After the airline deferred a decision for more than one year, Qantas is once more talking to aircraft manufacturers about acquiring new planes. A report on October 4, 2021, says that Qantas is now days away from announcing a formal tender process that will enable it to replace its fleet of Boeing 717 and Fokker 100 jets.
According to a report by Reuters, some anonymous industry sources state that the announcement of a formal tender process is now imminent. In the contract are orders all up for nearly 100 jets. Notably, all three manufacturers that include Airbus, Boeing, and Embraer are keen to get a slice of this lucrative airline pie.
Qantas has already flagged replacement programs for many types of smaller jets that are assigned to operate around Australia. Adding onto the Fokkers and Boeing 717s, many of Qantas’ 75 strong fleet of Boeing 737-800s are approaching 20 years. Hence, they are nearing the end of their Qantas careers.
Order announcements were expected in 2021. However, the national airline delayed the decision following the outbreak of the pandemic. This delay was as much about saving cash as the uncertain flying environment took hold of the world market.
Nonetheless, earlier this year, Qantas flagged revisiting the issue later in the year. Today, with the year nearing the end, Qantas seems ready to formalize months of informal chats with the plane makers. A Qantas spokesperson told Reuters:
“We’ve said for some time that the renewal of our domestic narrow body fleet is on our agenda.”
Embraers Make Huge Impression At Qantas
Qantas CEO Alan Joyce’s presence in Boston at IATA’s Annual General Meeting and World Air Transport Summit is believed to be fueling interest in Embraers. Being one of the lucky few people who have a leave pass to exit Australia, Joyce is expected to front the media by October 5. Reporters are advised that “something is in the air.”
Both the Embraer E2 and Airbus A220 jets are in the race to replace the Fokker 100 fleet that has an average age of 28.3 years. On the other hand, the Boeing 717-200 aircraft fleet has an average age of 19.6 years.
Airbus brought the A220 to Sydney in 2019 and took the Qantas boss for a spin over Sydney. At the time, Mr. Joyce was suitably impressed by the A220.
But Qantas has also embraced the Embraer jets, recently beginning to fly many of them under a leasing deal inked from Alliance Airlines. It is now the first time that Qantas has used Embraers, and notwithstanding the turbulent flying environment, the airline appears impressed with the new planes.
Qantas Expected To Drive A Hard Bargain
Reuters believe that the Boeing 737 MAX 7 is also an outside contender. However, Boeing might have some better luck focusing on the upcoming 737-800 replacement program at Qantas. The MAX 8 or 9 is an obvious choice for Qantas.
Nevertheless, the Airbus A320 is also on the radar of this airline. Qantas does not operate many Airbus aircraft across its narrowbody domestic fleet. It has been historically sticking with Boeing.
Many might think that history would give Boeing an incumbency advantage. However, Alan Joyce is not brand loyal in matters of aircraft and Airbus makes up a significant segment of the airline’s widebody fleet.
It is also important to note that low-cost subsidiary Jetstar flies Airbus A320s. It also has another 109 on order. Upsizing this order is always an option. Just like most airlines, Qantas drives a hardnosed bargain whenever they want to acquire planes. The company likes to play competing bidders off against one another and it is not shy about sending proposals back for price revision.
Going public this week appears to be the start of Mr. Joyce’s dance with the plane builders. He will tease and taunt and extract optimal value in the process, and so he should.