issues Qantas has been having, that Qantas needs to fix.

aggie57

aggie57

QF

04 Apr 2014

Total posts 152

I've only flown 96 once since the 787 came online and we left from one of the gates in the main terminal building. Can't recall the number, it was one of the ones at the south (El Segundo) end of the building.

Therealtimsmith

Therealtimsmith

23 Aug 2014

Total posts 10

This makes sense. I mean why would he say they were going to rush in and get more 787's, given that it would look like the whole "get 8 and test them out" story would be out the window, and given that they don't need to announce the next ones yet? There's nothing to gain and everything to lose from diving in and announcing a whole bunch of 787's ahead of when you have to in this case.

Himeno

Himeno

12 Dec 2012

Total posts 931

They do have things to lose. 15 options lapse soon. If they don't take those up, they are down to 30 options/rights and any new order past that is unlikely to get the cheap price they have for the current options.

sanj747

sanj747

Qantas - Qantas Frequent Flyer

01 Nov 2016

Total posts 88

The reason to wait must also have to do with the fact that Qantas is looking at real long range aircraft discussing this with both Airbus and Boeing. The first lot of 8 dreamliners is just a start with more new aircraft to come.

AJW

AJW

16 Nov 2011

Total posts 511

I am kinda with you. And at the risk of rising the ire of those that don’t like armchair experts I personally think the 787’s they have are stop gap fillers waiting for an aircraft to do Syd/Mel to LHR/US east coast non stop. When they come along the 788’s will join the 789’s at Jetstar which is where they belong IMO. Awful aircraft from pax perspective but gotta admire the technological advancement of the design.

John Phelan

John Phelan

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 322

No, where the 789s will end up is the Asian routes. A380 and 777-x to hubs in Europe, US, SCL, JNB ; 789 to everywhere in Asia/south Pacific and some long then routes in Europe and US.

ryanoleary

ryanoleary

Qantas - Qantas Frequent Flyer

23 Jun 2014

Total posts 11

Are the 787s certified to fly the SYD-JNB and SYD-SCL routes direct? I remember ETOPS used to be an issue, but that was some time ago. Upgrading from the 747s currently on those routes would be awesome. LA is flying direct MEL-SCL so I assume that certification issues have been resolved?

AJW

AJW

16 Nov 2011

Total posts 511

ETOPS wasn’t the issue it was CASA’s extra rules that limited routes they could used to those destinations. Not sure if that has been fixed but for what it’s with the 787 has max ETOPs rating.

Kiwirailengr

Kiwirailengr

10 Apr 2015

Total posts 9

Given that the SYD-SCL flight crosses NZ on the way and that AirNZ flies 787's from AKL to EZE, one would suggest there would not be a problem....

bsb

bsb

21 Jul 2011

Total posts 70

This lack of foresight is why NZ flies to more international ports than QF. Most global carriers have had this aircraft for years, inc OW ‘friends’ who are supposedly sharing info, so QF should know exactly what to expect.

As for Asia, we’ll THAT ship has sailed as seen by the almost weekly announcements fromChinese carriers on new routes into AU. Australian brands needed the land grab a decade ago. It’s too late now, especially for Qantas.

And just how many flights to India is QF operating? There is so much capacity to nab off SQ direct. It’s just too depressing.

kimshep

kimshep

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 492

It's a shame that NZ's alleged 'insight' didn't alert them to the multiple engine change problems they are working through on their current B787 fleet. Those HiFly emergency lease replacements and the B787 downtime costs must look really expensive right now?

kabe100

kabe100

30 Aug 2017

Total posts 35

QF does NOT have to worry about NZ's 789 engine issues at all. QF 789s got GEnX engines while NZ's 789s got RR engines.

And NZ789 issues are hardly the Boeing's fault. They are due to NZ's poor choice engine options. They chose RR engines for their 789s when they already had highly reliable GE engines for their 77Ws (777-330ERs).

MissBasset

MissBasset

Qantas - Qantas Frequent Flyer

31 Aug 2012

Total posts 194

@aniljak Do pay attention! That is happening now !

Sr Batrill

Sr Batrill

04 Dec 2017

Total posts 25

Go fix in your in-flight service, cabins and food before jumping the gun and ordering new planes. First is a fail food etc, Premium economy seat is a fail...A380 business seat is a fail, taking away premium lavs is a fail on the A330 and sharing in J on the A380 is a fail, ground staff and 'first hosts' and lounge in DFW all fails, taking away first lounges where there is a 'first' service in international ports is a fail. QF spend bit on plonk and grog to keep the masses happy....its all about the alcohol with QF everything else is very sub par.

