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Thursday, August 20, 2015

Qantas Returns to Profitability, Invests in 787s

Woodrow Bellamy III 

[Avionics Today 08-20-2015] Qantas International has emerged from a six-year restructuring effort to post a net profit of $408 million for its financial year that ended June 30. The Australian flag carrier's Chief Executive Officer Alan Joyce also announced a decision to modernize its long-haul fleet with eight new Boeing 787-9s during a press conference Wednesday. 
 
 
A computer rendering of the Qantas Boeing 787-9. Photo: Qantas.  
 
The airline has been able to make major strides toward profitability after seeing a record $2.8 billion loss for their financial year that ended June 30, 2014. Now, a year later, Joyce told reporters and analysts that they were able to achieve one of the biggest turnarounds in Australian corporate history.
 
"Qantas International was profitable on a full-year basis for the first time since the [Global Financial Crisis] GFC, with an underlying [Earnings Before Interest Tax] EBIT of $267 million — a turnaround of $764 million from last year’s result. The business has pursued growth opportunities through smarter use of aircraft, adding capacity to Los Angeles, Dallas, Vancouver, San Francisco, Santiago, Tokyo, and Singapore," he said. 
 
Joyce said Qantas also has plans to expand partnerships with American Airlines and China Eastern, which he believes will provide valuable growth opportunities. 
 
Part of the turnaround was also based on the improved regional performance of Qantas low-cost subsidiary Jetstar. According to Joyce, Jetstar's domestic New Zealand operations were profitable for the first time since domestic flight began there in 2009. Average airfares per passenger also grew in Australia for Jetstar.
 
While Jetstar improved its performance within Australia and New Zealand, Joyce also mentioned that Qantas has eliminated its minority stake in Jetstar Hong Kong, after Hong Kong's civil aviation authority decided not to approve the airline's operating license. Despite that decision by Qantas, during her recent address to the Center for Aviation (CAPA), Jetstar Group CEO Jayne Hrdlicka said the low-cost arm of Qantas still sees huge opportunities in Asia.
 
"The Asia-Pacific today is already the world’s biggest aviation market. By 2034, another 1.8 billion people will have started flying, for a total market size of 2.9 billion. That is twice as big as Europe and North America combined," said Hrdlicka. "This is clearly the region that is going to be most influential in shaping how the aviation industry develops in the foreseeable future. And [Low Cost Carriers] LCCs are logically going to continue to play a major role in bringing those new people and trips into the marketplace. There are now 11 LCC brands in the region that account for 56 percent of total capacity. Of those LCCs, there are a few big players, Jetstar being one of them."
 
Internationally, the biggest announcement of Wednesday’s press conference was the decision by Qantas to invest in the Boeing 787-9, Boeing's second installment of its flagship Dreamliner series of aircraft. Beginning in 2017, there will be eight new 787-9s joining the Qantas International fleet to replace five of the carrier's Boeing 747s. 
 
Joyce said the decision to purchase the 787s was primarily based on the operational efficiency of the aircraft, which has a range of 7,635 nautical miles (nm) and will reduce fuel burn and emissions by 20 percent each over the 747s that will be replaced. 
 

"Because the 787 is smaller than the jumbo, this replacement ratio gives us the flexibility of having more aircraft without significantly changing our overall carrying capacity," said Joyce. "However, the most significant advantage of the 787-9 — the reason we chose to wait for this particular aircraft — is its incredible efficiency. Its new technology will reduce fuel burn, cut heavy maintenance requirements and open up new destinations around the globe." 

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