Qantas fleet rebuild piece

[Peasant]

So by 2029 QF could have retired 40% of the 737 fleet (pretty much all the 2002-2006 deliveries), all the 717 fleet and got a big uplift in J seats

I don't dispute the calculations, other than presumably in a mature market, Qantas would be targeting 3-5% annual capacity growth.

Works best in super large airlines (like the US ones) who are continually replacing all types of aircraft.
And also in airlines with single fleet types (like most of the LCCs).

It has its failings in small-mid carriers who will purchase fleet in lumps so they have a sufficient mass of aircraft of similar specs.

Other measures you could look at is $ Capex per year to depreciation (adjusting both for leases)

I agree with you - but you will notice that even many mid-size airlines smoothen their deliveries across a longer period of time for this reason. And ordinarily, the small-mid airlines usually have these 'lumps' to coincide with new aircraft that provide a step-change in economics. The 77W in 2005, 787 in 2011, A321neo in 2016 being good examples. Qantas has eschewed this.

The capex per year to depreciation is an interesting one. Especially so in QF's case given the very large write downs they did in 2014 and then during covid.

If you are measuring this to determine future spend on replacement, that won't work either as the cost of replacing a fleet of Dash 8s will be much cheaper than replacing a fleet of 787s, and yet we've recorded the old Dash 8s on an equal weighting with the new 787s.

For the purposes of this discussion, I think we're really talking about the 737 and the A330 at the core, with smaller fleets like the 717 and Q400 on the periphery. It's arguable that QF already has the replacement to the A380 in the A350-1000.

 

[justinbrett]

For the purposes of this discussion, I think we're really talking about the 737 and the A330 at the core, with smaller fleets like the 717 and Q400 on the periphery. It's arguable that QF already has the replacement to the A380 in the A350-1000.

If you are looking at specific aircraft types you should at least be working with aircraft type specific fleet metrics.

What does the age of the Q400s or 717s have to do with replacing the 737s?

 

[TomYagher]

A bit rich imho.

I post one mildly amusing quote so people can enjoy their day a bit more. And now you’ve sparked an intense debate over the seat count of the 220/300 replacing a 717 scaled for 737 route referencing accounting for A380 average costing rolling over the NFI index minus carry forward impacts of the a321 seat configuration scaled on a unknown future forward non-linear J seat demand curve in relation to the non-important fleet age metric.

A bit rich imho

 

[Peasant]

If you are looking at specific aircraft types you should at least be working with aircraft type specific fleet metrics.

What does the age of the Q400s or 717s have to do with replacing the 737s?

In which case we know the A330s are 16 years old on average and the 737s 15 years. It doesn't change much as that's pretty much bang on the overall fleet average.

The Q400s and 717s have nothing to do with 737s. That's why i referred to it as peripheral to the core of this discussion.

 

[justinbrett]

In which case we know the A330s are 16 years old on average and the 737s 15 years. It doesn't change much as that's pretty much bang on the overall fleet average.

The Q400s and 717s have nothing to do with 737s. That's why i referred to it as peripheral to the core of this discussion.

You're completely proving my point.

Do we use the (company wide) average fleet age to determine when to replace the 787s? If you have to check the aircraft type specific fleet age with the company wide metric, that becomes redundant. QF doesn't use the company wide metric as it's meaningless for this purpose.

 

[Peasant]

Do we use the (company wide) average fleet age to determine when to replace the 787s? If you have to check the aircraft type specific fleet age with the company wide metric, that becomes redundant. QF doesn't use the company wide metric as it's meaningless for this purpose.

With respect, I think you're going around in circles without saying anything.

 

[justinbrett]

With respect, I think you're going around in circles without saying anything.

I don't think anyone is arguing that average fleet age is the only factor, but it has to be considered as a key metric for airlines if only for the fact that aircraft have a finite life (in flight hours and cycles) and are very expensive to replace. It is different to most other industries in this regard.

I've disproven your claim that this is a key metric for an airline managing its fleet replacements. It can't possibly be for the reasons already outlined.

How have I got this wrong?

 

[Peasant]

No, you've expressed an opinion that differs, and your opinion is valid. Nothing has been disproven.

 

[justinbrett]

No, you've expressed an opinion that differs, and your opinion is valid. Nothing has been disproven.

So you're saying we need the full company wide metric, which takes in to account the age of Q400s, 717s and 787s, to determine when to replace a specific aircraft type?

Please explain to me how you think this metric is useful in this context.

