Qantas delays A380 deliveries in cost-cutting drive

Qantas will delay the delivery of its A380s until 2016-17
Qantas will delay the delivery of its A380s until 2016-17

Qantas has announced a new group strategy aimed at reducing capital expenditure by a further AU$400 million (US$411 million) in 2012-13.

The latest initiative, which includes delaying the delivery of new Airbus A380s, follows a AU$500 million cost-cutting drive announced in February.

If the plan is successful, Qantas said that capital expenditure in 2012-13 will now total AU$1.9 billion, down from AU$2.3 billion. The reduction in expenditure will be achieved through changes to the group’s fleet plan, including the rescheduled delivery of two A380s previously intended for delivery in early 2013. These aircraft will now be delivered in 2016-17. The group’s final six A380s will be delivered from 2018-19.

Qantas has also announced plans to increase capacity on domestic routes. This will include extra peak time services one key routes connecting Sydney, Melbourne and Brisbane, the reintroduction of Boeing 747 services on the Sydney-Perth route and more Airbus A330 services on the Melbourne-Perth route. Jetstar and QantasLink will also add more domestic flights.

“Our priorities remain to build on our strong domestic business, enhance Qantas Frequent Flyer, turn around Qantas International and grow Jetstar in Asia,” said Qantas’ CEO, Alan Joyce. “Today we announce significant capacity increases and product upgrades for the Qantas, Jetstar and QantasLink domestic networks in 2013-14, focusing on core business and leisure routes. This will ensure that the group retains a profit-maximising 65% domestic market share while delivering the best customer experience in the market.”

Alan Joyce
Alan Joyce

Commenting on the delayed delivery of its A380s, Joyce added that the decision was “financially prudent” and that it would lead to “significant capital expenditure savings”.

“We are focused on making changes that will increase productivity and competitiveness in a range of areas, including modernising and consolidating our catering operations, streamlining heavy maintenance and introducing new engineering processes. Further updates on these initiatives will be provided in the coming weeks,” he added.

When Qantas announced its new business strategy in August 2011 it led to a conflict with maintenance unions, which accused the airline of off-shoring Australian jobs. With regards to the future of Qantas’ heavy maintenance operations in Australia, the airline said a decision “will be announced by mid-May after all options have been assessed thoroughly”.

“The group’s balanced portfolio and clear strategy makes it well-placed to manage the challenges of ongoing high fuel prices and the changing global economy, while also taking growth opportunities in Australia, Asia and elsewhere. We are acting decisively now to position ourselves for strong, sustainable growth over the long term,” Joyce concluded.
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