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Qantas Airways Cancels Order for One Boeing Dreamliner

January 17, 2013

Qantas Cancels Order for Dreamliner, Adds Short-Haul Aircraft

Qantas Airways Ltd. canceled one of the 15 orders it has for Boeing Co.’s 787 aircraft and added eight short-haul planes to its domestic fleet. Photographer: Sergio Dionisio/Bloomberg

Qantas Airways Ltd. (QAN) canceled one of the 15 orders it has for Boeing Co.’s 787 aircraft and added eight short-haul planes to its domestic fleet.

The cancellation of the composite-bodied aircraft is the first since regulators in the U.S. and other nations grounded the Dreamliner after an emergency landing this week by one of the planes in Japan. The decision was taken at the end of last year, the company said in an e-mailed statement, and had only now been finalised.

The aircraft, destined for the Sydney-based carrier’s Jetstar budget arm, may not be needed as it examines how much it needs to grow capacity on long-haul routes. Qantas on Dec. 20 won initial antitrust clearance for a deal under which it would collaborate with Emirates on international operations, including the so-called kangaroo route to Europe.

“While the plan is for Jetstar’s long-haul network to keep expanding we are using the flexibility in our agreement with Boeing (BA:US) to cancel a firm order knowing that we can replace it,” Alan Joyce, chief executive officer, said in the statement.

Planes from the remaining 14 firm orders are due to start arriving from July. Qantas, which canceled 35 787-9s for its main unit in August, retained the 50 purchase options it has for the Dreamliner.

“Qantas is a long-standing and very valued customer and we’re committed to working with them on their evolving fleet needs,” Allison Bone, a Sydney-based spokeswoman for Boeing, said by phone yesterday.

Domestic Routes

Qantas will lease an additional five Boeing 717 aircraft and buy three Bombardier Q400, smaller narrow-body planes used on shorter domestic routes. The Bombardier purchase is valued at about $98 million, according to a separate release from the Montreal-based manufacturer.

The order changes won’t affect Qantas’s plans to spend A$1.8 billion ($1.9 billion) on capital projects this year, the airline said.

The Dreamliner, Boeing’s most advanced jet ever, is facing its biggest crisis since entering commercial service in late 2011 as airlines ground the planes amid safety concerns caused by battery fires.

The Federal Aviation Administration ordered airlines to prove that lithium-ion batteries in the 787 “are safe and in compliance.” The FAA’s decision to ground the planes is the first such move involving an entire model in 34 years.

India, Chile

The European Aviation Safety Agency said it adopted the FAA directive. Regulators in Japan, India and Chile also ordered 787s in their countries grounded after an All Nippon Airways Co. plane made the emergency landing in Japan Jan. 16 following a battery-fault warning.

Boeing is set to double production of the 787 over the coming 12 months to help fill about 800 outstanding orders for the aircraft, making the year a crucial one for the fuel- efficient plane, which costs an average of $207 million at list prices.

Through the end of 2012, Boeing had 848 orders for the 787, according to the planemaker’s website. There are now 50 planes in service, which have flown 50,000 hours, Boeing said.

Qantas scrapped its order for 35 Dreamliners in August after delivery delays and losses on international routes. The carrier said at that time it would get $433 million from Boeing, including more than $300 million compensation for the delays and a refund of deposits for the canceled order.

The carrier had brought forward by two years the 50 options for 787-9s so that deliveries would begin in 2016 if they are exercised.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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