Qantas delays service entry of Boeing 787-8s

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Qantas will delay service entry of its Boeing 787-8 fleet as the airline moves to slash capital expenditure in the 2012-13 period.

The carrier says the move, which it said has been enabled by "manufacturer delays", will contribute to cuts in capex from a projected A$2.5 billion ($2.68 billion) to $2.3 billion for 2012 and from $2.8 billion to $2.3 billion in 2013 "with further cuts to be identified for that year", said chief executive Alan Joyce.

Boeing was due to deliver Qantas's first three of 15 787-8s in 2012, itself a delay from a handover initially projected for 2010. The carrier did not specify when it would now receive its initial Dreamliner.

Speaking as he announced the airline's half-year results, Joyce unveiled a raft of cost-saving measures, including route closures and a root-and-branch review of its MRO capability, which he said were necessary to "restore, retain and increase our efficiency and competitiveness".

Joyce said services will be withdrawn from the Singapore-Mumbai and Auckland-Los Angeles routes from May.

From June its Sydney-Bangkok service will be served using an Airbus A330 instead of a Boeing 747-400. Sydney-Auckland will also shift from an A330 to a 737-800.

A330s will also replace 747-400s on "certain services" between Sydney and Perth, and A330s will now be utilised on the Melbourne-Perth route.

Boeing 747 services to Japan will rise to seven per week, from six at present, said Joyce.

The network changes "and the critical mass of 12 A380s" in its fleet will enable Qantas to retire two more 747s this year, in addition to the four of the type that will retire in April.

Its entire maintenance operation will be reconfigured, said Joyce, as it looks to increase competitiveness in a division which is 30% more expensive than its competitors.

Although promising no jobs would be shifted off-shore, some 500 positions will be made redundant by the changes, said Joyce.

Heavy maintenance operations will be consolidated from its three sites at Melbourne, Brisbane and Avalon. No decision has been taken on the size of final maintenance footprint, but Joyce warned "doing nothing is not an option".

The majority of other maintenance and supply chain operations will be moved to Sydney, he added.

Line maintenance will change to a "maintenance on demand" approach, so that "engineers will not be conducting aircraft checks that are not required", said Joyce.

Rostering and planning activities will largely be consolidated to Sydney as well, he added. "We need to be ready to take tough decisions, and we must become more flexible and productive."

Qantas continues to evaluate the creation of a premium airline in Asia, but this will be a "capital-lite model", Joyce said.