QF group lose big

Day two of Australasian Aviation financial announcements saw Qantas announce a record $2.843 billion ($AUD) full year loss.

Qantas has reported a lower than expected full-year underlying loss before tax of $646 million, but booked a statutory loss of $2.8 billion as a result of hefty restructuring charges and writedowns to its fleet.

One of the most notable hits was the historic write down of the international fleet at $2.6b most notably due to an exchange rate of around $0.68 AUD-USD at time of purchase.

Qantas domestic had an underlying profit of just $30m for FY14 down from $365m in FY13, however Qantas International saw the biggest hit with an underlying loss of $497m compared with $246m in FY13

Jetstar had an underlying loss but I will focus on this in a separate post.

Qantas Freight made an underlying profit of $24m down from $36m in FY13, however Qantas Loyalty had the best result with an underlying profit of $286m up from $260m in FY13.

The Qantas Group expects to return to an underlying profit before tax in the first half of FY15 based on the following expectations:

• A target of $300m of Qantas Transformation benefits to be realised in the first half

• A stabilising operating environment, as market capacity growth subsides

• First half fuel costs in line with the first half of FY14

• The repeal of the carbon tax

• Reduced depreciation costs compared with the first half of FY14 

Fleet Changes

There are some interesting changes to the QF fleet coming out of this announcement.

QFi
- Gradual replacement of B747s with A330s on Australia to Asia routes including all SYD/BNE-SIN by Sept 2014
- Early retirement of 4x B747 with the remainder of the non-reconfigured B747s to leave by early 2016
- Push back the options on 50x B787 from 2016 into 2017
- Defer the delivery of the final 8x A380(previously announced)
- Defer the final 3 B787-8 deliveries for JQ (previously announced)

QFd - including QantasLink, Network Aviation, Jetstar and Jetconnect
- reduce turn time for domestic aircraft to improve utilisation
- refurbishment of B737-800 fleet to be completed by mid 2015, provides a total 3% capacity increase
- Early retirement of B767 fleet, to be gone by end of 2014!
- Retirement of Network Aviations fleet of Embraer Brasillia EMB120 effective immediately
- Retire 2x B738 due to increased utilisation, 1 to come from domestic 1 to come from Jetconnect
- Not renew lease on 2x A330-200s which will leave the fleet in early 2016
- 5x A320s ordered for Jetstar have been sold
- 2x QantasLink Q300 will be sold during FY15
- defer order for 21x A320 for Jetstar by 4 years and convert into order for 21x A320neo


Read all of the announcements to the ASX, including the media release, the CEO's address, the Investor presentation and the Fleet Update HERE

QF 'give up' share on tasman with route cuts

In another sign that QF is struggling, the airline has announced they will cut up to 15 Trans-Tasman flights to Auckland per week.

From October 26th Qantas will cut their MEL-AKL and SYD-AKL services by one flight a day while cutting BNE-AKL to just 5 flights per week down from double daily.

In July 2013 Qantas pledged to maintain "existing capacity on trans-Tasman routes that both Qantas and Emirates fly" as a condition of approval for its partnership with Emirates, and the airline says it will continue to comply with that requirement.

Most if not all of these flights are operated by Jetconnect the New Zealand based subsidiary airline that has a lower cost base than Qantas itself.

Jetstar will step in adding a new 6x weekly MEL-AKL and weekly SYD-AKL services but will drop their 3x weekly ADL-AKL service.

Virgin Australia and Air New Zealand are expected to benefit as their alliance picks up any additional passengers and or flights required on these routes, as VA earlier this year reported that Trans-Tasman was in good shape.

Read more about Qantas' cuts from Australian Business Traveller editor David Flynn HERE

End of the 737 'classic' era at QF

Qantas have rounded out the 737 'classic' era (737-300 & 400 models) with Boeing 737-476 VH-TJS named Jabiru flying the final service of the type on Sunday 23-February-2013 as QF819 CBR-MEL.

