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Topic: Qantas Said To Cancel Order For One 787
Username: KarelXWB
Posted 2013-01-17 07:43:00 and read 13569 times.

Reported by Bloomberg:

Quote:
Qantas Airways Ltd. (QAN) canceled one of the 15 orders it has for Boeing Co.’s 787 aircraft, according to a person familiar with the matter.

The cancellation is the first since regulators in the U.S. and other nations grounded the Dreamliner after an emergency landing by one of the planes in Japan. Qantas’s decision to scrap the order for its Jetstar unit isn’t connected to the grounding and had been planned since late last year, the person said, declining to be identified as the information is private.

Planes from the remaining 14 firm orders are due to start arriving from July, the person said. Qantas, which canceled 35 787-9s for its main unit in August, retained the 50 purchase options it has for the Dreamliner.
http://www.bloomberg.com/news/2013-0...der-for-one-boeing-dreamliner.html

So why would an airline cancel just one frame?

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 07:44:56 and read 13589 times.

QF cancelled the bulk of their 787 orders to conserve cash-flow, so that might be it. Or they are going to hold onto a 767 or A330 longer and therefore don't need a 787 to replace it.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: anstar
Posted 2013-01-17 07:46:07 and read 13527 times.

No idea why they just cancelled one.

Though they did originally have a huge 787 65 + 50 options If I am correct.

so they have now cancelled 51 and now only have the 14 + options on order.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: ClassicLover
Posted 2013-01-17 07:57:16 and read 13410 times.

It says in an article in The Australian - http://www.theaustralian.com.au/busi...wdown/story-e6frg95x-1226556154230

Part of the article says -

"QANTAS is hedging against slower growth in Jetstar's long-haul operations by cancelling a firm order for one of the low-cost carrier's Boeing 787 Dreamliners.

But it is boosting its domestic fleet with the addition of five 125-seat Boeing 717 aircraft and three 74-seat Bombardier Q400s, with deliveries slated to start in the second half of the year.

The new domestic aircraft will be used to pursue growth opportunities in short-haul markets such as Queensland and Western Australia.

The decision to cut the 787-8 order predates the problems being experienced by the Dreamliner, which was grounded by the US Federal Aviation Administration yesterday following two battery fires, and is understood to have been taken at the end of last year. Qantas and Boeing have been working since to finalise contractual details ahead of a formal announcement today."

I think that is pretty self explanatory.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: KC135TopBoom
Posted 2013-01-17 08:28:13 and read 13172 times.

Quoting anstar (Reply 2):
so they have now cancelled 51 and now only have the 14 + options on order.

No, QF canceled 36 total B-787s now, 35 B-787-9s and one B-787-8. They still hold options for 50 B-787s.

Where are they getting the 5 additionl B-717s? MX stored airplanes?

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Daysleeper
Posted 2013-01-17 08:44:02 and read 13042 times.

Are the remaining 787's on order going to be flown under the QF brand? or are they for Jet Star?

I also thought the main reason behind them cancelling the bulk of the order was because it was so late?

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 08:48:57 and read 13001 times.

Quoting Daysleeper (Reply 5):
Are the remaining 787's on order going to be flown under the QF brand? or are they for Jet Star?

The QF Group have changed their mind from time to time, but at the moment, they are slated for JetStar.



Quoting Daysleeper (Reply 5):
I also thought the main reason behind them cancelling the bulk of the order was because it was so late?

At the time they announced the cancellation, the QF Group stated it was to conserve cash.

If they had cancelled them for being late, they would have ordered a replacement (more 767s and/or A330s or finally adding the 777). Instead, they took a large number of 787 options so that when they were ready to add planes down the road, they were in a position to get them.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: ClassicLover
Posted 2013-01-17 09:12:33 and read 12836 times.

Quoting Stitch (Reply 6):
At the time they announced the cancellation, the QF Group stated it was to conserve cash.

They are getting their house in order - well, their international house anyway. They are working to get international profitable. Domestic already is and has been for years and years.

Quoting Stitch (Reply 6):
Instead, they took a large number of 787 options so that when they were ready to add planes down the road, they were in a position to get them.

Yes indeed. The articles in the Australian newspapers always point to the Qantas 787s coming in 2016. It's virtually a foregone conclusion that the options will be exercised and the aircraft brought into service. It's not as though they were penalised - the options and purchase rights were locked in at the original order price - so they're not losing anything there. Plus they received a hefty compensation package from Boeing in the region of $400m for the late deliveries.

