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Qantas To Purchase 17 New Aircraft And Revamp Domestic Operations

Melbourne, Australia – Qantas Airways announced that it will purchase 15 new generation, long range, narrow body aircraft and…

Melbourne, Australia<.> – Qantas Airways<.> announced that it will purchase 15 new generation, long range, narrow body aircraft and two Dash 8 aircraft as part of a comprehensive revamp of its domestic operations.

Qantas Chief Executive Officer Geoff Dixon said the new aircraft will allow Qantas to provide permanent additional capacity and enhance the range of services Qantas offers for travel in Australia, including to regional destinations.

The aircraft will be either Boeing 737-800s or Airbus A320s and the total cost of the acquisition will be in the order of A$1.5 billion, including start-up costs. Negotiations have been held with Airbus and Boeing over the past three weeks and there will be a decision on the aircraft type next week.

The first two aircraft will be delivered in January, with two aircraft delivered each month after that.

The new aircraft and new fleet strategy will give Qantas between 65 per cent and 70 per cent of the capacity in the Australian domestic market.

In order to partly fund the acquisition of the new aircraft, Qantas today announced it intends to raise $300 million of ordinary equity through a global bookbuild placement to domestic and foreign institutions (see separate announcement).

Mr Dixon said Qantas` revamped domestic operations will feature:
the 15 new narrow body aircraft, with an all economy class configuration of at least 165 state-of-the-art slimline seats, operating on services where there is small or no demand for business class travel;

reconfiguration of a number of existing Qantas Boeing 737 aircraft to create a total fleet of about 40 all economy class aircraft;

flights between Perth, Adelaide, Melbourne, Sydney and Brisbane operated by larger, two class, wide body aircraft (Boeing 767s or Airbus A330s);

regular two class Boeing 747 services between Perth and the East Coast of Australia and on long haul leisure routes;

a significant increase in direct flights between capital cities with fewer stops at ports in between;

continued business class services across the domestic network, between major centres and where there is sufficient demand;

an extension of the extremely successful Cityflyer service, which currently operates between Sydney and Melbourne, to Brisbane;

expanded Qantas Club lounges;

enhancement of the Frequent Flyer program with additional partners;

the all economy aircraft offering the new Economy Class box meals launched successfully in June this year.
Qantas will also take options for at least a further 40 narrow body aircraft at current prices as part of its long term fleet strategy.

The domestic market has changed fundamentally and irrevocably over the past year and our new strategy will enable us to meet the increasing customer focus on flexibility while in no way reducing the quality of the Qantas product or service, Mr Dixon said.

Currently, we have about 85 per cent of the domestic market because we have moved quickly, at the request of the Federal Government, State Governments and tourism authorities, to put in place short term measures to help hundreds of thousands of stranded Ansett customers, other travellers and the Australian tourism industry.

As we have said previously, we will gradually discontinue these interim arrangements and services as Virgin Blue and other carriers grow.

The acquisition of two Dash 8 aircraft will increase QantasLink operations in regional Queensland and further boost QantasLink`s overall services to regional Australia.

This latest commitment to regional Australia by Qantas follows the recent introduction of Boeing 717 services into Hobart and Launceston, he said. This initiative increased capacity into these cities by 26 per cent and also allowed us to boost services within Western Australia by transferring two BAe 146 aircraft to that State.

Mr Dixon said the all economy class fleet and the lower operating costs of the new aircraft would assist Qantas in its efforts to lower its cost base.

This is essential given the state of the global aviation industry, including the significant recent rises in insurance and security costs and aviation charges, Mr Dixon said.

We also need greater productivity and lower labour costs to compete effectively worldwide. We are meeting with all Unions represented at Qantas on Monday to discuss how we can achieve lower costs to maximise long term job opportunities at Qantas.

Mr Dixon said that while the terrorist attacks on 11 September and subsequent events in Afghanistan had not affected Qantas as severely as many other airlines, the downturn was still significant.

We are closely monitoring all our international routes and have already reduced capacity by almost 10 per cent, he said. This will result in some reductions in staff.

We also have the capacity to retire aircraft from our international fleet quickly. This option will be taken if there is any further deterioration in international travel.

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Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.