Qantas fleet rebuild piece

[Peasant]

I don't think it's as easy as that. Aircraft purchases are not like going to a car dealer on a Saturday and saying I'll get the one on the showroom floor.

You're right, but don't think this isn't of Alan Joyce's making.

He inherited an order of 65 B787s made by his predecessor in 2005. 18 years later, the QF Group has only taken delivery of 22 of them, with 11 each for Qantas and Jetstar. Qantas has another 3 waiting for delivery, delayed by Boeing's production issues, but that will be 25 of that original order for 65.

On the narrowbodies, the group placed an order for 110 A320/A321neos in 2011. We're now another 12 years down the road and only 6 of those original orders have been delivered, all of them to Jetstar. In the years to 2029, Qantas will only receive 20 of these (XLRs), so make of it what you will.

Separately they have to have a balance sheet that supports such purchases or cash flow if leased

The interesting bit here is the successive share buybacks with commentary that management thinks it has surplus capital. An unusual decision considering where they are on the capex curve.

 

[RooFlyer]

I don't think we can really criticise an airline for an "ageing" fleet until there is a consensus about what really constitutes an "ageing" fleet.

And you won't get that. But it would have to involve consideration of maintenance costs/revenue and moving into the major engineering 'rebuilds' age; fuel efficiency/revenue; manufacturer support, suitability for routes/market. The B737 and indeed the B747 shows that aircraft age doesn't necessarily come into consumer thinking, although aircraft reputation does a bit (DC10, B737-MAX, B787 initially).

Maybe whether 'age' (say greater average than an airline's contemporaries) is OK or not comes down more as to why an airline's fleet is aging. Is it because the current fleet is OK and there are no replacements that will make a material difference to the bottom line? Or because the current management just wants to defer big capex or cash flow commitments to make the current bottom line prettier and they really should have ordered to protect the operational aspects?

(BTW, mining capex, which can be large and lumpy can be treated similarly. There are lots of ways to defer capex on fleet renewals & even development if the shareholders are getting a bit twitchy about divis.)

The quoted article made the point

It’s a significant change from previous [Qantas] management who liked to keep average fleet age at about 10 years and cited the better fuel efficiency, longer range and greater reliability of newer aircraft as a key reason to spend figures such as $US110m ($164m) per Boeing 787 aircraft.

The airline has recently been starved of newer airframes - Alan Joyce sent the Dixon-ordered B787s mostly off to JetStar remember. Now new craft have been ordered - with a vengeance - but its someone else's bottom line to deal with.

 

[AustraliaPoochie]

Yes, new aircrafts have been ordered, but in past years, on Aust dom sectors, we could have a choice of the B767s, (gone now), or the A330s (will be retired), so from a date soon in the future, on Aust QFd sectors, it will all be narrow bodies planes from now.
Will be cheaper and easier for QF in the long run, but for the Aust dom long haul in discY, or down the back, can be horrid, esp in the middle seat, rows B/E & F.
Looks like they certainly won't put their 787s into true dom sectors, and certainly won't put the A350 into dom sectors either.
At least with the A330, its only 2 rows on the wing sides, so not that bad, and can spread out once the plane is in the air, if no one next to you.
Will be a sad day for me when the A321s/A220s come into Aust dom service.
My only choice is either stump up to fly J, or buy a comfort seat booking from the(ir) QF's overseas call cent(er), I am now QF NB.

 

[exceladdict]

Will be a sad day for me when the A321s/A220s come into Aust dom service.

I’m reserving judgement on this until we know for sure what the J cabins will be like. Ex-PER, increased frequencies to the east coast will be great, and the possibility of the 220 to open up thin routes is something I’m a bit optimistic about.

 

[encryptededdy]

On the narrowbodies, the group placed an order for 110 A320/A321neos in 2011

I thought this happened in 2021, not 2011?

 

[ozziflyer]

I thought this happened in 2021, not 2011?

It is complicated, they ordered a bunch, airbus ended behind. Jetstar got most of the ones delivered.
Some got turned into A321 NEO orders instead.
Peasant make's it sound worse and simpler than it really is.

 

[AustraliaPoochie]

On the Airbus website, it says the 321xls seats are 18in wide, 17in is standard, which is 43cm and a bit, 18in is 45cm and a bit.
Maybe I have too much of a liking for the 767s/330s, or the 787s, have tried all these, and the 350s, this one I havent tried, but giving me just 2cm more width on a 4.5hr flight ADL - PER or vv, is still a bit too narrow.

 

[Peasant]

Peasant make's it sound worse and simpler than it really is.

It's far from simple. There's a lot of smoke and mirrors and headline figures that have deceived the market. But Qantas was no victim.

How bad it sounds is purely a function of whether you think the average fleet age doubling from just over 7 years in 2013 to close to 15 years in 2022 is a bad thing.

 

[Quickstatus]

Qantas has another 3 waiting for delivery, delayed by Boeing's production issues, but that will be 25 of that original order for 65.

Imagine if QF got all 65 prior to Covid
Even now QF does not have enough marketshare to fill all those seats.

How bad it sounds is purely a function of whether you think the average fleet age doubling from just over 7 years in 2013 to close to 15 years in 2022 is a bad thing.

