Qantas orders new 787s and A350s

[jb747]

So in actual fact, there will be exactly the same number of widebodies after A330 & A380 replacement

I think the number of seats is probably a more important metric, and that seems to have gone down over all of the current management's reign.

 

[justinbrett]

I think the number of seats is probably a more important metric, and that seems to have gone down over all of the current management's reign.

More premium seats though, depending on configuration

 

[eastwest101]

Less overall seats in the entire fleet over current managements reign, the proportion of premium seats to economy seats has increased but an overall smaller pool of seats as the premium seats occupy more floor space, and economy seats have had their density increased so occupying less overall floor space.

More points available chasing fewer QF metal seats is the trend, other OW partners have also "shrunk" themselves in capacity and and reach but OW membership and EK is still the saving grace of Qantas in the last decade of management.

 

[Saab34]

Why isn’t QF international interested in heavy growth? Order another 20 aircraft on top.

India should be served from many capitals
USA should be connected from many more capitals to many more locations
South America
Europe directs

So many more markets from all 5 capitals they should be serving. India is about to explode. It’s all about Sydney and somewhat Melbourne being the poor cousin. PER/BNE/ADL we won’t even mention.

 

[jakeseven7]

Why isn’t QF international interested in heavy growth? Order another 20 aircraft on top.

Cool that sounds easy How would you finance these extra 20?

 

[justinbrett]

Less overall seats in the entire fleet over current managements reign, the proportion of premium seats to economy seats has increased but an overall smaller pool of seats as the premium seats occupy more floor space, and economy seats have had their density increased so occupying less overall floor space.

More points available chasing fewer QF metal seats is the trend, other OW partners have also "shrunk" themselves in capacity and and reach but OW membership and EK is still the saving grace of Qantas in the last decade of management.

The real number of premium seats should increase (not just proportionally), subject to configuration. Overall, it is about 86% of total seats based on common configs of 787-10s and A350-1000s (I doubt they'll use the sunrise config). I used VS's A350-1000 and UA's 787-10 for comparison.

There's still 15 years or so before the last A380 retires so I'm sure QF can add to this order with newer/different variants. I still think they're lacking a domestic widebody - if only the 797 was confirmed.

 

[RooFlyer]

Cool that sounds easy How would you finance these extra 20?

If the additions are for future growth, then they would be late 2020s delivery at the earliest, likely the next decade. Could probably rustle up a line of credit or something between now and then. .

 

[RichardMEL]

If the additions are for future growth, then they would be late 2020s delivery at the earliest, likely the next decade. Could probably rustle up a line of credit or something between now and then. .

With the current cost of money far more than it was just a few years ago maybe not. I wonder if that's a factor....

 

[justinbrett]

With the current cost of money far more than it was just a few years ago maybe not. I wonder if that's a factor....

And why buy something now we don't need for 15 years?

 

[RichardMEL]

And why buy something now we don't need for 15 years?

Interesting question re "need" - given the current situation of demand outstripping supply you'd think more capacity sooner would be welcome BUT of course China is coming back on line with more capacity coming, and slowly the demand/supply imbalance is being reduced (hopefully) and with fares coming down - so perhaps not in the short term. Medium term? Well, there's an argument for growth possibly.

Who would be analysts speculating on future needs so far out?

There possibly will be newer variants of aircraft over the next ten years anyway which may match better the needs of the carrier in the next decade.

 

[RooFlyer]

And why buy something now we don't need for 15 years?

I doubt they have to 'buy' them now. I think its more a case of getting yourself on the order queue which we know can be interchangeable, cancellable etc etc. Just like they have in the past, and present. Cost of securing a place in the order queue would be pretty trivial, especially with all the cash that's rolling around now (and being afforded on shareholders, not the company).

The better argument would be why order something which probably doesn't exist as yet?

 

[justinbrett]

The better argument would be why order something which probably doesn't exist as yet?

Which is my point (context in the post before that one)

 

[elanshin]

Honestly the market right now is extremely volatile. I suspect we're going to see a major down turn in leisure travel heading into next year if the trend of discretionary spending continues. Last year and this year are sort of outliers with many holidays and trips booked coming out of covid but once all that travel bank and travel demand finishes, forward bookings are likely going to be weak for next year.

Overall, the airline industry is likely to continue to keep growing but we're likely in for a couple of coughpy years with the current economy.

So in that sense Im not surprised QF is taking a more sort of middle of the road approach with their fleet renewal strategy today.

Who knows maybe in 3-4 years, the economy has rebound, the 777X is flying, airbus decides to restart the 380 program and make a NEO. QF can re-evaluate the position then.

