Qantas reviews fleet orders

[lloyd fox]

QANTAS has warned it may review aircraft orders unless it can get a decent return on capital from its loss-making mainline international operations.

Chief executive Alan Joyce said yesterday the airline would not keep spending on the international business until it began returning its cost of capital. "We have to review the capital we are putting into it because the business is not performing, it's clear, and there are other parts of the business that are," Mr Joyce said on the sidelines of the International Air Transport Association annual meeting in Singapore.

"They are giving us a better return on the cost of capital -- that's where we should be putting the expenditure, and international is not going to see any more growth until it's turned around."

Asked if that meant adjusting aircraft orders, Mr Joyce said: "Everything is on the table." He added that the airline would still take its order of 20 Airbus 380s as planned and it expected that reconfigurations to increase seat density would help improve its international business.

Mr Joyce also said the airline would be working with alliance partners American Airlines, LAN Chile and British Airways to improve route structures and boost its productivity as part of negotiations with unions.

"That's where our biggest disadvantage comes in a lot of cases; we have poor productivity compared to a lot of airlines," he said.

The comments came as the airline announced that it was sponsoring Malaysia Airlines to become a Oneworld Alliance member and intended to forge closer links with the Kuala Lumpur-based carrier as part of its international strategy.

Mr Joyce said the airline would continue its separate low-cost operation in Singapore but was keen to talk to Malaysia about co-operation in Malaysian and other Southeast Asian markets.

The Qantas chief expressed concern that an International Air Transport Association outlook forecast that more than halved the global industry profit outlook for this year was too bullish because it had not sufficiently accounted for high fuel prices.

He said Qantas agreed that oil prices would remain at $US110 and this would affect demand.

Mr Joyce said the airline had increased fares a number of times but was still not covering fuel costs, and he believed other airlines were in the same boat.

"IATA has shown the impact on demand is related to the impact on economic activity, and if the economic activity suffers you will have a big negative impact on airline profitability," he said.

Mr Joyce blamed the threat of industrial action as a possible cause of yesterday's fall in Qantas's share price below $2.


787'S ????

[Montague S]

and the share price has now dropped below $2. I will hedge my bets and say that Joyce will be gone sooner, not later, and the orders will remain.

[John Arena]

I hope he leaves, since he has come along, QANTAS has been on a downhill slope!!

If nothing changes, we will be seeing the end of QANTAS right in front of our eyes


John

[Erik H. Bakke]

Considering his comments that he does not want to throw more money into the loss-making international business, and want to focus on what makes money (in his words, Jetstar) I think we may see A380s going to Jetstar. Particularly as he also says that they will still take all of the A380 orders.

[Jon Harris]

totally agree with you guys! It's quite obvious the currect CEO and his team are not performing...so many announcements this week of carriers expanding internationally and all QF can do is cut and shrink...

Alan Joyce it's time to go!!!!!

We need someone like Gordon Bethune who performed miracle and turned CO around.

[Dave Dale]

Originally Posted by John Arena

I hope he leaves, since he has come along, QANTAS has been on a downhill slope!!

If nothing changes, we will be seeing the end of QANTAS right in front of our eyes


John

I am sure this is what Alan Joyce wants. The continual line of international business is not making money and nothing being done about it is a demonstration of a strategy to run the international business into oblivion to the continued success of Jetstar. What annoys me is why won't Qantas management come to the aid of the international business. This is not a recent problem but one protracted over time. Why not bite the bullet and get new effecient aircraft for the international business. There are those who say Qantas management have their reasons for not getting the 777. But after all this time, no 787's, surely it would have been prudent to have a contingency plan. I cannot help but think that some of the A380's still to come will be delivered to Jetstar and not Qantas... After watching the decline of Qantas since the early 2000's, it really is quite disheartening. And what is more disheartening for Qantas in my opinion, is the tie up between Virgin Australia and Singapore Airlines. I can probably see Singapore Airlines overtake Qantas in the not too distant future as being the largest carrier of international passengers to and from Australia. Unless Alan Joyce and the top team at Qantas decide to actually invest in the Qantas international business instead of saying until it makes money, there will be no investment, then they should go and save Qantas from its death. This is my two cents worth.

[Mick F]

some of the A380's still to come will be delivered to Jetstar and not Qantas

He'll have no pilots left at Qantas to fly what remains if he does that.

Mick

[Paul Waters]

Agreed Mick. When will this clown realise that the worst thing to ever happen to Qantas is himself?

The little Irishman needs to go.

Paul

[Steve S... 2]

You'll find he doesn't give a _ _ _ _ as he is getting the $$$ he wants/needs.

It is an Australia wide problem with management, and the way promotions are given to those who are incapable.

Australia has the worst management in the world (so they say) according to a documentary on TV a couple of years back.

[John Arena]

Didnt Joyce work in a high management role at Aer Lingus and Ansett, if thats true, QANTAS wont be the First Airline that he has destroyed....

Joyce, its time to leave. Bring Back Dixon, or hire someone else very reputable.

PLEASE PLEASE PLEASE QANTAS DO SOMETHING to revive our International Market, my hopes of flying a Qantas A380 seem all but dashed

John