Quoting Stitch (Reply 6):
The QF Group have changed their mind from time to time, but at the moment, they are slated for JetStar.

The 14 Boeing 787-8s are for Jetstar which will replace the 11 A330s they currently have.

Those 11 A330s will go to Qantas to presumably replace the domestic 767 fleet.

After that, one would assume the Qantas 787s will replace the international Boeing 767s first and then all of the A330-300s (which are all internationally configured).

Topic: RE: Qantas Said To Cancel Order For One 787
Username: sweair
Posted 2013-01-17 10:07:13 and read 12618 times.

I think Qantas will cancel all 787s and go for the A350. They have the A380 so they can pool their pilots etc.

The 787 is EOLed before it really entered the market sadly.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: KarelXWB
Posted 2013-01-17 10:20:41 and read 12491 times.

Quoting ClassicLover (Reply 7):
then all of the A330-300s

Those A333s are pretty young, are they leased for a 10-year period or so?

Topic: RE: Qantas Said To Cancel Order For One 787
Username: ClassicLover
Posted 2013-01-17 10:28:50 and read 12420 times.

Quoting sweair (Reply 8):
I think Qantas will cancel all 787s and go for the A350.

I doubt that very much. There is no way they're going to get the deal they got for the 787 on an A350 for a start.

Quoting KarelXWB (Reply 9):
Those A333s are pretty young, are they leased for a 10-year period or so?

2003-2004-2005, so they're around 10 years now. The 787 deliveries from 2016 will be spread out over several years, so eventually they will go if Qantas exercises all options. Not immediately of course, there are loads of Qantas 767s that are very very old that will go first.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: smi0006
Posted 2013-01-17 13:47:51 and read 11888 times.

Quoting ClassicLover (Reply 7):
The 14 Boeing 787-8s are for Jetstar which will replace the 11 A330s they currently have.

Those 11 A330s will go to Qantas to presumably replace the domestic 767 fleet.

Are we sure the A332s will be going to domestic? I could see them being very useful to open up some smaller Asian markets in light of the QF reshuffle of SIN services. Services like MEL-NRT, MEL-PVG etc. They could replace the oldest 767s and then replace the rest when the 787s start arriving to QF.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: sydscott
Posted 2013-01-17 14:31:03 and read 11686 times.

Quoting smi0006 (Reply 11):
Are we sure the A332s will be going to domestic?

Yes.

Quoting smi0006 (Reply 11):
I could see them being very useful to open up some smaller Asian markets in light of the QF reshuffle of SIN services. Services like MEL-NRT, MEL-PVG etc. They could replace the oldest 767s and then replace the rest when the 787s start arriving to QF.

There is plenty of space International config A330 capacity flying domestically at the moment and QF have already tried, and failed at, MEL-NRT and MEL-PVG. So I wouldn't be looking for them to return. Don't forget the 'reshuffle" of SIN services probably just means re-timing flights, or in PER's case cancelling one, so they arrive earlier into SIN for better connections.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: EK413
Posted 2013-01-17 14:52:08 and read 11572 times.

Quoting sweair (Reply 8):
I think Qantas will cancel all 787s and go for the A350. They have the A380 so they can pool their pilots etc.

You beat me to it... With a fleet of 12 x A380, large fleet of A330's this cancellation is "probably" a sign QF are leaning towards an A350 order to replace the B744 fleet perhaps...? Only speculating...

Quoting KarelXWB (Reply 9):

Quoting ClassicLover (Reply 7):
then all of the A330-300s

Those A333s are pretty young, are they leased for a 10-year period or so?

Way to young to be replaced when you take into account the age of the B734/B767 fleet... The A330 fleet I believe was sold to QF at a giveaway priced to good to say no...

Quoting smi0006 (Reply 11):
Are we sure the A332s will be going to domestic?

Guaranteed the 1st 4 x A332's VH-EBA,B,C & D will be remaining in the Domestic configuration...

EK413

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 15:03:48 and read 11488 times.

Quoting EK413 (Reply 13):
With a fleet of 12 x A380, large fleet of A330's this cancellation is "probably" a sign QF are leaning towards an A350 order to replace the B744 fleet perhaps...?

The QF Group has had the ability to walk away from the 787 order without penalty for years. If they felt the A350XWB was now the better plane for them, continuing to wait to place an order means they will have to wait that much longer to secure airframes. It also would make no sense for them to tie-up money in 787 orders, options and delivery positions.