 

[Saab34]

n leisure travel heading into next year if the trend of discretionary spending continues.

It’s an interesting point.

The discretionary retailers have all reported declines, big departments stores like Kmart and BIGW also have, however as analysts mentioned, it’s very category specific. Clothing and Homewares are down. But Toys and Leisure have actually grown. Kids want toys, they get toys. People want holidays, so they will take them.

I don’t think a downturn is coming at all, holidays/travel is part of the discretionary category that seems to be immune from any downturn, like the toys above.

I am actually quite surprised, and many airlines also seem to be surprised. We are in the spending rough patch now which will likely last the next 2 years, however they reported today the booking run rate is 130% vs 2019. And it’s growing. Travel is one category that many of us just can’t put to the side, seems to be Aussie specific.

 

[elanshin]

I am actually quite surprised, and many airlines also seem to be surprised. We are in the spending rough patch now which will likely last the next 2 years, however they reported today the booking run rate is 130% vs 2019. And it’s growing. Travel is one category that many of us just can’t put to the side, seems to be Aussie specific.

The numbers can be deceiving as it's likely a lots of the current travel numbers were booked back last year before everything started going south.

Then theres the billions in travel bank from covid that are still being used up now.

The only thing that seems to be an indicator is how many sales keep cropping up now and their increasing frequency compared to even 6 months ago. This isn't just for QF but all other airlines too. In fact QF is the only one that doesn't seem to have as many sales yet but I'm starting to see more now as well.

 

[Saab34]

The numbers can be deceiving as it's likely a lots of the current travel numbers were booked back last year before everything started going south.

Then theres the billions in travel bank from covid that are still being used up now.

The only thing that seems to be an indicator is how many sales keep cropping up now and their increasing frequency compared to even 6 months ago. This isn't just for QF but all other airlines too. In fact QF is the only one that doesn't seem to have as many sales yet but I'm starting to see more now as well.

Yes however they did advise to analysts today the booking curve has returned to 2019 levels, that is 6 months for International and 4-6 weeks for Domestic.

No sign in any curve or numbers yet, that things are trending south. I would be interested to see Virgin and Rex’ numbers, however I think poor performance or backwards performance, would be linked to poor management in those specific outfits.

The market looks healthy according to QF results. However, I would be keen to re ask the booking curve question at the H1 results early next year.

 

[justinbrett]

I don’t think a downturn is coming at all, holidays/travel is part of the discretionary category that seems to be immune from any downturn, like the toys above.

That's quite a bold POV.

The downturns post 9/11 and GFC absolutely smashed the global aviation industry. QF was a very sick airline 15 years ago.

Post covid has masked the problem this far, but that won't continue forever.

If nothing else, if the AUD keeps falling, I think Aussies will look to holiday in cheaper countries like South East Asia, and that's bad news for long haul airlines. I'm going overseas in a couple of weeks and I'm watching the AUD nervously as it gets very close to 60c; some are predicting it will go down to 40c.

 

[Himeno]

The downturns post 9/11 and GFC absolutely smashed the global aviation industry. QF was a very sick airline 15 years ago.

Which is the reason 51 of the original 115 787 order was cancelled.

 

[pauly7]

I am actually quite surprised, and many airlines also seem to be surprised. We are in the spending rough patch now which will likely last the next 2 years, however they reported today the booking run rate is 130% vs 2019. And it’s growing. Travel is one category that many of us just can’t put to the side, seems to be Aussie specific.

Have a look at the AU gov net spending saving charts by age demographics and it explains what is going on and why QF is still performing well and international especially.

Very basically - it’s because the older and wealthier cohorts are far less / not impacted by the cost of living pressures, smaller/no mortgages and are spending up BIG time, especially on travel. And they tend to fly premium carriers like QF. It’s the classic ‘two speed’ economy at work. Corporate travel spend is also holding up well which QF dominates thoroughly.

 

[downtheback]

The extra are A350s are a nice surprise. Thought it might've been 10 B787-10s if at all.

With those in mind, I think it's likely the B787-9s get a refurb to go 30J/21W/211Y (removing the 2nd J cabin, removing one row of W and backfilling with more Y).

B787-10 to go for 36J/21W and the remainder Y (about ~250).

A350-1000 not for ULR will have no F, extra Y instead.

It looks like there's options for more A350s which are intended to replace the A380s (everything on order is to replace the current batch of A330s). Depending on performance, they may take more A350s for midrange capacity and hopefully the B777-9s to replace the A380 in addition. Time will tell