VH-TJS was ordered by Australian Airlines and delivered new to them in early 1993 and was transferred to Qantas when the airline merged later that year.  It has flown for the National airline ever since.

While the retirement of VH-TJS and the Qantas Boeing 737-400 fleet see's the end of the era for the fleet on scheduled RPT service by the major carriers, the 737-300s & 400s continue to fly on in Australian skies.

There are 11 737-300s and 2 737-400s that still regularly popup around the traps.

Qantas subsidiary Express Freighters Australia (a former joint venture with Australia Post as Australian Air Express) operates a fleet of 4 Boeing 737-376(SF) in Qantas Freight colours, which cross the night skies flying freight between the Capital cities.  All four of these aircraft flew with Qantas domestically and also with Jetconnect the New Zealand subsidiary of Qantas before being converted to freighters.

Airwork NZ Limited operate a fleet of freighters in Australia on behalf of Toll Holdings this comprises 3x Boeing 737-3B7, 1x Boeing 737-3S1 & 1x Boeing 737-4Q8, these aircraft also fly in New Zealand.  Airwork has a further Boeing 737-476 ZK-JTQ which operates in Australia on charter, recently for Alliance Airlines on FIFO work.  This aircraft was also formerly Qantas & Jetconnect.

The other carrier that keeps the 'classics' in the Australian skies is Air Nauru which operates a fleet of 3 aircraft on scheduled services to Nauru, as well as FIFO and government charter work.

QF trans-tasman changes

As part of their alliance with Emirates, Qantas have announced changes to their trans-tasman services opening up the international network to New Zealand travellers.

All changes will come into effect from 27-October-2013

The biggest announcement is the introduction of twice weekly Perth-Auckland flights for the December - January  period.

The new Auckland-Perth service will operate during the holiday season with a twice-weekly A330 service from early December this year through to 1 February 2014.

As stated these flights will operate with an international configured Airbus A330 which gives Business travelers the option of lie flat seats which will be useful on the overnight PER-AKL leg.
This service will operate as QF111 PER-AKL 20:30-07:50* and QF112 AKL-PER 11:40-14:05

The announcement will also see a lot of the existing QF4* codes replaces by new QF13*/14*/15* codes.

Christchurch currently sees QF45/46 operare SYD-CHC-SYD during the day, this will be changed to operate as QF139 SYD-CHC in the evening with a 23:55 arrival and the return will now operate as QF138 CHC-SYD with an 07:30 departure, opening up connecting international flights out of SYD.

The only QF service not to see a timetable change is QF38 MEL-WLG which will become QF172 all other services see a timetable change of around 30 minutes

A full list of the flight number changes is

Read more from the official Qantas Press Release HERE and the NZ Heralds article on the new Perth service HERE

Jetconnect OK - FWA

Fair Work Australia (FWA) have rejected the claim from Qantas Pilots (AIPA) that Qantas' New Zealand subsidiary Jetconnect is a sham set up to undercut wages and conditions.

The Australian International Pilots Association had been hoping a favourable decision would bolster their campaign to get all pilots flying Qantas planes operating under the same award. The ACTU also joined the test case, which had the potential to affect other Australian companies operating overseas.

 The ruling also found that AIPA was unable to represent the Jetconnect Pilots.

"New Zealanders living and working in New Zealand for a New Zealand company should be subject to New Zealand's industrial laws and agreements and not to Australia's industrial laws," Ms Wirth said.

Read more of the AIPAs case and reaction as well as the FWA decision from Steve Creedy at theaustralian.com.au HERE

More QF industrial hassles

Qantas is facing serious strife as its long-haul pilots vote to take protracted industrial action.

Australian and International Pilots Association (AIPA) vice-president Richard Woodward yesterday said 94 per cent of the 1429 pilots who voted in a ballot were in favour of the action.

If the pilots vote over the weekend to take their action in the form of a strike it has the potential to ground all Qantas flights through New Zealand, both the trans-tasman services and the SYD-AKL-LAX service.

Read more from stuff.co.nz HERE