Qantas to buy Boeing 737s ordered by American
Qantas, the Australian airline, is to form a strategic alliance with American Airlines and is to buy up to 75 Boeing 737 aircraft ordered by the US carrier to help it meet demand in the domestic market.
The decision, announced on Sunday, is a blow to Airbus which had hoped Qantas, one of only a handful of airlines around the world that is expanding, would choose its A320 rather than the next-generation Boeing 737-800.
Qantas said the deal with American Airlines, already its partner in the OneWorld alliance, meant it could take delivery of the first batch of aircraft as early as January.
It is to buy 15 Boeing 737-800s originally destined for American with an option to buy up to a further 60 – 20 more than expected – as it gradually phases out 737-400s and 737-300s from its core domestic fleet of 111 Boeing jets.
The carrier is scrambling to add extra capacity to take advantage of last month’s collapse of Ansett, its main domestic rival, and bolster its position while talks to save the airline – which has resumed limited services – continue.
No value was put on the deal, part of Qantas’s recently announced A$1.5bn (US$753m) upgrade of its domestic fleet, but Boeing said the 15 aircraft had a catalogue value of US$910m.
Analysts said that given the difficulties in the global aviation sector following the September 11 terrorist attacks, they expected Qantas had negotiated a discount of at least 20 per cent.
American has been among the hardest hit, announcing last week the largest quarterly loss in its history, while Boeing has said it will cut up to 30,000 jobs from its commercial jet division.
Qantas will fund the order partly from this month’s A$450m rights issue, lifted from A$300m after strong demand.
The Sydney-based carrier, in which British Airways has a strategic stake, also revealed relatively little about its alliance with American, saying it was still working out the details.
But it said that among other things, Qantas aircraft would be configured to the same specifications as American’s to enable the two airlines to lease each other’s aircraft at short notice and for short periods.
Code-sharing and frequent-flyer arrangements between the two airlines would also be increased, Qantas would take over space in American’s terminal at Los Angeles airport, while the US carrier would also provide technical support and training for the new Boeing 737-800s.
Sunday’s order will compensate Boeing for the loss to Airbus last year of most of a Qantas contract for a US$4.6bn upgrade of its long-haul fleet.
The airline ordered 15 Airbus aircraft, including 12 of its A380, and just six Boeing 747-400s.
