QF Domestic Fleet Renewal: Airbus 320neo/220 Preferred

[Melburnian1]

QF is delivering a financial update today, which will be a sea of red ink. The company is hugely in debt.

Reuters states:

Australia's Qantas Airways Ltd (QAN) is poised to select Europe's Airbus for a major airplane order to renew its regional and mainline narrowbody fleets, two people familiar with the matter said.

An announcement of the two-pronged deal, which was first reported by Bloomberg News, is imminent, they said, asking not to be identified on confidential negotiations.

Airbus has been competing with Boeing Co for one of the industry's most keenly awaited deals - described recently by the airline's chief executive as a "once-in-a-generation" fleet renewal and expected to feature more than 100 jets.

Neither manufacturer agreed to comment. A Qantas spokesperson said there would be an announcement in about two hours, but had no further comment.

Chief Executive Alan Joyce said in October the carrier expected to order more than 100 narrowbody and regional planes, with a preferred supplier to be chosen in December.

It is separately looking at widebodies capable of the world's longest commercial flights from Sydney to London.

Post automatically merged: Dec 16, 2021

This is what Bloomberg said an hour or so ago:

(Bloomberg) -- Airbus SE is poised to sweep a multibillion-dollar aircraft order from Qantas Airways Ltd. in a blow to Boeing Co. and its 737 Max narrow-body jet, according to people briefed on the matter. The Australian carrier is set to announce its order decision Thursday morning in Sydney to replace the 75 older-generation Boeing 737 jets that serve as Qantas’s domestic workhorses,...

 

[AIRwin]

An announcement of the two-pronged deal, which was first reported by Bloomberg News, is imminent, they said, asking not to be identified on confidential negotiations.

Here is the link to the Bloomberg article:

Airbus Triumph in Qantas Deal Strikes Blow at Boeing and Max

Airbus SE’s domination of a multi-billion dollar aircraft order from Qantas Airways Ltd. struck a blow to a resurgent Boeing Co. and its 737 Max just as the aviation industry charts an exit from its worst-ever crisis.

www.bloomberg.com

 

[jakeseven7]

Very interesting if true… Airbus has been tipped the last few months but I never actually thought they’d get the narrow body fleet just because of QF’s history with Boeing…

The MAX still has major reputational issues to recover from and is old tech…. People in the US are able to swap off MAX operated flights at no cost if they want…

Is there anywhere we can watch the announcement live??

 

[jakeseven7]

Airbus wins order to renew Qantas fleet​

A Qantas spokesperson said there would be an announcement shortly, but declined to provide details.

The apparent loss of the contract is a huge blow to Boeing's 737 MAX with the jet cleared for flight late last year following a safety ban.

Chief Executive Alan Joyce said in October the carrier expected to order more than 100 narrowbody and regional planes, with a preferred supplier to be chosen in December.

It is separately looking at widebodies capable of the world's longest commercial flights from Sydney to London.

Qantas switches domestic fleet to Airbus in blow to Boeing

Qantas Airways on Thursday picked Airbus as the preferred supplier to replace its domestic fleet, switching from Boeing in a major win for the European planemaker that also triggered an upheaval in engine supplies.

www.reuters.com

 

[Melburnian1]

Very interesting if true… Airbus has been tipped the last few months but I never actually thought they’d get the narrow body fleet just because of QF’s history with Boeing…

Typically, QF will send its announcements to the ASX (as it's publicly listed) some time between 0820 and 0930 AEDT, before the ASX opens from 1000. The spokesman can't confirm such 'material' news unless the ASX has been informed.

 

[Ansett]

For one I much prefer the A320 Family than the 737 family. For Qantas group that would give them great flexibility between JQ and QF pilots and crew and may lead to a lower cost base with new enterprise agreements. Based on several discussions with people in the know it seems that the containerized baggage and freight is quicker and cheaper to load than manual loading and offers greater flexibility. Common fleet and interchangeability has to be a positive for QF group.