The QF Group may yet feel there is a role for the A350XWB, but they evidently continue to feel a role for the 787.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: tullamarine
Posted 2013-01-17 15:20:09 and read 11376 times.

This cancellation probably relates to preservation of cash. Domestic ops have been the cornerstone of QF's performance for several years but it is now under severe pressure with increased competition from VA. Yields have dropped across the board with J class yields down around 35% in just over a year!!! Previously QF had a virtual monopoly in J domestically.

Int'l ops remain problematic though it is hoped the EK tie-up will remove some loss making routes but Asia remains a big problem and the US is not the goldmine it once was.

The most profitable part of QF is now undoubtedly the FF scheme which will be further enhanced by the EK tie-up. The value locked up in the FF scheme has prompted a number of analysts to suggest QF float off all or part of the scheme so as to unlock value for long suffering shareholders.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Lufthansa
Posted 2013-01-17 16:41:44 and read 10486 times.

Also don't forget, as they get closer to EK, EK have probably the world's largest backlog order for widebodies.
There is room there, for example, for QF to get its hands on potentially new A350s, or used 77W's as additional new aircraft come online at EK.

After all, with the volume EK place, they're most likely getting the best price in the industry out of anybody.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 16:46:01 and read 10449 times.

Quoting Lufthansa (Reply 16):
Also don't forget, as they get closer to EK, EK have probably the world's largest backlog order for widebodies.

EK sells and then leases back the majority of their fleet, so QF would be dealing with the leasing companies once those planes are returned by EK. Airbus might also have clauses in their sales contracts with EK that prevent them from selling airframes to other airlines.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: DeltaB717
Posted 2013-01-17 17:07:52 and read 10185 times.

Quoting Stitch (Reply 17):
Airbus might also have clauses in their sales contracts with EK that prevent them from selling airframes to other airlines.

I don't doubt there would be a clause to that effect, but being EK can't imagine such a clause would last long into the life of each unit?

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 17:11:02 and read 10139 times.

Quoting DeltaB717 (Reply 18):
don't doubt there would be a clause to that effect, but being EK can't imagine such a clause would last long into the life of each unit?

That I cannot say, as I am not privy to the details of EK's A350XWB order with Airbus. But even if it is a short-term period (say 5 years), that would still be 2020 or later for deliveries and QF could likely get new builds by that timeframe.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: DeltaB717
Posted 2013-01-17 17:31:25 and read 9902 times.

Perhaps it's not the A350s QF are after... if EK was planning to move on a few 77L/77W in the near term QF might be interested? Probably not but who knows, especially with QF!

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Stitch
Posted 2013-01-17 17:33:49 and read 9875 times.

Quoting DeltaB717 (Reply 20):
if EK was planning to move on a few 77L/77W in the near term QF might be interested?

I can't see QF ever operating the 777. With Boeing increasing production, now would have been the time for QF to order if they wanted it.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: sydscott
Posted 2013-01-17 18:36:08 and read 9253 times.

Quoting Stitch (Reply 14):
The QF Group may yet feel there is a role for the A350XWB, but they evidently continue to feel a role for the 787.

I'd say they would be open to the A350 but for now the 788, 789 and the proposed 787-10 should be able to fulfill all of the missions QF has for this type of aircraft and satisfy the replacement of the A333/A332/744 fleet in due course.

Quoting EK413 (Reply 13):
You beat me to it... With a fleet of 12 x A380, large fleet of A330's this cancellation is "probably" a sign QF are leaning towards an A350 order to replace the B744 fleet perhaps...? Only speculating...

Again, I would doubt it. QF have had plent of opportunity to entirely dump the 787's and to order the A350. I'd say Airbus would be more than happy for them to do so and would give them a great price on the A350 and the A332. However I'd say it's not going to happen. That's not to say the A350 won't be ordered but I can see it more as a conversion of the deferred A380's on order than anything else.

Quoting Stitch (Reply 21):
I can't see QF ever operating the 777. With Boeing increasing production, now would have been the time for QF to order if they wanted it.

QF won't be a 777 operator. If anything, a further delay in the 787 program highlights a need for more A330's.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: sydscott
Posted 2013-01-17 19:52:46 and read 8695 times.

Quoting ClassicLover (Reply 7):
The 14 Boeing 787-8s are for Jetstar which will replace the 11 A330s they currently have.

