Project Sunrise: A350 or 777X?

[stig_aus]

I wonder how long these flights, assuming they eventuate, would remain monopolies? Presumably, if they are viable, they are also viable for BA, AF, and the myriad US airlines. With any competition at all I’d have to doubt their viability, which I understand is quite marginal anyway.

I think the key difference here is that getting people from Australia to these destinations is core business for QF, where as for BA and others its only a small part of their offering and would be much more risky. Especially if the economics look to be marginal then I feel that it could remain a monopoly for sometime - at least until it becomes more compelling for new entrants.

 

[Flying Fox]

I wonder at what price fuel would have to reach to ground these flights because they are uneconomical?

 

[Inlander]

Looks like if the project gets going it's going to be 12 X A350-1000.https://www.smh.com.au/business/companies/qantas-picks-a350-1000-for-non-stop-london-new-york-flights-20191213-p53jmx.html

 

[dajop]

I think the advantage for QF is that it has multiple routes it could operate with the aircraft - the US or Euro airlines really only have SYD and MEL so you're looking at an even smaller fleet and all the issues with that.

The Euro carriers don't have much else that they could use such aircraft on. But US carriers could also use for New York - SE Asia (in particular SIN) and also (in theory, although the economics almost certainly don't stack up) west coast/midwest - Southern Africa, which is really beyond current ranges.

The aircraft could also be used for shorter routes as necessary either to fill in down time or as a rotation (for example .. my partner recently flew SIN-KUL on the SQ long haul A350 with only J and Y+).

 

[docjames]

Not really a surprise it’s the A350 - available sooner, known economics etc.

DIdn’t QF have A380 options (wasn’t original order 12+8?) presumably for which a “credit” would be held for which the A350 order would have been the logical use?

 

[mflyer100]

Suggesting an order of 12 A350's might mean they're looking even further into the future (e.g around 2030). There are rumours of an A350neo coming out in the late 2020s (with some delays probably around early 2030's when qantas would retire their a380s).

This would allow basically a one for one swap and reconfiguration of these jets into less "premium heavy" configurations and then ordering A350neo's to continue project sunrise routes.

 

[jetset]

Not really a surprise it’s the A350 - available sooner, known economics etc.

I agree. Despite all the bluster I doubt Boeing was ever a real contender. They were never going to get the 777-8 flying within the time frame specified. Qantas was probably using the Sunrise 'Challange' as leverage against Airbus. Airbus probably realised this which is why they haven't produced a bespoke ULR version.

 

[jb747]

Not really a surprise it’s the A350 - available sooner, known economics etc.

DIdn’t QF have A380 options (wasn’t original order 12+8?) presumably for which a “credit” would be held for which the A350 order would have been the logical use?

The second tranche of 8 were converted to orders. AJ then deferred them forever, and eventually cancelled them. I think he was hanging out for program cancellation by Airbus. There could well have been very substantial cancellation fees due to Airbus over this, which may have been negotiated into the XLR orders and perhaps beyond.

Suggesting an order of 12 A350's might mean they're looking even further into the future (e.g around 2030). There are rumours of an A350neo coming out in the late 2020s (with some delays probably around early 2030's when qantas would retire their a380s).

If this converts to an order, and if they are actually delivered, I would not be at all surprised if this group of 12 are the 380 replacements. They won’t be around in 10 years time. A few at the longest....

NEO means “new engine option”. The engine makers are becoming less and less likely to invest in engines for small families of aircraft, and single engine choices are becoming more the norm than the exception. Some “NEOs” make sense, such as the 330, but I certainly wouldn’t be hanging out for an NEO of what is a new design.

 

[justinbrett]

The Euro carriers don't have much else that they could use such aircraft on. But US carriers could also use for New York - SE Asia (in particular SIN) and also (in theory, although the economics almost certainly don't stack up) west coast/midwest - Southern Africa, which is really beyond current ranges.

The aircraft could also be used for shorter routes as necessary either to fill in down time or as a rotation (for example .. my partner recently flew SIN-KUL on the SQ long haul A350 with only J and Y+).

I don’t think the US carriers will be rushing to launch East Coast - Pacific services. They very much still rely on the hub and spoke system, with many major domestic routes requiring a stop in a hub - especially if you are aligned to a particular airline. It makes far more sense for the US carriers to operate from a west coast hub (or to a lesser extent central hub like ORD or DFW) so they can feed in pax from the east coast and other areas.

I think culturally one stop services are much more acceptable to Americans than they are to Australians. It’s just a fact of having over 500 airports with commercial services.

 

[moa999]

They won’t

I see a fair bit longer in the A380s future.
Qantas wouldn't be spending big $s on refurb to get rid of them in 2023/2024 - they'd just fly on with average product (like the 747s have been)

The A380s are also owned which means Australia's tax/accounting rules - and 20yr depreciation comes into play. Retire an A380 at 12yr point for scrap and you take an 8yr hit - probably A$100+m per plane to the bottom line. (Assuming 50% discount to US$450m list)

And I'd think you'd want a bigger plane to replace them, otherwise you are giving up even more market share

 

[jb747]

Airbus probably realised this which is why they haven't produced a bespoke ULR version.