 

[Melburnian1]

Interesting that the Australian media missed out on this scoop and that instead it's come from what used to be called 'news wire' services.

You'd think business journalists here would have contacts at Airbus and Boeing.

Shows how Europe is a long way away

 

[jakeseven7]

Personally I dislike both narrow bodies but if I had to pick one (from a passenger comfort point of view) the Airbus family is roomier and quieter so would be a nose ahead of the 737. I also still have some misgivings about the MAX arriving intact…

Perhaps we can tempt our resident consultant back to give us more insight into the business side of things with this thread @pauly7

 

[Melburnian1]

Personally I dislike both narrow bodies but if I had to pick one (from a passenger comfort point of view) the Airbus family is roomier and quieter so would be a nose ahead of the 737. I also still have misgivings about the MAX arriving intact…

Agree. Narrow bodied aircraft are an uncomfortable way to travel, especially compared to competing high speed rail where it exists (not in Oz!) and wide bodied aircraft, but for some irrational reason, the Airbus A320s etc. feel more spacious even though the difference in cabin width is marginal.

 

[Andrew Curran]

ASX market update

"Project Winton: Airbus A320neo and A220 families chosen as preferred aircraft for domestic fleet renewal. Order anticipated to be finalised by the end of FY22. "

Subject to final Board approval, an order is anticipated by the end of FY22 consisting of 40 firm commitments and 94 purchase right options, with flexibility on timing and mix of aircraft from within these two families

 

[RichardMEL]

The 220's would replace 717 and (maybe?) E190 ac in time one presumes.

this is a HUGE blow for Boeing. Massive loss. Puts the 787 fleet (I know QF just ordered three more for delivery) in a real corner, specially if/when A350's ordered for Sunrise.

 

[TheInsider]

The 220's would replace 717 and (maybe?) E190 ac in time one presumes.

this is a HUGE blow for Boeing. Massive loss. Puts the 787 fleet (I know QF just ordered three more for delivery) in a real corner, specially if/when A350's ordered for Sunrise.

QF orders are generally piddly compared to other carriers. I think QF like to think they have more sway.
And when QF does order, it takes them decades to complete the orders.

The QF PR machine at work again.

 

[MH_fan]

I'm not surprised by the Airbus order over Boeing but I am surprised that they are going with only the A321XLR (we're talking about the A320 family here as they're also ordering the A220). I thought they'd have a mix, as you'd think the A321XLR seems a bit excessive for domestic flights.

 

[moa999]

More detail from the 9-pg ASX release

PROJECT WINTON
After a detailed tender process, Qantas has selected the Airbus A320neo and A220 families to renew the airline’s
existing domestic narrowbody jet fleet. Both aircraft types will be powered by Pratt and Whitney engines.
Subject to final Board approval, an order is anticipated by the end of FY22 consisting of 40 firm commitments
and 94 purchase right options, with flexibility on timing and mix of aircraft from within these two families. (See
separate release.)
Aircraft would start arriving by the first half of FY24 and deliveries would be spread over the following 10-plus
years as the airline’s existing Boeing 737-800s and 717s reach the end of their economic lifespan.
Qantas will enter discussions with its key work groups on the arrangements required to operate the aircraft
and meet the business case for this investment, before Board approval is sought for an order to be placed.