As an additional thought, it's interesting that JQ has firmed up the 14 in the way they have. So we know 11 are coming in to replace the A332's, but the key question is what growth will absorb 3 788's of capacity? Maybe we'll see an increase in Australia - Singapore - Asia flying? Maybe some long haul from Auckland say to Los Angeles? With only 3 growth 788's it means JQ won't be adding alot of long distance routes in the near future which is probably a good thing as they fill out Jetstar Japan and slowly expand Jetstar Asia with narrowbody flying.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: greaser
Posted 2013-01-17 19:54:32 and read 8683 times.

Quoting sweair (Reply 8):
The 787 is EOLed before it really entered the market sadly.

I think the hundreds of orders for the 787 would disagree with your uncorroborated statement.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: tullamarine
Posted 2013-01-17 20:03:31 and read 8925 times.

Quoting sydscott (Reply 23):
With only 3 growth 788's it means JQ won't be adding alot of long distance routes in the near future which is probably a good thing

Rumour is JQ Long-haul is not particularly profitable which is not surprising given most other LCCs have also struggled to make good profits from longer-haul ops. Assuming this is the case, I'd be surprised seeing JQ add many longer routes.

It is also unlikely that they will attempt Aust-US or NZ-US in the short to medium term. For example, it is unlikely that JQ could do NZ-US at significant enough cost advantage to tempt pax away from NZ given the extra add-ons a long-haul flight with JQ entails for most pax and JQ's Business Class would struggle to compete with NZ's W Class let alone NZ's J cabin.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: qf002
Posted 2013-01-17 20:11:45 and read 8840 times.

Quoting ClassicLover (Reply 7):
After that, one would assume the Qantas 787s will replace the international Boeing 767s first and then all of the A330-300s (which are all internationally configured).

The only remaining international 767 route is SYD-HNL (there's also SYD-NOU but that's operated with domestic planes), and that has got to see something new before 2016 (though it wouldn't surprise me if it didn't). The first 789s will replace any A332s still flying internationally, then help replace the 744 capacity which is due to be retired by 2019-20 (along with the remaining 8 A380s which arrive from 2016). The focus will then turn to the A333s early next decade, which will probably involve 787-10s if that aircraft is launched.

It's also likely that JQ will see some more aircraft (especially with this cancelation), and QF might actually decide to take a few for growth  Wow!
Quoting EK413 (Reply 13):
You beat me to it... With a fleet of 12 x A380, large fleet of A330's this cancellation is "probably" a sign QF are leaning towards an A350 order to replace the B744 fleet perhaps...? Only speculating...

I would be shocked if they ordered the A350. It goes against everything they want to achieve with this fleet renewal (ie consistent fleet across all brands, flexibility to move aircraft around JQ/international/domestic, an eventual replacement for the domestic WB fleet which the A350 would suck at etc)

Quoting tullamarine (Reply 15):
The most profitable part of QF is now undoubtedly the FF scheme

There are lots of ways to define profitability, but domestic still makes more money than QFF (at least that's what the figures in the 2012 Annual Report show).

Topic: RE: Qantas Said To Cancel Order For One 787
Username: tullamarine
Posted 2013-01-17 20:19:51 and read 8913 times.

Quoting qf002 (Reply 26):
There are lots of ways to define profitability, but domestic still makes more money than QFF (at least that's what the figures in the 2012 Annual Report show).

On an assets employed basis, the FF scheme is easily the most profitable (and valuable) part of the business. Domestic has been very profitable but there is constant speculation the the capacity war with VA will not help the profitability of QF domestic...or VA. Should VA get control of Tiger, as seems likely, this war will only intensify.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: mariner
Posted 2013-01-17 20:39:29 and read 8762 times.

Quoting ClassicLover (Reply 10):
There is no way they're going to get the deal they got for the 787 on an A350 for a start.

I hope they wouldn't want the deal they got on the 787's.

One of the major reasons they ordered the 787 was because of the 2008 delivery slots that Boeing pulled out of a hat.

I know aeronauts crack a fat just thinking about the 787, but I don't care which planes they fly, they're all amazing to me. I am more interested in profitability and the cost to Qantas in terms of lost opportunity is incalculable.

mariner

[Edited 2013-01-17 20:47:15]

Topic: RE: Qantas Said To Cancel Order For One 787
Username: CM
Posted 2013-01-17 20:59:39 and read 8623 times.

