Besieged Qantas directors to meet in NY on crisis items

[docjames]

apparently there is a leasing company that has cancelled some deliveries so there are 2008/2009 slots available.

BA are also interested int hese slots as well.

Ah, wasnt aware of that - which company? With all the fleet shifting you'd think they;d keep the slots and lease the aircraft (to QF perhaps!).

Would there still be issues with getting crews online etc in that timeframe (adding another aircraft to QF fleet)?

I personally suspect they'll stick it out until the 787s come online rather than push into a new aircraft.

 

[ANstar]

Ah, wasnt aware of that - which company? .

Not sure, but it was in one of the articles about BA (not QF)

Cant remeber if the airline leasing them had cancelled or the leasing co had cancelled, but it inferred that there were 777 slots avail for BA (or insert airline's name haer [---]...)

 

[Flying Fox]

I don't expect QF to ever get the 777. They were involved with the initial design and never purchased it.

Availability is limited to 2014+ for new orders and thus QF wouldn't see them until then (unless slots are already reserved).

I think QF would be better off pushing Boeing to spec & build a 787-10 (which would be more economical than the 777 anyway with a similar delivery time frame). This would allow them to integrate them into their existing 65 firm + 50 options 787 order.

They would save $ in terms of maintenance & crew training vs introducing a new set of maintenance & training for 777s.

Given the assumption of long term v.high fuel prices, the break-even point for junking fully paid off 747-400s that burns more fuel vs introduction of new fuel efficient 777s (including new maintenance facilities, spares and training) that wouldn't arrived until 2014+ would still be very high.

I think we will see 747-400s held until replaced by A380-800s (at airports that can cater for them) and 787-8s, 787-9s and 787-10s in the future. So I see the QF fleet as all twin engined except for the A380. Shame as I like the 747-400 and 747-800 in QF colours.

Sure, the 747-400s might get flown less but I don't see 777s in the QF fleet.

 

[maninblack]

The price of oil has gone from $40 a barrel 6 years ago to $50 3years ago to over $130 now. It really doesn't matter what aircraft they fly, none will be economic if prices increase much more unless the market can tolerate large fare increases. (which it probably cannot) The latest gen 773 is about 10% more efficient per seat/mile than an A345 and about 15% better than 744ER on long range ops. Significant but given the price of oil has increased more than 100% over the last few years little more than cold comfort.

Take into account the cost of new aircraft as an intermediate step and it is hard to see it stack up to buy 773's now. QF will have to continue to remove or scale back un-profitable routes until the climate becomes more favorable.

With the A380 deliveries starting and with both current and further inevitable route/frequency reductions, they will have excess international aircraft capacity in the short-medium term.

A good start would be to shut down JQ international, return those aircraft to QF and retire some 763's. (I am not joking) LCC airlines are going to go to the wall big time over the next year if oil prices remain on the increase. People will have to get use to the fact that overseas travel is a luxury, not a right. Airfares are ridiculously and un-sustainably low on most LCC's (they are also contributing to environmental disaster)

By the way, why the hell are they meeting in New York?

There endeth the lecture :!:

 

[simongr]

By the way, why the hell are they meeting in New York?

A mileage run perhaps?

I think the NY venue does give more credence to them meeting with a manufcturer - or maybe GD was on vacation...

 

[Flying Fox]

By the way, why the hell are they meeting in New York?

Status Run

 

[ANstar]

The price of oil has gone from $40 a barrel 6 years ago to $50 3years ago to over $130 now. It

Given that the 77W may have 15-20% over an older 744 in fuel savings, that would effectively mean that they would be saving twice as much now (with doibled oil prices int he past 12 months) as well as the favourably $AUD it may now work whereas previously it was marginal.

 

[maninblack]

A mileage run perhaps?

I think the NY venue does give more credence to them meeting with a manufcturer - or maybe GD was on vacation...

There are only two manufacturers they would be dealing with, one is in Seattle, the other in Toulouse. I figure they must have plenty of empty seats in F on QF107. Perhaps they are attending one of those important "industry conferences".

 

[maninblack]

Given that the 77W may have 15-20% over an older 744 in fuel savings, that would effectively mean that they would be saving twice as much now (with doibled oil prices int he past 12 months) as well as the favourably $AUD it may now work whereas previously it was marginal.

Yes but they don't hav'em, they would have needed them in service 2 years ago, not in two years time.

 

[serfty]

The so called crisis has been precipitated by the cost of JetA, but has been excacerbated by the conscious decision of the board and management of QF some years ago to age the fleet. This has resulted in an airline that has a number of gas guzzling aircarft.

I believe any such conscious decision was made not so much in respect to being one of "age-ing the Fleet" rather that they expected to there being a dozen or so QF liveried A380's in service by now.

