Qantas overhauls domestic jets, flags $1.1 billon loss

Qantas announced today it has picked the Airbus A320neo and A220 aircraft to replace the Boeing 737 as the backbone of its domestic and short-haul international fleet.

The Australian airline will, subject to board approval, order 40 planes with options to buy 94 more from European manufacturer Airbus.

The regional QantasLink service will also replace its current Boeing 717 aircraft with the Airbus A220.

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The announcement was made in a market update released today.

Deliveries of the new planes will start by late 2023, Qantas said. They will be spread across the following decade to phase out the Boeing aircraft.

Qantas CEO Alan Joyce said the purchase of the Airbus aircraft was part of the airline's renewal plan.

"This is a long-term renewal plan with deliveries and payments spread over the next decade and beyond, but the similarly long lead time for aircraft orders means we need to make these decisions now," Mr Joyce said.

Qantas said the order was in addition to the purchase of order more than 100 new Airbus jets over the next 10 years for Jetstar — also part of Qantas Group — in what it says will be the biggest aircraft order in Australian history.

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'Poor trading condition'

Qantas also announced an underlying earnings loss of up to $1.1 billion in the first half of the 2022 financial year.

Mr Joyce said the results were the result of pandemic-linked shutdowns.

The easing of border restrictions had enabled the airline to improve its balance sheet and net debt would be about $5.65 billion at the end of the half financial year.

Qantas is banking on a strong rebound in domestic air travel after the reopening of most states and territories.

It has forecast its domestic business to be 102 per cent of pre-pandemic levels by March, and 117 per cent by the end of June.

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In contrast, international flying is expected to reach just 30 per cent of pre-COVID-19 levels by March and 60 per cent by late June.

Mr Joyce said Qantas had endured one of its worst trading periods following lockdowns in Sydney and Melbourne.

"Fortunately, the structural changes we made earlier in the pandemic put us in a good position to weather these extremely poor trading conditions while the national vaccination rate reached a point where states started to open back up," Mr Joyce said.

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