Quoting KarelXWB (Thread starter):
So why would an airline cancel just one frame?

Can't afford the PDPs? QF is not in a strong financial position at present.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: EK413
Posted 2013-01-17 21:42:09 and read 8350 times.

Quoting Stitch (Reply 14):
Quoting sydscott (Reply 22):
Quoting qf002 (Reply 26):

Cheers for your responses... So I take it management plan on switching strategy and concentrate on QF mainline domestic opposed to JQ...?

EK413

Topic: RE: Qantas Said To Cancel Order For One 787
Username: sydscott
Posted 2013-01-17 22:14:33 and read 8152 times.

Quoting CM (Reply 29):
Can't afford the PDPs? QF is not in a strong financial position at present.

That's a myth. QF is in a strong financial position with good, positive cash flows and enough profitable units to sustain them. The 787 cancellations was more about sustaining this position while they turn around International than a sign that the overall group is not in a strong financial position. It was all about preserving their investment grade credit rating which is something that very few airlines have. (Less than a handful)

Quoting mariner (Reply 28):
I am more interested in profitability and the cost to Qantas in terms of lost opportunity is incalculable.

Entirely agreed. A mitigation strategy executed back in 2007/2008 for A332's and 777's would have been better than waiting until 2013 for the 787.

Quoting EK413 (Reply 30):
So I take it management plan on switching strategy and concentrate on QF mainline domestic opposed to JQ...?

Not entirely. JQ, JQ Asia and JQ Japan will continue to take A320's and expand through narrowbody flying. The strategy for QF mainline domestic has been;

- Replace the older 734's with 738's - that will be completed next year;
- Modernise and expand regional flying - done with all of the new Dash 8-400's and the retirement of a substantial number of the 200's.
- Expand into regional WA & FIFO flying - done through both QF mainline domestic to Karratha, Port Hedland etc and through the acquisition of Network;
- Modernise the domestic widebody fleet - this is where the 787 has Domestic down. The 767's should already be gone however what QF are currently rolling out with the IPAD IFE etc is actually pretty good. Doing that, along with adding the 5 domestic A332's for transcon flying, and re-deploying international configured 747's & A330's has kept them competitive in key SYD-PER and MEL-PER routes.

So even through the expansion of Jetstar, domestic has been a focus for Qantas and has been the profit powerhouse for the flying part of the group. I'd say the most neglected part of the group was QF International to be honest and that probably highlights why that division got to where it was.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: qf002
Posted 2013-01-17 22:34:54 and read 7995 times.

Quoting CM (Reply 29):
Can't afford the PDPs? QF is not in a strong financial position at present.

Huh? $3b in cash isn't a strong financial position?

There is nothing more to this than QF/JQ simply not needing the aircraft because their growth forecasts are down.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Asiaflyer
Posted 2013-01-17 23:12:58 and read 7738 times.

Quoting qf002 (Reply 26):
I would be shocked if they ordered the A350. It goes against everything they want to achieve with this fleet renewal (ie consistent fleet across all brands, flexibility to move aircraft around JQ/international/domestic, an eventual replacement for the domestic WB fleet which the A350 would suck at etc)


I could see QF convert remaining A380s on order to A350-1000 and add another 10 for replacing current 744s. That should give QF a much more efficient plane than if they ordered 777 and filles the gap between 789 and A380.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: XT6Wagon
Posted 2013-01-17 23:14:15 and read 7716 times.

Quoting qf002 (Reply 32):
Huh? $3b in cash isn't a strong financial position?

Not in this industry.

For an airline this size of QF, you need seemingly huge cash reserves to just cover normal operating cash flow. Credit Card holdback, Fuel payments, Wages, Lease Payments, etc. The reserves have to be big enough to cover the natural flucutation in actual "cash" on a daily basis plus then real reserves for bad times.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: EK413
Posted 2013-01-17 23:52:47 and read 7397 times.

Quoting sydscott (Reply 31):
Quoting EK413 (Reply 30):
So I take it management plan on switching strategy and concentrate on QF mainline domestic opposed to JQ...?

Not entirely. JQ, JQ Asia and JQ Japan will continue to take A320's and expand through narrowbody flying. The strategy for QF mainline domestic has been;

Probably I should've been clearer in my quote I was referring to JQ International with the current fleet of 11 x A332's sufficient for the time being until the 1st of 14 B787's arrive...