And then in the addendum

QANTAS SELECTS AIRBUS AS PREFERRED AIRCRAFT
FOR DOMESTIC FLEET RENEWAL
• Airbus A320neo and Airbus A220 families selected as preferred aircraft types.
• In-principle agreement for up to 134 orders and purchase right options over 10 plus years with
deliveries from FY24 onwards.
• Combines with existing Jetstar order to give the Qantas Group significant flexibility on timing and
aircraft type/size.
• Order is expected to be finalised by the end of FY22.
Sydney, Thursday 16 December: Qantas has selected the Airbus A320neo and Airbus A220 families as the
preferred aircraft for the long-term renewal of its domestic narrow-body fleet.
A firm commitment for 40 aircraft – 20 A321XLR (extra long-range) and 20 A220 aircraft – is expected to be
placed with Airbus by the end of FY22, following discussions with employees about arrangements to operate
the new aircraft types and a final decision by the Qantas Board.
Qantas will also have a further 94 purchase right options1 on aircraft over a 10-plus year delivery window as
its existing Boeing 737-800s and 717s are gradually phased out.
The order is in addition to Jetstar’s existing agreement with Airbus for over 100 aircraft in the A320neo family.
Part of this new deal includes combining these two orders so that the Group can draw down on a total of 299
deliveries across both the A320 and A220 families as needed over the next decade and beyond for Qantas,
QantasLink and Jetstar.
Once finalised, this will represent the largest aircraft order in Australian aviation history.
Financial details of the deal are commercial in confidence but represent a material discount from list prices.
Today’s announcement follows a detailed review by the airline’s engineering, flight operations, customer
experience, network, fleet procurement and finance teams. The airline conducted detailed evaluation of the
A320neo and B737 MAX families as well as the smaller A220 and Embraer E190/195-E2s.

SELECTED AIRCRAFT
The initial firm order concentrates on the larger, single-aisle A321XLR, and the mid-size A220-300 with purchase
right options for the smaller A220-100, giving Qantas a fleet mix that can deliver better network choices and route
economics.
The XLR can carry around 15 per cent more passengers on each flight than the airline’s existing B737-800s,
making it well suited to busy routes between capital cities like Melbourne, Sydney and Brisbane. Its longer
range means it can also be used to open up new city pairs.
The small and medium size A220s provide the Group with flexibility to deploy these aircraft throughout most
of its domestic and regional operations. They could be used during off peak times between major cities and
on key regional routes to increase frequency.
Both aircraft types will be powered by Pratt & Whitney GTF engines and will deliver fuel savings of between
15-20 per cent, contributing to the airline’s broader emission reduction efforts.

CEO COMMENTARY
Qantas Group CEO Alan Joyce said the airline had called the renewal of its domestic fleet Project Winton
after the town where the national carrier was born 101 years ago, because it’s a key strategic decision for the
future of Qantas Domestic.
“This is a long-term renewal plan with deliveries and payments spread over the next decade and beyond, but
the similarly long lead time for aircraft orders means we need to make these decisions now.
“Qantas is in a position to make these commitments because of the way we’ve navigated through the
pandemic, which is a credit to the whole organization.
“This is a clear sign of our confidence in the future and we’ve locked in pricing just ahead of what’s likely to
be a big uptick in demand for next-generation narrow-body aircraft. That’s good news for our customers, our
people and our shareholders.
“We’ll be having discussions with our people to ensure we have the arrangements necessary to support such
a large investment.
“Can I thank Airbus, Boeing, Embraer and the engine manufacturers for the efforts they put into this process.
This was a very tough choice to make. Each option delivered on our core requirements around safety,
capability and emissions reductions. But when you multiply even small benefits in areas like range or cost
across this many aircraft and over the 20 years they’ll be in the fleet, Airbus was the right choice as preferred
tenderer.
“The Airbus deal had the added advantage of providing ongoing flexibility within the order, meaning we can
continue to choose between the entire A320neo and A220 families depending on our changing needs in the
years ahead. The ability to combine the Jetstar and Qantas order for the A320 type was also a factor.
“The A320 will be new for Qantas Domestic, but we already know it’s a great aircraft because it’s been the
backbone of Jetstar’s success for more than 15 years and more recently operating the resources industry in
Western Australia.
“The A220 is such a versatile aircraft which has become popular with airline customers in the United States and
Europe because it has the capability to fly regional routes as well as longer sectors between capital cities.
“The combination of small, medium and large jets and the different range and economics they each bring
means we can have the right aircraft on the right route.
“For customers, that means having more departures throughout the day on a smaller aircraft, or extra
capacity at peak times with a larger aircraft. Or the ability to start a new regional route because the
economics of the aircraft make it possible.
“We have some exciting plans for the next-generation cabins we’ll put on these aircraft, which will offer
improvements for passengers that we’ll share in coming months.
“Importantly, these aircraft will deliver a step change in reducing fuel burn and carbon emissions compared
with our current fleet, which gets us closer to the net zero target we’ve set,” added Mr Joyce.