And its all just a rubbery measure. Its utility more or less depends on the outcome you seek from the accounting analysis.

 

[moa999]

average fleet age doubling from just over 7 years in 2013 to close to 15 years in 2022 is a bad thing.

But as noted above what type matters.

Post 2001 and Ansetts collapse Qantas took on board 75 737s (many cheap from a cancelled AA order).
The first arrived in 2002 (initially with AA seats) and the last (RetroRoo2) in 2014.
Since then all mainline has bought is the 787s. And obviously Covid stopped a few more.

As the 321XLRs will arrive at approx 10+/yr they will quickly drop the average.

 

[#flying]

I’m reserving judgement on this until we know for sure what the J cabins will be like. Ex-PER, increased frequencies to the east coast will be great, and the possibility of the 220 to open up thin routes is something I’m a bit optimistic about.

In terms of opening up thin routes, hasn’t this largely already been achieved with the wet lease of the Alliance E190s?

 

[Peasant]

As the 321XLRs will arrive at approx 10+/yr they will quickly drop the average.

Just remember that according to the current order book, there are only 20 A321 XLRs on order to replace 75 B737-800s between now and 2029. The bulk of 737 replacements won't happen until well into the 2030s.

 

[AustraliaPoochie]

In terms of opening up thin routes, hasn’t this largely already been achieved with the wet lease of the Alliance E190s?

In a way, its a very crooked way of/for QF to do this agreement with Alliance.
Not crooked in a bad way, maybe financially shrewd is the more appropriate word.
It carries the QF branding and all that, but in the end, its a lease, and QF saves money, ...
And its not like as if those seats on the Alliance flights bought on the QF website are any cheaper either.
So, they charge us discY/full Y/J class fares, but they pay Alliance less in charges, so they keep the $.

 

[justinbrett]

In a way, its a very crooked way of/for QF to do this agreement with Alliance.
Not crooked in a bad way, maybe financially shrewd is the more appropriate word.
It carries the QF branding and all that, but in the end, its a lease, and QF saves money, ...
And its not like as if those seats on the Alliance flights bought on the QF website are any cheaper either.
So, they charge us discY/full Y/J class fares, but they pay Alliance less in charges, so they keep the $.

That’s quite an allegation - and assumption that a wet lease saves money (I don’t think so)

But is mostly refuted by the fact QF is trying to buy Alliance.

 

[AustraliaPoochie]

Look at JQd fares, they are cheaper on the QF website, Alliance should be cheaper too, on the QF website.
When QF's new planes come in, would QF (if they succeed in buying Alliance), put any new planes onto the Alliance routes?
If the running cost of Alliance is cheaper, fares when booked with a QF flight number, on Alliance, should be cheaper.

 

[justinbrett]

Look at JQd fares, they are cheaper on the QF website, Alliance should be cheaper too, on the QF website.
When QF's new planes come in, would QF (if they succeed in buying Alliance), put any new planes onto the Alliance routes?
If the running cost of Alliance is cheaper, fares when booked with a QF flight number, on Alliance, should be cheaper.

Qantas don’t codeshare on Alliance, they wet lease. Completely different. Jetstar is irrelevant to the discussion.

Nobody said the running cost of Alliance was cheaper.

There are no Alliance routes when it comes to the wet lease. They are QF routes. QF determines the routes and schedule. Many operate on former QF mainline or QLK routes, or even alongside. Think of it more like the National Jet part of Qantaslink that happens to be externally owned.

 

[jpp42]

What impact did the Alliance deal have on the Qantas-owned fleet? Have they retired any 717's or Q400's or anything as a result?

 

[exceladdict]

In terms of opening up thin routes, hasn’t this largely already been achieved with the wet lease of the Alliance E190s?

Perhaps - ADL to NTL for example? Google suggests an extra 1000 miles of range on the 220. Wondering if that opens up some international and domestic options ex PER, ADL, DRW, CNS, NTL - or perhaps provides for greater frequencies on the big trunks too. If there was one area of an airline, other than the FF program, it would be interesting to work in I think it would be in calculating and comparing these economics!

 

[eastwest101]

What impact did the Alliance deal have on the Qantas-owned fleet? Have they retired any 717's or Q400's or anything as a result?

Post Covid (and its difficult to tell what the long term or short term plans were) its true that the QFLink B717 fleet stopped a lot of flying, and during and after Covid the B717 fleet was parked up a lot of the time and went from high utilization to lower utilization, the Alliance operated E190s went from low utilization to very high utilization as soon as they arrived in the country.

Not many Q400s parked up during or past Covid as a lot of them were on intra-state routes and thus not really affected by Covid state border closures i.e. they never really stopped flying.

 

[moa999]

Just remember that according to the current order book, there are only 20 A321 XLRs on order to replace 75 B737-800s between now and 2029. The bulk of 737 replacements won't happen until well into the 2030s.

Yep although it's 12 by FY26 then 8 more by FY29 (you also got 3 then 9 A350s in this period).

But personally I see anything in the FY27-29 period as guidance only and you could well see swaps of 321XLRs between JQ and QF over that period, or even refurbed 788s coming over to QF.