Quoting qf002 (Reply 32):
Quoting CM (Reply 29):
Can't afford the PDPs? QF is not in a strong financial position at present.

Huh? $3b in cash isn't a strong financial position?

There is nothing more to this than QF/JQ simply not needing the aircraft because their growth forecasts are down

I was under the impression $3 billion cash reserve is pretty good but I guess I'm wrong...?

EK413

Topic: RE: Qantas Said To Cancel Order For One 787
Username: tonymctigue
Posted 2013-01-18 00:15:00 and read 7208 times.

Quoting ClassicLover (Reply 7):
They are working to get international profitable. Domestic already is and has been for years and years.

I don't know how profitable domestic is for QF. I've been reading plenty of articles about a bitter price war between Qantas and Virgin Australia on domestic routes. That is not to say they are not still making profits on domestic but it certainly does indicate that they are probably not as profitable as they used to be.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: mariner
Posted 2013-01-18 00:22:58 and read 7135 times.

Quoting EK413 (Reply 35):
I was under the impression $3 billion cash reserve is pretty good but I guess I'm wrong...?

No, you're not wrong.

There is a difference between cash reserve and cash flow. Cash flow is funded from operations.

Once credit card holdback is established, for example, it is continuous and predictable (if delayed) cash flow, as long as forward bookings maintain at a fairly constant level.

For some time, American Airlines was cash (flow) positive although the overall airline was losing money. Conversely, a profitable airline can still be cash (flow) negative, if it is funding forward operations (progress payments on an aircraft order, say).

Cash reserves are unallocated cash, and $3 billion is a fairly healthy pile.

mariner

[Edited 2013-01-18 01:20:25]

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Asiaflyer
Posted 2013-01-18 00:47:22 and read 6921 times.

Quoting mariner (Reply 37):
No, you're not wrong.


Not necessary. You also have to consider how much debt they have. If overall debts are low, it is might be easy to borrow more if needed. If you are in finacial distress, to get more credits can be nearly impossible.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: mariner
Posted 2013-01-18 00:57:44 and read 6854 times.

Quoting Asiaflyer (Reply 38):
. If overall debts are low, it is might be easy to borrow more if needed.

It doesn't necessarily need to be low, as long as it is secured - guaranteed - by assets.

Quoting Asiaflyer (Reply 38):
If you are in finacial distress, to get more credits can be nearly impossible.

Which Qantas is not. Despite a downgrade, Qantas still has an investment grade rating, one of the few airlines that does:

http://www.qantas.com.au/travel/airl...a-releases/jan-2012/5360/global/en

"he Qantas Group today reaffirmed its strong financial position despite the decision by Moody’s to downgrade the company’s credit rating.

The Group’s credit rating with Moody’s remains investment-grade at Baa3 / stable. Qantas continues to be one of only two airline companies rated investment-grade by both Moody’s and S&P.

With operating cashflow strengthening this financial year, a cash balance of more than $3 billion and the ability to adjust capital investment as appropriate, the Qantas Group remains in a strong funding position."


mariner

Topic: RE: Qantas Said To Cancel Order For One 787
Username: ClassicLover
Posted 2013-01-18 02:33:49 and read 6214 times.

Quoting mariner (Reply 28):
I hope they wouldn't want the deal they got on the 787's.

One of the major reasons they ordered the 787 was because of the 2008 delivery slots that Boeing pulled out of a hat.

I meant this from the perspective that in 2005 the 787 list price was $125-$135 million - very, very cheap. Qantas would have received a major discount off this due to the size of the original order. They have received over $300 million in compensation for late delivery, and received a refund of circa $100 million extra in deposits for the cancelled orders.

Boeing is now listing (granted 8 years later) the price of a 787-8 at $206 million and a 787-9 at $243 million. Qantas has the original price locked in for all the orders including whatever discount they received off the $125-$135 million price. Whether there was a price escalation clause in the contract or not, I do not know.

However, there is no way any A350 order now is going to approach the price Qantas have in place for the 787 order. That is what I meant.

Quoting mariner (Reply 39):
The Group’s credit rating with Moody’s remains investment-grade at Baa3 / stable. Qantas continues to be one of only two airline companies rated investment-grade by both Moody’s and S&P.

The other airline is Southwest, right?

Quoting tullamarine (Reply 27):

On an assets employed basis, the FF scheme is easily the most profitable (and valuable) part of the business.