I have the feeling that Airbus are far more adept negotiators than any airline people....

But, they really did not need to produce a ULR version of the 350. They were already designed with extra fuel tankage in mind, and some of the work necessary for such installations already happens on the production line. Fitted for, but not with. Increased maximum take off weight could be as little as a tick in an engineering paperwork box.

Whatever happens though, from the makers point of view, this is a niche market. They’ve both done lots of money over the years catering to markets that did not develop, so I can’t see them spending a great deal of effort on this. Boeing, in particular, are really between a rock and hard place at the moment, with question marks of varying degrees against many of their products, and a huge one against the company itself.

 

[jb747]

I see a fair bit longer in the A380s future.
Qantas wouldn't be spending big $s on refurb to get rid of them in 2023/2024 - they'd just fly on with average product (like the 747s have been)

It would not be the first time an aircraft has had lots of money spent upon it, only to be discarded shortly thereafter.

The A380s are also owned which means Australia's tax/accounting rules - and 20yr depreciation comes into play. Retire an A380 at 12yr point for scrap and you take an 8yr hit - probably A$100+m per plane to the bottom line. (Assuming 50% discount to US$450m list)

Their operating cost will overwhelm any such accounting savings. Even before I left, very few of us expected to see them past 15 years. Most of us just did the maths on whether we’d retire before they did. Their relative costs will rise as the twins eat into their passenger loadings. Even compared to an old 777, their burn across the Pacific is high. Their operating costs may have fallen, if Airbus had actually built the numbers they talked about, and perhaps even if QF had taken more.

And I'd think you'd want a bigger plane to replace them, otherwise you are giving up even more market share

No. Quite the opposite. As AJ has been quoted as saying, it would be cheaper to send two 787s across the Pacific, nose to tail, than the one 380. The airline will get out of very large aircraft entirely. It was a bet by Airbus (and stupidly followed by Boeing with the 747-8) that bigger was better. As has been proven, that’s only the case in a very small basket of circumstances, with the entire market moving back to mid sized aircraft. Joyce hasn’t cared about market share thus far, and if they manage to keep control of a reasonable part of the premium market with ULR flights, he won’t be running hugely expensive aircraft loaded with discount travellers.

 

[Berlin]

We'll never see a QF 777 then.

Good. This decision makes me so happy- the A350 is what the 777 certainly never was: A truly beautiful aircraft.

Better start to put some money aside for the first non-stop Sydney to New York in F

 

[Quickstatus]

The A380s are also owned which means Australia's tax/accounting rules - and 20yr depreciation comes into play. Retire an A380 at 12yr point for scrap and you take an 8yr hit - probably A$100+m per plane to the bottom line. (Assuming 50% discount to US$450m list)

Nothing like a write off to reduce tax.

Moreover it is possible/likely that it may be cheaper to write off the airframe than to hold on and operate it in less than at the economic sweet spot.
Other A380 are progressively being scrapped at the +10year age. Cue Singair x2.

I’m agnostic about any type of airplane . My patronage is based on who operates it, the route and timing, the cabin product, and price. Having said that I’m never keen on small aircraft because I seem to get motion sickness in small aircraft. The Saabs are OK

 

[esseeeayeenn]

Nothing like a write off to reduce tax.

Qantas hasn't paid tax for years anyway.

 

[Quickstatus]

Even BA tried to crunch the numbers for some 2nd hand A380 but could not make the numbers work. And AF have accelerated the retirement of all their A380 - well before the 20yr mark.

The XWB is also slightly wider than the 787. Not by much but likely to give the poor Y passengers maybe an extra 10-15mm seat width. I don’t think wide enough for 10 across

If the A350 XWB comes into play, how would the 787-9 fit into the overall operations?

 

[moa999]

Qantas hasn't paid tax for years anyway.

Suggest you need to read the FY19 Annual Report

Other A380 are progressively being scrapped at the +10year age. Cue Singair x2.

Early aircraft - and leased.
And even if owned SQ can use 15yr life to 10% residual

 

[jase05]

I may be wrong but didn’t I see a recent statement from AJ that the SYD-DFW A380 route was a gold mine and the most profitable route in the QF stable?

 

[Quickstatus]

Suggest you need to read the FY19 Annual Report


Early aircraft - and leased.
And even if owned SQ can use 15yr life to 10% residual

Yes but they obviously thought that there was no benefit to holding it that long. Then the lessor decided it was worth more as parts than as a going concern

Yes, the Group exhausted it’s carry forward losses in FY18 and crossed over into tax paying territory- it paid 5mil in FY18. About 250mil for FY19.

 

[moa999]

it paid 5mil in FY18. About 250mil for FY19.

Which is about $250m more than every other airline flying into Australia, plus all the payroll taxes, GST etc