Qantas has deferred a decision on Project Sunrise and its A350-1000 order until the end of the year. Until recently, the airline had stuck to the pre-announced timeline with a decision due this month. But with Qantas now going into survival mode, the best-laid plans have gone out the window.
Project Sunrise is the tagline for Qantas’ highly publicized proposed ultra-long-haul nonstop flights. Destinations included New York, London, Rio de Janerio, and Capetown. Late last year, Qantas said a modified A350-1000 was its preferred aircraft to operate these flights.
Qantas extends order deadline with Airbus
The Australian airline placed a tentative order with Airbus for 12 of the aircraft. Airbus had given Qantas a 31 March deadline to confirm that order. But ET is reporting that Qantas Boss, Alan Joyce, has approached Airbus asking for an extension.
“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.”
Some have suggested that Mr Joyce is trying to lever Airbus into offering a better deal. The planes have suddenly got a lot more expensive. Qantas collects most of its revenue in AUD but pays for planes in USD. The AUD is sliding fast against the USD.
But it is far more likely that Mr Joyce needs to get his airline through the current crisis and collapse in demand for travel.
Yesterday, Qantas announced the cessation of all international services as of 31 March. It also has slashed capacity on domestic routes, including key trunk routes. Yesterday, Mr Joyce said;
“The efforts to contain the spread of Coronavirus have led to a huge drop in travel demand, the likes of which we have never seen before. This is having a devastating impact on all airlines.”
We have to plan for this lasting 6 months, 12 months, 18 months
In an interview with Hamish McDonald on ABC’s Radio National Breakfast earlier today, Alan Joyce said Qantas is one of the strongest airlines in the world and one of the best positioned to get through the downturn.
But he expects things to get worse before they get better.
“This is the biggest crisis the industry has ever been in, bigger than 9/11, the GFC. Parts of the economy are starting to shut down. I think we are going to have a severe deep recession or depression, an economic hit that’s going to be significant.
“Things are moving so fast … Changes by market, by country. You have to adapt and be flexible. We are reacting to what we see at the time and taking immediate action.”
The problem is no-one knows how long this will last for.
“We have to plan for this lasting 6 months, 12 months, 18 months.”
Mr Joyce is unapologetic for the drastic steps he has taken this week. He says his priority is the survival of the airline and the welfare of its employees (the airline is standing down two-thirds of its workforce). In that context, an order for a dozen A350-1000 is not so important.
“We need to position Qantas to get through this … We are ensuring Qantas is here for the long run.“