... and despite what people are saying, you don't go and sell off profitable parts of your business. Pan Am did (Pacific routes spring to mind) and look what happened to them. You'd be mad to sell anything like that off.

Quoting sydscott (Reply 22):
QF won't be a 777 operator. If anything, a further delay in the 787 program highlights a need for more A330's.

If the 777X launches and becomes what it is planned to be, you might see that in the Qantas fleet though - but that's years and years away.

Quoting tullamarine (Reply 15):
This cancellation probably relates to preservation of cash.

It specifically says in the article that it is due to Jetstar international not performing so well and therefore the planned expansion has been curtailed.

Quoting EK413 (Reply 13):
Way to young to be replaced when you take into account the age of the B734/B767 fleet... The A330 fleet I believe was sold to QF at a giveaway priced to good to say no...

True, but come 2023, there will still be 787s coming online one would assume and they would replace the A330-300s.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: mariner
Posted 2013-01-18 03:07:02 and read 5959 times.

Quoting ClassicLover (Reply 40):
However, there is no way any A350 order now is going to approach the price Qantas have in place for the 787 order. That is what I meant.

I understood exactly what you meant - and in the simplest terms you're right, they wouldn't get another aircraft at the same price.

My point is that it I don't care how cheap the aircraft was, it has cost Qantas plenty in lost opportunities - and the opportunities it has given the competition.

I think Qantas should have been more proactive in dealing with the issue, but if the 787 had arrived even just a year late, then the recent financial history of Qantas might have been very, very different.

So - I hope Qantas never does a deal like that again.

mariner

Topic: RE: Qantas Said To Cancel Order For One 787
Username: SYDSpotter
Posted 2013-01-18 05:29:02 and read 5061 times.

Quoting mariner (Reply 41):
My point is that it I don't care how cheap the aircraft was, it has cost Qantas plenty in lost opportunities - and the opportunities it has given the competition.

I think Qantas should have been more proactive in dealing with the issue, but if the 787 had arrived even just a year late, then the recent financial history of Qantas might have been very, very different.

Not sure the 787 alone would've solved all of underlying issues with QF Intl, but we can only speculate as to what might have been. Whilst it has cost QF potential opportunities don't forget that it also saved it from some pretty hefty capex (had the planes been delivered on time) during a time when it was struggling (and the wider industry as well) so in some ways it was a blessing the plane wasn't delivered on time. However I agree that the continued recent delays are certainly not helping QF. Nevertheless QF has had a history of placing all of it's eggs in one basket in terms of aircraft acquisition/strategy (e.g. The time when 747's were the mainstay of the Intl ops).

Topic: RE: Qantas Said To Cancel Order For One 787
Username: ClassicLover
Posted 2013-01-18 06:46:22 and read 4642 times.

Quoting mariner (Reply 41):
it has cost Qantas plenty in lost opportunities - and the opportunities it has given the competition.

In what regard exactly? Apparently the value of said lost opportunities is $300m - but which opportunities have been lost?

It was always stated the first 15 were going to Jetstar before Qantas even saw one, so say the 15 were spread out over a year and a half, that meant Qantas probably wouldn't have seen their first aircraft until 2010.

Even then, it was slated as a 767 replacement before anything else, so say another 2 years to replace all the 767s, and that brings us up to 2012.

Explain to me what opportunities have been lost in the period 2012 to now? It's all a bit of coulda woulda shoulda isn't it at this stage considering the change in the Australian aviation landscape (Virgin changing direction) and the global changes in such a short period of time.

Quoting mariner (Reply 41):
I think Qantas should have been more proactive in dealing with the issue,

How? By saying to Boeing, "We'll take the half completed aircraft and finish them ourselves." ?   But back to being serious...

Qantas could have been more proactive as ANA and JAL did and taken on new build 767s to get them through, which I am sure Boeing offered them. That they chose not to is not the fault of Boeing being late with the 787 but with Qantas management. If, as a result, they have "missed opportunities" then the blame doesn't land with the 787 but with Qantas.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: mariner
Posted 2013-01-18 09:32:10 and read 4111 times.

Quoting SYDSpotter (Reply 42):
Not sure the 787 alone would've solved all of underlying issues with QF Intl, but we can only speculate as to what might have been.

I'm sure it would not, on its own. But the delays threw the forward plan into complete disarray.

And part of the problem was the incremental nature of the delays. If it was known from the git-go how long the delay would be, then they might have developed a more radical alternative plan.

