Qantas Group to Reallocate Capacity and Retire Planes

 In response to the rising fuel prices and drop of demand due to natural disasters, the Qantas group has decided to reallocate some of its capacity and retire some of its aircraft earlier than planned.


 With the newly announced plan, the airline will be reducing Qantas and Jetstar’s second half domestic capacity growth from 14% to 8% and international capacity growth from 10% to 7%.

 Jetstar will be suspending four weekly services between Japan and Australia, and will also be reducing services to Christchurch.

 Qantas will downgrade its Boeing 747 services to Tokyo to Airbus A330s. It is believed that the extra A330 is coming from the Brisbane – Singapore service which is being upgraded to a Boeing 747 service. Qantas will also be suspending service between Perth and Tokyo from 8 May, which presently operates thrice weekly and is code-shared with Japan Airlines.

 The airline will retire two Boeing 767 aircraft earlier than planned.

 The airline has estimated that the natural disasters which hit Australia, New Zealand and Japan will cost the airline AUD140 million in the year’s second half. This includes the cost of Japan earthquake and tsunami at AUD 45 million.

 The airline has hedged 96% percent of its fuel for the rest of the financial year at a worst-case scenario crude oil price of USD99.48 per barrel.

 The airline also stated that it would be reducing “management headcount”, but did not reveal an exact figure. The airline will act to reduce its employees’ annual and long-leave balances.

 While it made sense in the ’90s for some airlines to keep their older generation, lower finance cost aircraft, this is no longer the case in a situation where consumers are demanding lower prices and cost efficiency rather than finance costs are driving fleet planning decisions.

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