 

[jpp42]

Justin, there are lots of metrics used to evaluate companies that may not seem "fair" to those on the operational coalface. I find this is particularly the case when you look at the ways companies justify or avoid Capex spending. My company, in a different industry, is subject to the same macroeconomic conditions and is periodically changing Capex strategy and looking at ways to either maximise existing assets, or convince ourselves that spending on new assets is prudent when we have the right conditions to borrow for capital spending. When we present these numbers to upper management and ultimately investors, they are going to be watered down into something very basic (cost per commodity unit), that our operational teams really object to as there are so many detailed factors that make each project incomparable. I see the same issue here when talking about average fleet age - some investors and analysis just want a soundbite that gives them an overall view, they often don't really care about the details of which type lasts longer or the variances depending on aircraft role. Your objection is noted, but it's not going to stop people from using this. However much it may seem "wrong" to those in operations, this kind of thing is the brutal truth of business.

 

[Peasant]

So you're saying we need the full company wide metric, which takes in to account the age of Q400s, 717s and 787s, to determine when to replace a specific aircraft type?

Please explain to me how you think this metric is useful in this context.

I'm not really sure why you want to keep going around and around in circles on a technicality.

Average fleet age doesn't tell the full story, as noted above, but in the case of Qantas, it tells much of the story because they have received so few aircraft in the last decade. The 75 B737s are on average 15 years, the 28 A330s are on average 16 years, so they represent the overall average age of the fleet, at 15 years. So we're back at square one.

I really don't think this is adding anything whatsoever to the debate and just makes it unpleasantly tedious for other posters to follow.

 

[justinbrett]

I'm not really sure why you want to keep going around and around in circles on a technicality.

Average fleet age doesn't tell the full story, as noted above, but in the case of Qantas, it tells much of the story because they have received so few aircraft in the last decade. The 75 B737s are on average 15 years, the 28 A330s are on average 16 years, so they represent the overall average age of the fleet, at 15 years. So we're back at square one.

I really don't think this is adding anything whatsoever to the debate and just makes it unpleasantly tedious for other posters to follow.

You keep saying I'm going around in circles but it is you won't answer the question.

Just because the 737 and A330 aircraft type specific fleet age happens - at this time - for this specific airline - to be similar to the company wide metric, doesn't make the company wide metric useful. It is completely illogical to consider the age of unrelated aircraft types when determining when to replace a specific aircraft type.

You can keep saying that I'm the one making this painful but you're the one who won't explain your claims. I've given you plenty of reasons of why this metric isn't useful for the purpose you say it is, yet all you've done is dodge the question.

Not withstanding the metric is useful for other purposes - mostly accountants/analysts who aren't involved in running an airline and need something simple that they can understand quickly. But that wasn't your claim.

However much it may seem "wrong" to those in operations,

And to QF, by all accounts.

 

[RichardMEL]

I post one mildly amusing quote so people can enjoy their day a bit more. And now you’ve sparked an intense debate over the seat count of the 220/300 replacing a 717 scaled for 737 route referencing accounting for A380 average costing rolling over the NFI index minus carry forward impacts of the a321 seat configuration scaled on a unknown future forward non-linear J seat demand curve in relation to the non-important fleet age metric.

A bit rich imho

It's what we do

 

[Quickstatus]

the seat count of the 220/300...yad yada yada...in relation to the non-important fleet age metric

....how is this supposed to be fairer and simpler?

 

[RooFlyer]

Qantas of course used to use and promoted the 'average fleet age' metric - here as a peer comparison, just as I mentioned. Note young average age touted as a virtue and lower age a target. Of course that was back then.

2013 presentation:

2015 (note text in third grey arrow)



2017 on an aggregate and aircraft type basis. Accountants again!!

 

[TomYagher]

It's what we do

AFF should probably just fire the board, and fund all the required capex with the savings by using the AFF Qantas thread as institutional direction…now I understand why this debate is so important.

What I really want to know is what they’re replacing the dash 8’s with? maintained platinum on them alone last year, and not even 400’s.

2013 presentation

While the age metric may have lost importance to QF, surely maintaining the ‘fuel efficient fleet’ is still more than ever a priority…or has that switched to engaging the FF program and online marketplace?

 

[justinbrett]

Qantas of course used to use and promoted the 'average fleet age' metric - here as a peer comparison, just as I mentioned. Note young average age touted as a virtue and lower age a target. Of course that was back then.

2013 presentation:
View attachment 324137
2015 (note text in third grey arrow)

View attachment 324146

2017 on an aggregate and aircraft type basis. Accountants again!!

View attachment 324132

That last slide is good. Tell me that's not infinitely more useful than a single company wide figure.

 

[Quickstatus]

QF should probably just fire the board

The only people that can "fire the board" are the shareholders

 

[TomYagher]

The only people that can "fire the board" are the shareholders

Fixed

 

[moa999]

That last slide is good. Tell me that's not infinitely more useful than a single company wide figure.

And indeed other than the 1:1 replacement of the 747s, and the retirement/conversion of a couple of A380s and A330s, that's still the mainline fleet today, just six years older.

I'm sure in the early 2030s when QF has replaced all the 738s management will be back flagging the low average fleet age.