Friday, June 26, 2009

Qantas Scraps Orders for Boeing Planes

HONG KONG — Qantas Airways of Australia said Friday that it would scrap or defer orders for 30 of Boeing’s new 787 Dreamliner aircraft, dealing a heavy blow to the American manufacturer and highlighting the intense pressure for cost savings at airlines around the world as the industry struggles to adjust to a sharp drop in passengers and freight.

Qantas, still the largest customer of the long-range, wide-body Dreamliner aircraft that is considered the key to Boeing’s future, is canceling orders for 15 of the 787s, in a move that it said would save the airline $3 billion. It is delaying delivery of 15 others by four years.

Alan Joyce, chief executive of the airline, said in a statement that Qantas’ decision was not linked to news Tuesday that the Boeing 787’s first flight had been delayed to allow further minor modifications to be made to what has been touted as the world’s most sophisticated plane.

Those problems were the latest in a series of delays in the Dreamliner project and ignited concerns about the possible effect on initial delivery schedules. The first delivery, to All Nippon Airways, was scheduled for the first quarter of 2010.

Qantas said it would retain orders for 50 of the new aircraft, including 15 for its low-cost subsidiary, Jetstar. A spokesman for Qantas, Simon Rushton, declined to comment on whether the airline would pay a penalty for the cancellation.

Analysts said the Australian flag carrier’s cancellation was one of the most significant such announcements to date, even in an industry that has already undergone major cost cuts and shake-ups.

“For Qantas to pull or defer deliveries is a major, major step,” said Derek Sadubin, an analyst at the Center for Asia Pacific Aviation, a consulting company in Sydney.

The Qantas decision takes the number of cancellations for the 787 from airlines around the world so far this year to 73, or about 8 percent of total orders for the aircraft, Mr. Sadubin said, adding that more cancellations — of aircraft of all types and makes — are probable.

Mr. Joyce, said, “Qantas announced its original B787 order in December 2005, and the operating environment for the world’s airlines has clearly changed dramatically since then.”

The global economic turmoil has taken a heavy toll on passenger and cargo traffic, with the latest figures from the International Air Transport Association showing passenger numbers in May were 9.3 percent below numbers from a year earlier, and freight demand was down 17.4 percent.

Falling volumes, combined with soaring oil prices last year, forced airlines around the world to reduce staff and flights, park planes and shelve investment plans, including aircraft orders.

Like many of its rivals, Qantas expects sharply reduced profits this year. In April, it announced it would shed 1,750 jobs, in addition to 1,500 job cuts announced last year, and warned it was exploring ways to reduce the number of aircraft it was to receive from Boeing.

“Qantas, like most airlines around the world, is clearly in survival mode,” Mr. Sadubin said.

“We are working Qantas to make changes appropriate to the current climate,” Jim Proulx, a Boeing spokesman in Seattle, told Bloomberg News.

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