In large part they didn't do that because it was always "on its way" - and because it was believed to be a "game changer."

It may be - but it has to be flying to change the game.

Quoting ClassicLover (Reply 43):
In what regard exactly? Apparently the value of said lost opportunities is $300m - but which opportunities have been lost?

If it really is the game-changer that Mr, Joyce and many others claim, and worth waiting for because of that, then - presumably - it would have changed the game.

If Jetstar had been flying the 787 in SYD-PER in, say, 2010 - and if it is this game changer - what would Virgin Australia put up against it now that it has changed direction?

Air New Zealand is in the same boat and the CEO has publicly spoken of the lost opportunities because of the delay and the competitive disadvantage, the inability to open a South American route, for example, or India.

Quoting ClassicLover (Reply 43):
How? By saying to Boeing, "We'll take the half completed aircraft and finish them ourselves." ?  But back to being serious.

I don't mind you being frivolous.  

Qantas used the A330 as the patch. I think they should have regarded it as rather more than just a bandage.

mariner

Topic: RE: Qantas Said To Cancel Order For One 787
Username: Planemaker
Posted 2013-01-18 11:09:31 and read 4007 times.

Quote:
Qantas has ordered three new Bombardier Q400s and plans to lease five more Boeing 717s, but it has canceled one Boeing 787 in a move unrelated to the aircraft's grounding.
http://atwonline.com/aircraft-engine...-q400s-cancels-one-boeing-787-0118

Topic: RE: Qantas Said To Cancel Order For One 787
Username: StickShaker
Posted 2013-01-19 05:14:59 and read 3503 times.

Quoting ClassicLover (Reply 43):
Explain to me what opportunities have been lost in the period 2012 to now? It's all a bit of coulda woulda shoulda isn't it at this stage considering the change in the Australian aviation landscape (Virgin changing direction) and the global changes in such a short period of time.

The opportunities lost due to the 787 delays are a subset of those due to QF's failure to invest in any 250-300 seat long haul platform since the 1990's despite nearly all of QF's major competitors doing so.
QF refused to climb aboard the 777 program which effectively stranded them in the hub to hub market while everyone else was developing P2P networks during the 1990's and 2000's. The 787 delays effectively prolonged that situation right up until the present day. QF are still operating a 1980's style network in 2013.
The opportunities lost are substantial and this is reflected in QF's much diminished market share and dismal performance of its QF international arm.

The 787 delays did not create this situation but they certainly exacerbated it.


Regards,
StickShaker

Topic: RE: Qantas Said To Cancel Order For One 787
Username: travelhound
Posted 2013-01-19 15:22:50 and read 3175 times.

Quoting sydscott (Reply 31):
Entirely agreed. A mitigation strategy executed back in 2007/2008 for A332's and 777's would have been better than waiting until 2013 for the 787.

I think the boat had already sailed in 2007/08. I think the A330 and 777 deal should have been made back in 2003.

I always say the QF A380 and 787 fleet strategy was always high risk. A more conservative approach may have been more A330's and maybe the inclusion of 777's in to the fleet.

Quoting mariner (Reply 37):
No, you're not wrong. There is a difference between cash reserve and cash flow. Cash flow is funded from operations. Once credit card holdback is established, for example, it is continuous and predictable (if delayed) cash flow, as long as forward bookings maintain at a fairly constant level.For some time, American Airlines was cash (flow) positive although the overall airline was losing money. Conversely, a profitable airline can still be cash (flow) negative, if it is funding forward operations (progress payments on an aircraft order, say).Cash reserves are unallocated cash, and $3 billion is a fairly healthy pile.mariner

I think one of the concerns for QF has been how to fund all of these new aircraft coming on stream.

At a guess I'd suggest the cost to fund one 787 would fund five 717's and 3 DH8's. Considering the international market is somewhat of an unknown quantity the 717's and DH8's probably had a more definable ROI.

Topic: RE: Qantas Said To Cancel Order For One 787
Username: planesmart
Posted 2013-01-20 13:17:37 and read 2649 times.

As Donald Trump says, it's nothing personal, it's business.

Every early 787 customer will have negotiated penalties and concessions from Boeing, including collateral concessions on other models, spares and even $ compensation on temporary replacement aircraft and unused funding.

Boeing are doing an amazing real-time juggling act. In this case, the cancellation may be a net benefit to Boeing (compensation to Q smaller than compensation to another customer), Q (increased compensation) and other airline (access to needed aircraft).


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