Qantas has deferred its Airbus A350-1000 order that it had pledged for Project Sunrise today, citing that the coronavirus had put pressure on the airline’s financial performance and ordering new aircraft would not be a smart move at this time. Airbus has yet to reply to Qantas’ request and may give the reserved production slots over to another airline.
What are the details?
Qantas is hurting from the extended fallout of the deadly coronavirus, as it looks to cut services and routes amid a lack of air travel demand. Already Qantas has grounded all but two of its Airbus A380s and has suspended its Sydney-Singapore-London service (routing it via Perth instead).
The airline is also taking several actions to reduce its expenses, such as putting staff on unpaid leave, removing bonuses and reducing executive salaries (the Qantas group CEO Alan Joyce is taking no pay until July 2020).
Hence, the idea of signing up for a fleet of 12 shiny, new, but very expensive Airbus A350-1000s is almost unthinkable at this stage.
“We would rather wait for the coronavirus issue to be out of the way before we put a firm aircraft order in for the A350,” Joyce explained to Australian Business Traveller, adding that “we haven’t heard back from Airbus yet, but we’re hopeful we can try and get an extension.”
Why does Qantas want the Airbus A350-1000?
The aircraft on order will be specifically designed for flights between Sydney to London and Sydney to New York, with additional fuel tanks onboard to ensure that they can fly direct and without stopping. Dubbed ‘Project Sunrise’, these flights would allow seamless travel between anywhere in the world and reduce travel time between Australia and world hubs by a significant amount of time.
But these aircraft are not cheap. Each one will cost just shy of $400 million USD, and 12 individual units would push the total order over $4 billion USD. This is an expense that might be too much for the airline right now.
Qantas has delayed the order
Airbus had given the Australian airline until the end of March to agree to the order, otherwise, they have said they will give the production slots in the factory to another airline who may want A350-1000 aircraft. Missing this deadline could mean that Qantas’ chosen aircraft could have a delayed delivery extending for years.
But Qantas has hedged a bet that there are no other airlines looking to the order the A350-1000 right now, as all airline operators are facing the same challenging coronavirus market conditions.
“Airbus had given us the delay until the end of March,” Joyce continued to the same magazine. “That was based on the fact the slots were potentially valuable and could be sold to other airlines. We think in the current environment that may not be the case, nobody seems to be ordering aircraft.”
What do you think about this news? Should Qantas be delaying this order? Let us know in the comments.