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Qantas Announces Changes to B787 Orders

Sydney, 26 June 2009

Qantas announced today it had reached mutual agreement with Boeing to defer the delivery of 15 B787-8 aircraft by four years and cancel orders for 15 B787-9s scheduled for delivery in 2014/2015.

Qantas Chief Executive Officer, Mr Alan Joyce, said the changes to the Group's B787 orders were appropriate in the current climate, and that discussions with Boeing, which commenced some months ago, had not been influenced by the announcement this week of a design issue and further delay to the aircraft's first flight.

"Qantas announced its original B787 order in December 2005, and the operating environment for the world's airlines has clearly changed dramatically since then," Mr Joyce said.

"The agreement we have reached with Boeing will provide greater certainty going forward in terms of our fleet renewal and growth strategies as well as broader resource planning and matching capacity with demand.

"It will also allow Qantas to manage capital investment more effectively while still delivering an aircraft that offers sound prospects for our flying businesses and our customers.

"For both Qantas and Jetstar, the B787 will provide for international capacity growth and new routes, including point-to-point destinations, and mean lower operating and maintenance costs, greater fuel efficiency and improved environmental performance.

"The latest delay is disappointing, but we do not expect it to impact the Qantas Group given these changes to our delivery program. We remain committed to the aircraft as the right choice - for Jetstar's future international expansion, Qantas' growth and as a replacement for Qantas' B767-300 fleet."

After the order changes, the Qantas Group will jointly remain the biggest airline customer for B787 family aircraft.

The changes will see*:
* Qantas Group firm orders reduce from 65 to 50 aircraft, comprising 35 B787-9s and 15 B787-8s;
* the Group's first 15 aircraft - B787-9s for Jetstar's international operations - delivered from mid-2013, around three years later than planned. Jetstar was to take delivery of 15 smaller B787-8s in mid-2010;
* 15 B787-8s follow over the 12 months from the fourth quarter of 2014 for Qantas' Australian domestic operations and to retire the remaining Qantas B767-300 fleet;
* remaining deliveries, of 20 B787-9s for both Qantas and Jetstar international operations, take place from the fourth quarter of 2015 through to 2017; and
* Qantas retain the ability to purchase up to 50 additional aircraft.

Mr Joyce said the cancellation of 15 B787-9s would reduce the Group's aircraft capital expenditure by US$3 billion based on current list prices.

"Delaying delivery, and reducing overall B787 capacity, is prudent, while still enabling Qantas and Jetstar to take advantage of growth opportunities and market demands, both domestically and internationally," he said.

Details of the contractual agreement with Boeing remain confidential, but the settlement is materially in line with that previously recognised.

* delivery timeframes are based on current Boeing planning guidance and may be subject to change.

Issued by Qantas Corporate Communication (3936)
Email: qantasmedia@qantas.com.au