QANTAS AIRWAYS cancelled an order for 35 Boeing 787-9s after posting its first annual loss in at least 17 years because of higher fuel costs, labour disputes and rising competition on international routes.
The order, worth $8.5 billion at list prices, was scrapped because of “lower growth requirements in this uncertain global context”, chief executive Alan Joyce told reporters in Sydney yesterday.
The airline, Australia’s biggest, reported a loss of Aus$245 million (€204 million) for the year ended June 30th. Qantas rose to an 11-week high on Sydney’s stock exchange as the Dreamliner cancellation and a $433 million payout from Boeing eased funding concerns. Joyce has also delayed Airbus SAS A380s, cut overseas routes and begun talks on working with Emirates to revive international operations that lost Aus$450 million last fiscal year.
The carrier’s main flying unit had an underlying loss of Aus$21 million. Budget arm Jetstar had a profit of Aus$203 million and the frequent-flier programme unit made a profit of Aus$231 million.
The company booked one-time charges of Aus$398 million in the year as Joyce restructures operations in a bid to return to profit. Labour disputes culminated in the airline grounding its main fleet on October 29th to force a showdown. The carrier has cut the equivalent of 2,800 jobs, about 11 per cent of its workforce.
Its stock rose 2.6 per cent to Aus$1.20 at the close in Sydney, the highest since June 4th.
The payments from Boeing will include more than $300 million of compensation for 787 delivery delays, said chief financial officer Gareth Evans. Budget arm Jetstar will begin getting 15 on-order 787-8s next year. Qantas will also get back deposits for the cancelled 787-9 orders totalling less than $100 million, Mr Evans said. Marc Birtel, a Boeing spokesman in Seattle, declined to comment.
The cancelled 787-9 orders were converted into options, raising the carrier’s total Dreamliner rights to 100, Mr Evans said. The carrier’s fuel bill rose 18 per cent last fiscal year to Aus$4.3 billion because of higher prices and increased flying. Fuel costs now eat up about half of the A$1 million revenue Qantas typically generates on flights between Australia and London, Joyce said. – (Bloomberg)
