QF Passing on [one of its] 15 B787 Options

[Flying Fox]

Qantas to let first 787 option lapse | Australian Aviation

Qantas will let the first of its 15 Boeing 787 options lapse later this month, CEO Alan Joyce has told Reuters.

I believe that someone said that QF were getting the B787's super cheap; so I guess that they weren't cheap enough for Mr Joyce to sign on the dotted line.

Its a bit sad IMHO as I would like to see QF have a larger fleet for B787s (emotionally based vs financially based option).

 

[Himeno]

It appears that they are keeping the options, but losing the place in the queue.

 

[JohnK]

The economy configuration of 3-3-3 is not so great. Bassinet in the window side bulkheads not great for those with status looking for bulkhead.

 

[Flying Fox]

It appears that they are keeping the options, but losing the place in the queue.

Oh, I read that differently. Sorry if my title is mis-leading.

 

[Pleb Status]

It appears that they are keeping the options, but losing the place in the queue.

That is not my reading of it (and other articles). QF had 15 options and 30 purchase rights and now they will have 14 options and 30 purchase rights.

If QF are only looking to have a maximum of 20 or so it is not a big deal.

The less non-Japanese 787 in the world the better as far as I am concerned...

 

[Quickstatus]

What’s the difference between an option and a purchase right?

 

[JessicaTam]

Oh, I read that differently. Sorry if my title is mis-leading.

I have edited the title for clarity.

 

[Himeno]

That is not my reading of it (and other articles). QF had 15 options and 30 purchase rights and now they will have 14 options and 30 purchase rights.

Qantas has not cancelled any 787 options and has simply let one lapse to be picked up later.

A spokesman for the airline has clarified to AirlineRatings.com that the airline is fully committed to the 787 after one remark by its chief executive Alan Joyce at the Singapore Airshow was taken somewhat out of context.

They've moved where in the assembly queue the lapsed option is available.
The next 4 options are for delivery slots in first half FY20.

The less non-Japanese 787 in the world the better as far as I am concerned...

Why's that? Only JAL has 8 across Y 787s. ANA changed theirs to 9 across.

 

[moa999]

Think it's more capex management.

Particularly as they've seemingly decided the 787 isn't the right aircraft to replace the domestic 330s (hence looking at the MOM/797), they have more than enough options.

Current four all FY18 deliveries.
Next four FY19 (1H to be particular).

So makes sense to defer anything more until July 2019 (start of FY20)

 

[Himeno]

Particularly as they've seemingly decided the 787 isn't the right aircraft to replace the domestic 330s (hence looking at the MOM/797), they have more than enough options.

The 797 is part of the Yellowstone Project to be a replacement for the 757. The other parts of the Yellowstone Project became the 787 and 777X.

Could a 757 type aircraft could replace domestic 330s?

 

[Matt_01]

What’s the difference between an option and a purchase right?

If I recall correctly an option is the rights to purchase and aircraft in production line or in the queue. Purchase rights are based on dollar value but no fixed delivery. I think purchase rights can be transferred to other aircraft types.

 

[UP4014]

Perhaps the book values on the aircraft these are replacing is simply too high at present and they need to speed up some depreciation. The second hand market is flooded and other airlines talking of parking up and selling aircraft makes financiers nervous on top of the 380 on the downhill run. Otherwise the banks will want some sold at a loss which can be a spiral.

 

[Himeno]

Perhaps the book values on the aircraft these are replacing is simply too high at present and they need to speed up some depreciation. The second hand market is flooded and other airlines talking of parking up and selling aircraft makes financiers nervous on top of the 380 on the downhill run. Otherwise the banks will want some sold at a loss which can be a spiral.

Which aircraft?
The current 787s are replacing the non ER 744s, which are all fully depreciated thanks to the $2 billion write off QF did a few years ago. What any new firmed 787 orders will replace is currently unknown, though assumed to be the older A330s.

 

[UP4014]

Which aircraft?
The current 787s are replacing the non ER 744s, which are all fully depreciated thanks to the $2 billion write off QF did a few years ago. What any new firmed 787 orders will replace is currently unknown, though assumed to be the older A330s.

Thanks for letting us know your assumptions.

 

[pauly7]

Think it's more capex management.

Particularly as they've seemingly decided the 787 isn't the right aircraft to replace the domestic 330s (hence looking at the MOM/797), they have more than enough options.

Current four all FY18 deliveries.
Next four FY19 (1H to be particular).

So makes sense to defer anything more until July 2019 (start of FY20)

Keep in mind that they need to keep options open for the ULR solution pitched out to both Boeing and Airbus, the original 787 order was very aggressive and things have changed, they want different aircraft to supplement the fleet. Still a very sizeable option remains. Will be interesting to see what happens....

 

[JessicaTam]

Which aircraft?
The current 787s are replacing the non ER 744s, which are all fully depreciated thanks to the $2 billion write off QF did a few years ago. What any new firmed 787 orders will replace is currently unknown, though assumed to be the older A330s.

Pretty accurate IMHO.

 

[UP4014]

The QF fleet was deemed overvalued and the $2B write down was to correct it but they only bought the values down to current market values at the time they did it, 2015 I think. One reason for the intitial overvaluation was exchange rates when the aircraft come onto the books higher value also means ability to borrow more against it.

The write down of the fleet to market value also reduced depreciation; year on year saving in depreciation of around $200m.

The only aircraft they have with a fully depreciated value are the ones they give away.