Qantas to spend A$1.5bn on fleet expansion

Qantas, the Australian airline, on Thursday announced a A$1.5bn (US$750m) aircraft purchase programme, making Qantas as one of the few carriers expanding in a stricken world airline industry.

The purchases would be partially funded by a A$300m share issue, with details yet to be finalised. BA would not participate in the issue, a policy which would slightly dilute its Qantas stake.

Qantas plans to buy 17 new aircraft, spearheading a fleet restructure partially designed to take advantage of last month’s demise of the company’s largest domestic competitor, Ansett.

Geoff Dixon, Qantas chief executive, said the new planes would be either Boeing 737-800s or Airbus A320s. When the decision is made, Qantas will also take options to purchase at least a further 40 aircraft.

With the first two aircraft scheduled for delivery in January, next year, Mr Dixon said the new fleet would give Qantas capacity to cover between 65 and 70 per cent of the Australian domestic market.

Qantas is currently operating at about 85 percent of the domestic market, reflecting interim arrangements to cover the loss of most Ansett flights, but Mr Dixon said this share would gradually reduce as rivals, including Virgin Blue, increased capacity.

Mr Dixon said while the US terrorist attacks had not hit 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.

Mr Dixon also dismissed speculation that its major shareholder, British Airways, wanted to sell its 25 per cent stake in the company.

Mr Dixon said he had been told by Rod Eddington, BA chief executive, that the British company had a “strong desire” to retain its stake, despite volatile times.

Qantas shares, which were suspended at A$3.24 on Thursday pending finalisation of the terms of the share issue, will resume trading on Friday.

Financial Times

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