Qantas intends to renew its domestic fleet with a mix of Airbus A320neo and A220 aircraft, announcing an agreement in principle on Thursday to place 134 orders and purchase right options for the types with deliveries starting in 2024. The Australian carrier said that it expects to finalize the orders by the end of 2022, and has designated the Airbus narrowbodies as its “preferred aircraft” to replace existing Boeing 737-800s and 717s.
Following discussions with employees about arrangements for operating the new jets, the Qantas board expects to confirm a commitment to buy 20 A321XLR and 20 A220s by the end of next year. The remaining 94 purchase right options will cover a 10-year delivery window as the Boeing aircraft are phased out.
Airbus won the new business in the face of competition with Boeing’s new 737 Max airliner, and also from Embraer’s E190 and 195-E2s. The deal adds to the existing agreement for Qantas subsidiary Jetstar to buy more than 100 A320neos.
The A321XLR can be equipped with between 180 and 220 seats and operate on routes of up to 4,700 nm, while the A220 can carry between 100 and 150 passengers on sectors of up to 3,450 nm. Both aircraft are powered by Pratt & Whitney’s Geared Turbofan engines, respectively the PW1100G and the PW1500G.
Qantas has yet to specify the cabin configuration for the aircraft it will take from Airbus. However, it pointed to the fact that the A321XLR can carry around 15 percent more passengers than the existing Boeing 737-800s as being a factor in its choice, indicating that it will deploy the aircraft on busy routes to cities including Melbourne, Sydney, and Brisbane, as well for opening new sectors.
“This was a very tough choice to make,” commented Qantas CEO Alan Joyce, while thanking Boeing and Embraer for their proposals. “Each option delivered on our core requirements around safety, capability, and emissions reductions. But when you multiply even small benefits in areas like range or cost across this many aircraft and over 20 years they’ll be in the fleet, Airbus was the right choice as the preferred tenderer."
Joyce added that having the flexibility to switch orders between different members of the A320neo and A220 families as the carrier’s needs change was viewed as an advantage. He also mentioned the synergies resulting from the existing Jetstar order with Airbus.
“Qantas is in a position to make these commitments because of the way we’ve navigated through the pandemic, which is a credit to the whole organization,” said Joyce. “This is a clear sign of our confidence in the future and we’ve locked in pricing just ahead of what’s likely to be a big uptick in demand for next-generation narrowbody aircraft.”
On Thursday, the airline also reported progress in repairing a balance sheet severely dented by Covid travel restrictions, with all furloughed employees expected to return to work. It said that the Qantas Group “expects to finish the first half of FY22 with a materially better net debt position than it had prior to the start of the Delta variant lockdowns in June.”
In a market update, Qantas indicated that it still anticipates a loss of between A$250 and A$300 million (up to $216 million) for the first half of 2022. In the third quarter of next year, it expects domestic flight capacity return to 102 percent of pre-Covid levels, rising to 117 percent by the fourth quarter. It expects international capacity to recover more slowly, to just 30 percent of pre-pandemic levels in the third quarter, doubling to 60 percent in the fourth quarter.