Qantas CEO Alan Joyce says he wants to order the Boeing 787, but only after the airline has paid down debt and strengthened its balance sheet.
“I want to order it, I think everybody at Qantas wants to have them, they’d love those aircraft to come in,” Joyce said in Brisbane on Tuesday, the day after Qantas released guidance forecasting a $300-350 million underlying profit for the first half of the current financial year.
“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, and I think we can achieve all of that, and we’re working with our people to make sure that we get there.”
Qantas holds options and purchase rights on 50 787s, on top of 11 787-8s currently being delivered to low-cost subsidiary Jetstar. Joyce and his management team have repeatedly reiterated in recents years that the Qantas Group won’t order further 787s until Qantas’s international operations have returned to profitability. Monday’s profit guidance highlighted that all Qantas business segments, including Qantas International, were on track to record a profitable first half.
Joyce further explained that Qantas has flexibility as to when it can confirm 787 options into firm orders and when aircraft delivieries can take place.
“What’s ended up happening is they are very movable … 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.
“We’d like to make [a decision] as soon as we can and as soon as all of our conditions and our outlook is [right] we’ll make that call. But don’t assume that there is a hard date where we will lose an [aircraft] option. It’s very flexible.”
Joyce also confirmed Qantas would look at the Boeing 737 MAX and Airbus A320neo as options to eventually begin replacing Qantas Domestic’s 737 fleet.
“I think what we will do for Qantas mainline is we will have a look at absolutely the MAX or the Neo. We have great Neo options, we have them at a great price and there is enough aircraft there, with the way that the deal works, to ratchet up the options that are available. But we will also look at the MAX and we will see what is the best economic outcome for the group.”
The Qantas Group already has 99 Airbus A320neo aircraft on order pencilled in for Jetstar, with first deliveries from 2016.
“Again, our focus is on transformation, it is the same issue with the 787s, we need to make more progress on paying down our debt, we need to make more progress on turning the cost base around and we’re very conscious of the fact that we will not order aircraft until we see the right environment, the right balance sheet, the right business case to enable us to do that, and the 737 replacement is in the same boat,” Joyce said.
“We’d like to get there as fast as we can, [but] we still have a lot of life left in the 737s.”