Aside from the 743's being retired, The ZX's were to go back to BA over two years ago.

 

[dajop]

Availability is limited to 2014+ for new orders and thus QF wouldn't see them until then (unless slots are already reserved)

I have no knowledge of who's ordered what as far as 777's go .... wonder though if QF is a vulture circling for some carcasses as cash strapped airlines go to the wall, or at the very least cancel or defer orders ....

 

[simongr]

But as oil prices increase the running cost differential increases - so if an order was made now for 2 years time when oil has jumped to $200/barrel it might be a closer then.

Taking some rough examples - the fuel tanks on a 744 hold 57,285 gallons which is 1,364 Barrels. Cude price (and I know you would have to refine the fuel to fly with it but this is at least a starting point).

So in very simple terms each turnover of the tanks comparing a 777 to a 744 as the price of fuel leaps the cash savings leap even if the aircraft is still only 15% more efficient - that means it takes fewer trips to get the ROI or NPV you require as a business.

 

[ANstar]

Yes but they don't hav'em, they would have needed them in service 2 years ago, not in two years time.

I believe there are some late 2008 and 2009 slots as per my posts above

Even if that turns out to be false, it appears BA have secured 2010 delviery for their 777-300er's (so earlier than 2014)

<http://www.avionews.com/index.php?corpo=see_news_home.php&news_id=1090972&pagina_chiamante=index.php>

 

[Flying Fox]

Even if that turns out to be false, it appears BA have secured 2010 delviery for their 777-300er's (so earlier than 2014)

My understanding is that these are conversions from 777-200s to 777-300s so the slots always belong to BA, its just that it is now time to decide which flavour of the 777 they want.

Any additional aircraft can be pushed to the back of the queue.

 

[ANstar]

My understanding is that these are conversions from 777-200s to 777-300s .

I thought their temp 777's were due for delviery 2008/2009 NOT 2010?

 

[Fluid-Flyer]

By the way, why the hell are they meeting in New York?

Personally, I think American Airlines is in serious trouble.

Qantas obviously has a strategic partnership with this company, which will impact QF if AA goes out of business. I figure (with so little knowledge about these things however) that at some stage after Labor Day (in the USA) we will see one of the big carriers collapse? [maybe UA?] (Current legacy airline strategy in the US seems focused on “not being the first to hit the wall”, and thus waiting for a competitor to collapse, taking with it an enormous amount of "industry over capacity"?)

Some issues/opportunities for Qantas in its alliance with AA –

• AA has a large number of Boeing aircraft production slots, including 777s? [QF has taken AA slots before, e.g. 737s]
• AA “service degradation” is approaching a level that may be in breach of its OneWorld Alliance responsibilities.
• Qantas board members will probably be trying to use their various connections in the US, to determine if the US government will act to protect the big airline players, or free the market to decide outcomes competitively.

 

[Flying Fox]

I thought their temp 777's were due for delviery 2008/2009 NOT 2010?

Not sure. I'm willing to concede that I could be wrong about my dates.

Some issues/opportunities for Qantas in its alliance with AA –

• AA has a large number of Boeing aircraft production slots, including 777s? [QF has taken AA slots before, e.g. 737s]
• AA “service degradation” is approaching a level that may be in breach of its OneWorld Alliance responsibilities.
• Qantas board members will probably be trying to use their various connections in the US, to determine if the US government will act to protect the big airline players, or free the market to decide outcomes competitively.

You've made some interesting points there. I would total agreed about AA's service levels and their new $15 first checked bag tax.

I still stand by my assertion that QF + B777 won't happen.

This is subject to Boeing making a B777-200XLR or similar that can make SYD-LHR-SYD non-stop all year round and still be profitable. If Boeing or Airbus can make this aircraft, QF will buy it.

 

[markis10]

The urgency about making a decision is based on the fact that SQ are in the same postion and are also about to announce thier choice of replacement for their 747-400 fleet, again its the 777 that is expected to get the nod.

Dont forget the order book includes 30 odd bodies that have unidentified owners, and V Australia have got pretty quick delivery!

 

[bokflyer]

Qantas also has another issue with replacing the 747s. Some of its routes aren't suitable for twin engine planes like the 777 or 787, and are probably not high-density enough for A380s. Unless I'm mistaken, SYD-JNB and SYD-EZE would not be applicable for ETOPS usage, meaning you need a 4-engine aircraft. If Qantas want to keep these routes and don't want to use the A380, they will need a four engine aircraft in their fleet. That means A340 or 747-800, I would guess.

 

[markis10]

Qantas also has another issue with replacing the 747s. Some of its routes aren't suitable for twin engine planes like the 777 or 787, and are probably not high-density enough for A380s.

They are not replacing all of the 747's, only the older models. The ER versions are pups compared to the early 747-400s that are approaching 20 years next year!