AIRCRAFT SPECIFICATIONS
Note: Aircraft information has been sourced from manufacturers’ websites. Specifications are indicative only
and not reflective of the specifications of any potential aircraft order by Qantas.

Airbus A320 family
• Includes the Airbus A320neo and A321neo
• A320neo seats – from 150 to 180 for a two-class configuration. 6,300km range
• A321neo seats – from 180 to 220 for a two-class configuration. 7,400km range
• A321XLR seats – from 180 to 220 for a two-class configuration. 8,700km range
• The A320neo family offers fuel improvements of 14 per cent from A320ceos
• 50 per cent quieter than the A320ceos
• Pratt & Whitney GTF (PW1100G-JM) engines

Airbus A220
• Specifically designed for the 100-150 seat market
• More than 20 per cent lower fuel burn per seat than B717s, half the noise footprint, and decreased
emissions
• Up to 6,390km range
• Pratt & Whitney GTF (PW1500G) engines

 

[Ade]

think the A321XLR seems a bit excessive for domestic flights.

Same sentiment here. seems like an overkill for a domestic flight. However, that being said, QF could potentially look at using the XLR for trans-tasman (again, not so much variance in the travel time/distance when compared to a domestic trip) or pacific island trips? Say SYD-NAN ? Or DRW/PER-SIN/KUL ?

I'd think the XLRs could service a route that is international/premium but not far ... And if the seating in J is going to be anything like JQ 32X or UL 32X, then the seats could be priced strategically to recoup the costs. My 2 cents

 

[moa999]

It's only 20 321XLRs.
I wouldn't be surprised to initially see most of these aircraft actually replace the 332s with some Asia flying (already been suggested two 332s are going the freighter conversion route)

And then the bulk of the order will ultimately be for 321s (not LR or XLR) for domestic only operations.

 

[Captain Halliday]

Don’t assume the XLRs are going to QF.

JQ would be my prediction for routes to SE Asia.

Allowing older 320s to be shifted over to QF.

 

[RichardMEL]

QF orders are generally piddly compared to other carriers. I think QF like to think they have more sway.
And when QF does order, it takes them decades to complete the orders.

The QF PR machine at work again.

Actually my comment is not about QF PR per se.

Sure, compared to a 3-400ish plane order from an AA or a WN a QF order is not that big a deal in terms of $$$ or impact on Boeing.

but my point is this is a huge hit reputation wise. QF has been a SOLID Boeing customer for decades since the 707 age. The A380 was an aboration most agree and the 777-300ER probably would have been a better fit for QF at the time, but that aside, QF have been rusted on Boeing customers. I reckon if you'd gone to Seattle (now Chicago) and asked Boeing who they considered the most loyal and dependable customers they'd have Southwest as #1 and QF would be I reckon well up there on the list.

Now QF potentially by the mid 30's could well be an all Airbus fleet using CCQ and fleet flexibility to good effect (A330's could be replaced with 330neo possibly).

It makes sense for QF. You can bet the boardroom in Chicago is pretty unhappy despite the relative size. They've been sent a message well and truly.

imo

 

[moa999]

As per the detailed release.
When this order is combined with the prior (more Jetstar associated one) it's for 299 aircraft - that's a decent order in anyone's book.

Think it's fairly clear that the 20 321XLRs and 20 223s are for mainline. (Ed main brand, not Jetstar. The 223s will likely be QantasLink)
Less clear what this means for the original 36 321XLRs that had similar from 2024 dates as part of the more Jetstar associated order.

 

[moa999]

They also appear to have stuffed up the aircraft specs on the last page.

My understanding is it's the 321neoLR with a 7400km range. The base 321neo is closer to 6000km - which of course should be plenty for all domestic flying.