Qantas will cancel firm orders for 35 Boeing 787-9 Dreamliners after posting a worse than expected $244 million statutory loss last financial year.
The loss, a nearly half-billion dollar swing from the previous year’s $250 million profit, was blamed on high fuel prices, the cost of Qantas’ industrial dispute and intense competition.
Qantas posted pre-tax profits of $95 million on revenues of $15.7 billion for the financial year that ended in June, CEO Alan Joyce told a Sydney news conference this morning.
As expected, Qantas’ international business lost $450 million as it struggles to compete with lower-cost carriers based in the Middle East and Asia. Qantas’ domestic business remained profitable but faces an increasingly intense challenge from Virgin Australia. Virgin is expected to announce its financial results next week.
Mr. Joyce said Qantas had made “significant progress” in its overall strategy, with investment in new aircraft giving the airline its youngest fleet since Qantas went public in 1995.
Qantas still plans to take delivery of 15 787-8s in the second half of next year. Those aircraft will be transferred to Jetstar, with Jetstar A330s in turn transferred to the mainline brand, allowing Qantas to begin phasing out its ageing Boeing 767s.
The 35 cancelled 787-9s had been scheduled for delivery beginning in 2014. The cancellation will reduce capital expenditure by US$8.5 billion based on list prices, though the actual savings will be less than that since airline’s typically negotiate significant discounts on aircraft orders.
Qantas retains options and purchase rights on a further 50 787-9s, and Mr. Joyce said the airline would bring those options forward to 2016, resulting in at least a two year delay of the Dreamliner’s introduction into Qantas service. The moves leave Qantas International with no firm aircraft orders.
This story is being updated throughout the morning.