After deferring a decision for over a year, Qantas is once again talking to aircraft manufacturers about buying new planes. A report on Monday indicates Qantas is just days away from announcing a formal tender process to replace its fleet of Fokker 100 and Boeing 717 jets.
A formal tender announcement is imminent
According to Reuters, unnamed industry sources say the announcement of a formal tender process is imminent. In play are orders all up for around 100 jets, and all three manufacturers – Boeing, Airbus, and Embraer are keen for a slice of the lucrative pie.
Qantas has flagged replacement programs for several types of smaller jets that operate around Australia. In addition to the Fokkers and Boeing 717s, several of Qantas’ 75 strong fleet of Boeing 737-800s are approaching 20 years and nearing the end of their Qantas careers.
Order announcements were expected last year, but the airline delayed deciding following the outbreak of COVID-19. That delay was as much about conserving cash as the uncertain flying environment.
However, earlier this year, Qantas did flag revisiting the issue later in the year. Now, with the year winding up, Qantas looks set to formalize months of informal chats with the plane makers.
“We’ve said for some time that the renewal of our domestic narrowbody fleet is on our agenda,” a Qantas spokesperson told Reuters.
Embraers make an impression at Qantas
Fuelling interest is Qantas CEO Alan Joyce’s presence in Boston at IATA’s Annual General Meeting and World Air Transport Summit. One of the lucky few people to get a leave pass to exit Australia, he is expected to front the media in the next 24 hours. Simple Flying is advised “something is in the air.”
Both the Airbus A220 and Embraer E2 jets are in the running to replace the Fokker 100 fleet (average age 28.3 years) and the Boeing 717-200 aircraft (average age 19.6 years). Airbus brought the A220 to Sydney in 2019, taking the Qantas boss for a spin over Sydney. Mr Joyce was suitably impressed at the time.
But Qantas has also embraced the Embraer jets, recently starting to fly several of them under a leasing deal from Alliance Airlines. It is the first time Qantas has used Embraers, and notwithstanding the turbulent flying environment, the airline seems impressed with the plane.
Qantas will drive a hard bargain
Reuters suggests Boeing 737 MAX 7 is also an outside contender. But Boeing might have better luck focusing on the upcoming 737-800 replacement program at Qantas. The MAX 8 or 9 is an obvious choice for Qantas here.
However, the Airbus A320 is also on the radar. Qantas doesn’t operate many Airbus aircraft across its narrowbody domestic fleet, historically sticking with Boeing. You might think this would give Boeing an incumbency advantage, but Alan Joyce isn’t particularly brand loyal when it comes to aircraft and Airbus make up a sizeable portion of the airline’s widebody fleet.
It is also worth remembering low-cost subsidiary Jetstar flies Airbus A320s and has another 109 on order. Upsizing that order is always an option.
Qantas, like most airlines, drives a hardnosed bargain when buying planes. The airline likes to play competing bidders off against each other and isn’t shy about sending a proposal back for a price revision.
Going public this week is the start of Mr Joyce’s dance with the plane builders. He’ll tease and taunt and extract maximum value in the process – and so he should.
What do you think the best planes for Qantas to buy would be? Post a comment and let us know.
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