AJW

AJW

16 Nov 2011

Total posts 511

But still making a very healthy profit.

willvill

willvill

17 May 2012

Total posts 81

Great to see Qantas has very good fuel hedging in place because so too are the fuel charges. Implemented when fuel was 100% more many years ago, gouging customers still the norm at Qantas.

Timmy22bc

Timmy22bc

18 Oct 2015

Total posts 34

I’ve heard a rumour from a friend & I have no reason NOT to believe it, that as late as Dec 17 Qantas had not been able to run PER-LON on the sims without a tech stop... just an interesting antidote given this news & Joyces Apparent skeptisicm...

SeaVisionBurma

SeaVisionBurma

Thai Airways International - Royal Orchid Plus

13 Jan 2017

Total posts 33

Anecdote, Timmy. Not antidote

Timmy22bc

Timmy22bc

18 Oct 2015

Total posts 34

Thank you, was on the phone, I can't seem to edit comments...

Grannular

Grannular

31 Mar 2014

Total posts 290

I am sure they will just block out a couple rows of seats and be all good. They probably can't make it with a full load

John Phelan

John Phelan

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 322

And on the sims, where are they doing the tech stop?

Joshb

Joshb

Qantas - QFF Platinum

20 Mar 2012

Total posts 213

Frankfurt, from what I’ve heard

james vvvv

james vvvv

Jetstar Airways - Qantas Frequent Flyer

23 May 2017

Total posts 18

Antidote and dositote and little lambs eat ivy!

Give me your answer do!

Maybe Joyce is shrewd enough to see a deve loping storm in the Gulf. There could be panic sales or orders cancelled. This is not the time to buy..

smit0847

smit0847

30 Aug 2013

Total posts 448

How are they increasing capacity into Asia 'especially China' when they have not announced any new routes or equipment upguages to China?!

John Phelan

John Phelan

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 322

PEK is a fairly recent new route. And KIX. Sop there's two. To do more, they'll need more 789s.

turbojezz

turbojezz

Qantas - Qantas Frequent Flyer

20 Mar 2014

Total posts 130

i hope this means more A380s!

Jumpman23

Jumpman23

05 Feb 2018

Total posts 1

"so we really want to see the case working and business case performing the way we expected to,” hmmmmm, actually let's see if the A350-1000 is better than the Dreamliners

mo

mo

22 Dec 2012

Total posts 37

I suspect this is a negotiating tactic from Alan to either tempt Airbus into the ring or exact more concessions from Boeing.

He is probably also keeping an eye on passenger experiences given the narrow seating and cramped cabin in the 787 squeezeliner.

afloskar

afloskar

10 Aug 2015

Total posts 130

Qantas only have 166 economy, 28 premium economy and 42 business. This is one of the least packed 787's around so you can't really say that in regards to Qantas.

chap6595

chap6595

Qantas - Qantas Frequent Flyer

17 May 2015

Total posts 51

I wonder if they will have a couple of different set ups....maybe one for short flights to Asia with more in it???

ChickenorBeef

ChickenorBeef

Qantas - Qantas Frequent Flyer

21 Jun 2017

Total posts 26

Hmmm... it’s only the ~600th 787 on earth, so not really road tested I guess (sigh). I wonder if Qantas PC desktops are as up to date as their planes? If so, is someone in Qantas IT saying “hang on, lets get vista bedded down and then we’ll see how we go?” Prob the same team who didn’t think to incorporate wifi “domes” in their long haul fuel calc... bitcoin, wifi, internet.... pffft fads that won’t last. :)

TimotheeDufour

TimotheeDufour

05 Feb 2018

Total posts 1

You make your money on Cargo and all the 747's are going out with a full cargo load.

QF25 to Tokyo is full with Tuna and Meat every night.

The 787 won't be the answer for Qantas long haul.


patrickk

patrickk

Qantas

19 Apr 2012

Total posts 405

The strategy seems to be working and Ariel is are now staring to push manufacturers hard on after sales service el-Baktir and Qatar as an example. The teething problems with the A380 was another case in point. The lesson is don’t buy more until you areahppy with the current lot otherwise you just get had. The increase to Asia is very obvious with the move to fly A380s there. The issue with China is that the Chinese wont fly non Chinese airlines and Australians are not flocking to China but the story with Singapore, Japan, and Hong Kong is quite different. Also slots are hard to come by. I can see QF using an A380 to the new Bajing airport when it opens in 2019.

