Qantas Group to Place Fleet Order: Building a Stronger Qantas - New international Strategy

Sydney, 16 August 2011

The Qantas Group today announced it would acquire up to 110 Airbus A320 aircraft, plus 194 purchase rights and options, to support fleet renewal and growth for the next 10 to 15 years.

Smart investment in aircraft is part of the Qantas Group’s five-year plan to build a truly modern, customer-focused and competitive global airline business.

The Group has committed to order up to 110 A320s (106 confirmed from Airbus and four additional aircraft, either purchased or leased, subject to availability). These aircraft will facilitate capacity growth across Jetstar’s domestic and international operations, the launch of Jetstar Japan and the establishment of Qantas’ new premium Asia-focused airline - while the purchase rights and options provide the Group with significant flexibility to pursue further growth opportunities on favourable commercial terms.

The Group will become a major customer for the new more fuel-efficient A320neo. The commitment for 110 A320s includes 78 A320neos with 194 rights and options on further purchases.

In addition, as a result of the new strategy and network changes for Qantas international announced today, Qantas will defer the delivery of its final six Airbus A380s by up to six years, driving substantial capital cost savings. Qantas’ A380 fleet will reach 12 aircraft by the end of 2011 and 14 aircraft by mid-2013. The remaining six A380s will be delivered to coincide with the retirement of Qantas’ last six Boeing 747ER aircraft.

Qantas Chief Executive Officer Alan Joyce said the agreement with Airbus represented the most effective allocation of capital to growth opportunities.

“This is an investment that will position the Qantas Group very strongly in the competitive Asia-Pacific aviation market, while containing costs,” Mr Joyce said.

“The first of the A320s will be allocated to the new Jetstar Japan venture between the Qantas Group, Japan Airlines and Mitsubishi. We are using the Qantas Group’s scale in the aircraft purchasing market to establish this exciting new airline. Financial management of the fleet will rest with Jetstar Japan and will be funded independently of the Group’s balance sheet.

“The remainder of the A320 order will go to other new ventures, including Qantas’ premium airline serving the Australia-Asia market, and to renewing Jetstar’s global fleet – giving us the flexibility to meet growth requirements where needed.

“Our A380 delivery program is well-advanced, while later this year the first of our Boeing 747s reconfigured with A380 product, seats and inflight entertainment will enter service.

“As our flagship, the A380 is a fabulous aircraft and receives tremendous feedback from our customers. It will continue to lead our long-haul fleet. However, the review and restructure of our international network has led to the decision to defer six of the A380s we have in order.

“Our priority is to allocate capital to those businesses which provide the best return on investment. In this context we will continue to review our capital expenditure. This is an approach we have taken previously with the cancellation of B787 aircraft, and future B787 deliveries, like all aircraft orders, will be reviewed as required.

“We are delighted to have reached agreement with Airbus for this important restructuring of our fleet plan, which reflects our commitment to realise growth potential while maintaining prudent financial management.”

Changes to the Qantas Group fleet plan are as follows:
- The purchase of between 28 and 32 current-generation A320 aircraft.
- The purchase of 78 new A320neo aircraft with 194 rights and options for further purchases.
- The rescheduling of six A380 deliveries by up to six years.

Issued by Qantas Corporate Communication (5158a)