With Qantas now flying straight and level towards a return to profitability, the airline’s plan to buy the Boeing 787 Dreamliner is edging back into the spotlight.
The fuel-efficient aircraft has been part of Qantas’ roadmap since December 2005, when then-CEO Geoff Dixon inked a deal for as many as 115 of the next-gen jets to be delivered from 2008.
Of course, the much-delayed Dreamliner didn’t make its commercial debut until October 2011, while Qantas’ own commitment has been pared back and pushed back over the many years since.
In 2012 the airline cancelled 35 firm orders to rein in costs, although 50 options and purchase rights were brought forward “by almost two years, available for delivery from 2016" the airline said at the time.
In August 2014 the first five options from that batch were delayed until 2017 to help bring the books back into balance.
Taking up those options has always been contingent on a turnaround for Qantas’ ailing international arm, which recorded a $497 million loss over the 2013-2014 financial year.
But Qantas is now gliding towards a $300-350 million profit for the six months from July to December 2014, with CEO Alan Joyce reporting that all divisions of the airline – including its beleaguered international arm – are tracking back into the black.
Red-tailed Dreamliners for 2017?
So has the airline ready to restart the clock on its Boeing 787 order? Not quite yet, says Joyce, although he’s still bullish on the Dreamliner.
“I want to order it [and] I think everybody at Qantas wants to have them”, Joyce said in December during a preview of the airline’s new Business Suite business class seating – the same seating which would likely find its way into any red-tailed Boeing 787-9s.
“But we have to make sure that the business has the balance sheet straight, has the [right] cost base – the transformation [program] is key - and has the appropriate business case to get them” Joyce added.
The first priority is therefore to pay down outstanding debt – with a target of $1 billion in the 2015 financial year – and get the balance sheet on a solid footing.
That leaves plenty of time to turn a Boeing 787 option into an order, assuming the airline chooses to stick to the 2017 timeframe.
However, Joyce says that Qantas’ relationship with Boeing allows plenty of flexibility when it comes to taking up the options as well as when the first Dreamliner deliveries would take place.
“We’ve got the flexibility of moving them out, so we haven’t lost any of the options, and we talk to Boeing if we say we need more time. So there is not going to be a firm date, that date is always going to be variable.”
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