EK413

EK413

21 Jul 2014

Total posts 8

Disappointing news I guess QF want to test the waters before they commit to firm orders even though other carriers have demonstrated the B787 capabilities.
Or they just want to make Boeing sweat a little more and come to the table with a real B747 replacement in the 350+ seater category.

chap6595

chap6595

Qantas - Qantas Frequent Flyer

17 May 2015

Total posts 51

But “Qantas”has had the 787-8 for a number of years with Jetstar. They know what the machine will do. They will order more and everyone knows it.

The 787-9 will replace the A330 into Asia and do the pacific run from east coast to USA, and to South America and South Africa.

I would also guess they might look at 797 for East / West coast runs, good sized place for the distance.

EK413

EK413

21 Jul 2014

Total posts 8

I know they will order more QF is just waiting for the PER-LHR service to kick off then they’ll evaluate the data. JQ don’t operate ULH routes, QF will be one of the 1st carriers to push the B789 to the envelope.

The B789 is a perfect fit for markets the likes of BNE & PER. The B778/9 or A350 is better fit for SYD & MEL once Boeing provide strong data the aircraft are capable of operating LHR from the east coast non-stop.

MarkJohnSon Banned

MarkJohnSon Banned

19 Jan 2018

Total posts 90

The negativity in this thread is astounding.

Let's not forget that aviation is a tough business. A significant part of an airline's cost base, fuel, is completely out of its control. It was for this reason, amongst others, that Qantas was really struggling between 2012-2014.

Prudent cost-cutting by Mr. Joyce and his management team, combined with the good fortune of a collapse in the price of oil were able to turn Qantas' fortunes around. Were it not for these factors, we wouldn't even be discussing the possibility of Qantas being able to take some more 787s.

Since then, the price of oil has recovered somewhat from its lows, and you could characterise Qantas' overall operating environment as "good", with some challenges.

With that backdrop, adopting a non-committal "wait and see approach" on these new birds is highly adroit. Well done Mr. Joyce.

Austin

Austin

Qantas - Qantas Frequent Flyer

11 Nov 2015

Total posts 24

This is Qantas playing its hand with the duoopoly of Boeing and Airbus. I would expect them to screw the factories as hard as there can...

ramius

ramius

10 Jun 2017

Total posts 7

By the comments, I'm not sure that most of the posters here are aware that the 15 Options that they had were at a price so low, that giving them up to 'bargain between manufacturers' is non-sensical. When QF signed the deal, those 15 airframes were going to be delivered at less cost than any other airline that has subsequently ordered them. Maybe QF have looked and decided that they don't need 53 in their fleet, and 38 is a better mix. Maybe they are looking at the 777X. But what is a fact, is that if they are going to take up the 30 purchase rights they have remaining, then it is at a higher cost than the 15 Options that they have just dumped. So, I say again, with the data already available, how is that this Management team can't make a business case for a jet that has under half the fuel burn of the ageing 747s?

AJW

AJW

16 Nov 2011

Total posts 511

Half the burn and half the capacity of both two legged cargo and underfloor cargo. I am certain management knows what they need to do to keep their shareholders happy.

Himeno

Himeno

12 Dec 2012

Total posts 931

I'm seeing some reports that they haven't lost the 15 options that are lapsing, they just lose the space in the queue.

(also a report that QF are shifting A380 heavy maintenance from Lufthansa Technik to Emirates Engineering - starting with repainting 8 of them from March)

AJW

AJW

16 Nov 2011

Total posts 511

Options are for spaces in the queue. They can of course trade them.

As for A380 maintenance it is confirmed that 8 A380 are getting a repaint at Emirates weather that means maintenace moves there is a seperate issue.

Trogdor

Trogdor

11 Dec 2015

Total posts 81

Makes you wonder whether Qantas is re-evaluating the 787 with respect to other aircraft on the horizon, namely the 777-x and 797.

There's no point replacing a near-full 747 with a Dreamliner when a 777-x carries more pax, and the 797 potentially makes a lot of sense replacing the A330s for shorter routes into Asia or East coast to Perth, whereas the 787 is "too much plane" to do those jobs.

It doesn't make much sense to bulk-buy Dreamliners only to have better-suited aircraft come into service that you can no longer afford

AJW

AJW

16 Nov 2011

Total posts 511

I think you are on the money. Me personally the current lot are (cheap) stop gap fillers that are waiting for an aircraft to come along that is genuine 747 replacement. With the current 789’s to find new roles in a few years time. I am placing an early bet they will become silver in colour in about 5-10 years time.

patrickk

patrickk

Qantas

19 Apr 2012

Total posts 405

Trogdor they may be able to get the 78-10 which is the plane for Asia at or near the exisiting contracted prices. The proposed 797 won’t have the legs to get to north Asia or even to Bangkok.

