The Qantas Group has announced the largest aircraft order in Australian aviation history – and chief executive Alan Joyce has revealed how close Qantas came to bankruptcy when the Covid-19 pandemic battered the aviation industry in 2020.
Announcing major fleet decisions that will reshape the airline’s international and domestic networks over the next decade and beyond, Joyce spoke yesterday of a big increase in domestic demand, ahead of expectations, with Qantas and Jetstar operating at approximately 110% of pre-Covid capacity over the Easter school holidays.
Bookings for markets including London, Los Angeles, South Africa and Bali are all above pre-Covid levels and Jetstar has resumed more than 60% of its international routes as more leisure destinations in Asia have re-opened.
Joyce also revealed that Qantas, which now has a strong balance sheet, was just 11 weeks from bankruptcy at one point in 2020.
Those days are well behind it and ‘Project Sunrise’ has dawned. To operate longer international routes (including non-stop Sydney-London flights and non-stop flights from other Australian cities to London and New York), Qantas has ordered 12 Airbus A350-1000s. These will run the Project Sunrise flights from Australia.
The first Sydney-London service will operate from Kingsford Smith Airport and will take just over 20 hours, because of the prevailing headwind, Joyce said. The return journey is a little quicker but in either direction, it will be the longest route in the world.
The new non-stop services are scheduled to start by the end of calendar 2025, initially from Sydney and then from other Australian cities. There will be a fare premium in economy class above services which require an intermediate stop. Additionally, the aircraft are configured to have extra premium seating.
The huge, $34 billion fleet order Qantas announced yesterday consists entirely of Airbus planes. Joyce said that the airline alternated between Boeing and Airbus in its fleet requirements, depending on needs at the time. Qantas operates many Boeing 737s on shorter routes and although these will eventually be phased out, Boeing 787 Dreamliners remain a mainstay of the Qantas fleet.
Domestically, Qantas will start the renewal of its narrowbody jets as part of ‘Project Winton’ with firm orders for 20 Airbus A321XLRs and 20 A220-300s as its Boeing 737s and 717s are gradually retired. The first of these aircraft will start to arrive in late calendar 2023, with the order including purchase right options for another 94 aircraft for delivery through to at least 2034.
Qantas says all of these next-generation aircraft – through their lower emissions, longer range, less noise and better economics – will improve how people travel around Australia and overseas. They will also create over 1000 jobs and many career progression opportunities.
Customers can expect more direct routes and therefore less total travel time. They can expect higher levels of cabin comfort. And, particularly on domestic and regional routes, they can expect more choice of flights at different times of day due to different size aircraft for peak and off-peak times.
Joyce said: “New types of aircraft make new things possible. That’s what makes today’s announcement so significant for the national carrier and for a country like Australia where air travel is crucial.
Qantas Airbus aircraft: Airbus A350-1000 (closest), A321XLR and A220-300
“Throughout our history, the aircraft we’ve flown have defined the era we’re in. The 707 introduced the jet age, the 747 democratised travel and the A380 brought a completely new level of comfort. The A350 and Project Sunrise will make any city just one flight away from Australia. It’s the last frontier and the final fix for the tyranny of distance. As you’d expect, the cabin is being specially designed for maximum comfort in all classes for long-haul flying.
“The A320s and A220s will become the backbone of our domestic fleet for the next 20 years, helping to keep this country moving. Their range and economics will make new direct routes possible, including serving regional cities better.
“These newer aircraft and engines will reduce emissions by at least 15% if running on fossil fuels, and significantly better when run on Sustainable Aviation Fuel. This order brings us closer to our commitment to reach net zero emissions by 2050. Project Sunrise will be carbon neutral from day one.
“We have come through the other side of the pandemic a structurally different company. Our domestic market share is higher and the demand for direct international flights is even stronger than it was before COVID. The business case for Project Sunrise has an internal rate of return in the mid-teens.
“The Board’s decision to approve what is the largest aircraft order in Australian aviation is a clear vote of confidence in the future of the Qantas Group. Our strategy for these aircraft will see us generate significant benefits for those who make it possible – our people, our customers and our shareholders.
“The phasing of this order means it can be funded within our debt range and through earnings, while still leaving room for shareholder returns in line with our financial framework.”
Qantas yesterday issued the following information on the massive new order.
ABOUT THE ORDER
- Firm orders for 12 Airbus A350-1000 for Project Sunrise. Deliveries to begin in 2025 and complete by 2028.
- Firm orders for 20 A321XLR and 20 A220-300 for Project Winton to start renewal of Qantas’ narrow body fleet as its fleet of 95 Boeing 737 and Boeing 717 aircraft retire. Deliveries of A220s to start late calendar 2023; A321XLRs deliveries to start a year later in late calendar 2024.
- An additional 94 purchase right options spread across A320 and A220 families, with significant flexibility on delivery timing (over 10-plus years) and aircraft type.
- Combines with the existing order of 109 A320s (plus purchase rights) for Jetstar into a single Qantas Group narrow body order of 299 aircraft (half of which are firm orders and half are purchase right options), with the flexibility to draw down on that order by choosing any variant from the A320 and A220 families.
- Demonstration of this flexibility with confirmation today that Jetstar will convert 20 of its existing A320 family order to A321XLRs, which have the potential to fly short haul international routes, with delivery to start in the second half of calendar 2024. (The first tranche from this existing order – 18 A321LRs – are due to arrive from July 2022 onwards.)
- Total cost of the deal is commercial in confidence, though a significant discount from standard price should be assumed.
ABOUT THE AIRCRAFT
PROJECT WINTON
- Qantas’ A321XLR is five metres longer than the outgoing 737s and will be configured to seat 200 people (20 business, 180 economy) – a 15% increase with no reduction in space between seats. It can fly approximately 3,000km further than the 737 (at 8,700km) and opens up a wider range of direct domestic and short haul international routes (e.g. South East Asia, Pacific islands).
- The A220-300 is larger overall than the outgoing 717s and will be configured to seat 137 people (10 in Business, 127 in Economy) – a 25% increase with no reduction in space between seats. It has almost double the range at over 6,000 kilometres, meaning it can fly between any city in Australia.
- Both aircraft types will be powered by Pratt & Whitney Geared Turbo Fan engines (PW1100G-JM and PW1500G)
- The noise levels of both aircraft are up to 50% lower than the retiring aircraft.
- On a per seat basis, the A220-300 burns 28% less fuel per passenger than the 717. The A321XLR burns 17% less fuel per passenger compared with the 737.
PROJECT SUNRISE
- The Qantas A350-1000 will have the range for direct flights between Australia and any city in the world. Powered by Rolls-Royce Trent XWB-97 turbofan engines which are 25 percent more fuel efficient than previous generation aircraft.
- Will carry 238 passengers across four classes (First, Business, Premium Economy, Economy), with more than 40% of the cabin dedicated to premium seating. Compares to more than 300 seats on competitor airlines.
- The cabin is specially configured for improved comfort on long flights and includes a wellbeing zone in the centre.
Report by Peter Needham