Trogdor

Trogdor

11 Dec 2015

Total posts 81

patrickk - last I saw Boeing was talking around a 9,000 klm range for the 797, which would happily do most parts of Asia from the eastern capitals

patrickk

patrickk

Qantas

19 Apr 2012

Total posts 405

Interesting if it is that great in range then its weight might disadvantage it vis a vis the A321 and its range is mighty close to the 78-10; which may mean its competing with itself. An interesting balancing act for Boeing.

Trogdor

Trogdor

11 Dec 2015

Total posts 81

True - that balancing act is probably why it has taken so long to replace the 757.

My understanding is that the extra range over the A321 gives airlines in the US the option of point-to-point flights further into Europe (and visa versa) - for example Dallas-Paris or Chicago-Rome. The 787-10 is still a fair way clear of it though, with an extra 3,000klm range and around 100 additional pax

DownSouth

DownSouth

23 Oct 2014

Total posts 106

Qantas may have thought they would have the domestic wide body / business market to themselves back then and prob factored this into their initial order, with 15-20 787-8 for domestic to replace 767 and 330. They could continue to charge elevated prices and monopolise he freight market making the “numbers” look fantastic on an oversized and over”weight ” aircraft for domestic. Times / market has changed prob no need for heavy aircraft on transcon / domestic as QF cannot extract the “capital return” they desire from domestic customers. Therefore maybe a reduced need for 787’s.

AJW

AJW

16 Nov 2011

Total posts 511

Good to see someone has a memory that Qantas initially had no plan for 787 international operations. The original plan was 788 to Jetstar, then 789 to Jetstar with the 788’s coming to replaces the 767’s domestically in Qantas colours.

Of course plans change due to changing market dynamics and things like the manufacturing delays the 787 was plagued with.

Himeno

Himeno

12 Dec 2012

Total posts 931

The original order in December 2005 was for 115 aircraft.
65 firm orders, 20 options and 30 rights. (and at the time, they expected to have 28 in service across Qantas and Jetstar by December 2011 with the first 4 arriving in 2008).

Then between 2009 and 2012, they cancelled 50 firm orders, leaving 15 for JQ, before cancelling 1 more in 2013.
Finally in August 2015, they converted 3 of the JQ aircraft to QF (leaving 11 for JQ) and firmed up 5 options.

SteveCF

SteveCF

Virgin Australia - Velocity Rewards

15 Aug 2012

Total posts 171

Aviation is a complicated business with many moving parts. Alan Joyce and his team is privy to a lot more data and information than any of us here.

Considering the job AJ has done turning this airline around I'm probably more inclined to trust him than arm chair CEO's. Just check the balance sheet, and let's be honest the hard and soft product has been improving in his tenure.

David

David

24 Oct 2010

Total posts 2336

Well said, SteveCF.

crosscourt

crosscourt

Qantas - Qantas Frequent Flyer - Chairmans Lounge

01 Sep 2011

Total posts 351

Well said. There's often way too many "experts" on here. One wonders why they're not heading up an airline. They seem to know it all.

langdonfm

langdonfm

Singapore Airlines - KrisFlyer

24 Feb 2016

Total posts 18

You've forgotten that he nearly drove the airline into the ground with his ridiculous capacity war with VA? How short people's memories have become.

SteveCF

SteveCF

Virgin Australia - Velocity Rewards

15 Aug 2012

Total posts 171

No short memory, just realistic that aviation is a complex business.

But was the capacity war 'ridiculous'? Maybe, but like I said, look at the business results. And then look at their rival VA.

Clearly there was a strategy and qantas won.

Nick Sydney 2

Nick Sydney 2

Qantas - Qantas Frequent Flyer

22 Jul 2015

Total posts 223

Not sure I'd want to be in a 787 - 9 for the long treks to Nth America. Tried it on an AA 787 9 from LAX to Sydney and definatly missed the lower noise levels and space of the 380

bsb

bsb

21 Jul 2011

Total posts 70

I did it from AKL LAX and loved it. J was fantastic and I noitcied the lack of jet lag after compared to the 380 or 744

Vulch

Vulch

09 Jan 2016

Total posts 44

Hope the economy cabin is empty every flight, so they get the msg that 17” wide for 17 hours is NOT acceptable!

tonyw

tonyw

Qantas - Qantas Frequent Flyer

18 Jul 2015

Total posts 20

perhaps reduce the seats, increase the toilets and the cargo capacity?

CitizenF

CitizenF

11 Jan 2017

Total posts 15

Unfortunately there is no F on these aircrafts. 6-9 hours to SE in Business cabin is ok. However, 17 hours in that Business suite is too torturing. Flying to Europe on EK (QF ticket) via DXB or BKK, or QF via DXB or SIN are much preferable.

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