Qantas CEO would like to order 45 more Boeing 787s if the first ones prove their worth

If you recall when Qantas first ordered the 787 the plan was for Jetstar to get the -8's, then when the -9's arrived they would go to Jetstar with the Jetstar -8's then transfering to Qantas domesitc for that very reason.

And PER-SIN

@ Chris McKellar:

"Air NZ, like their 789's as they are very cost effective if used on flights 5 hours or more....also confirmed by other carriers who use 787's for medium to long haul flights."

Given the right cabin density/seat count, I'd argue that the 788 & 789 are also @ least ok for shorthaul down to 1.5-2hrs duration in terms of cost effectiveness.  Why?  Just look @ how 788+789 hv been deployed by NH - the largest 787 operator in the world by far(Also longest op experience...nearly 5yrs).  They've already got 50 frames in service(i.e. more than double the 787 fleet size of NZ+JQ combined) and 13 of them in hi-density cabin config are deployed purely for multiple daily domestic duties where no route is over 3hrs.

"..A350 is a late entrant...data is not currrently available but it won't be long...their performance data pans out over short....haul operations."

It may but will take a long time to determine if ever at all.  So far no 350 operators hv planned to deploy any on 3hrs or shorter sectors @ multiple daily frequencies(I'm talking about 20-30 cycles or more per day fleet wide).  In sharp contrast, NH has been doing exactly that with 787 for 5yrs accumulating loads of shorthaul op performance data.

Tech-wise fundamentally, the 350 platform is a slightly more heavy-duty design(Also why AIrbus can develop 359ULR relatively cheap+quick) than the 787 platform.  The 359 is a heavier+larger airframe than 789(let alone 788) while both use turbofan designs fm a similar fuel efficiency tech generation.  In shorthaul ops, airframe weight is typically a bigger driver for fuel efficiency than any advantage(Tiny diff between 787 vs 350 families anyway) in engine+aero design factors.

"..Qantas...is in the process of what bulk discount that Boeing is going to give them."

No, it is not.  QF doesn't hv to.  The hefty discount price(Commonly known as program launch discount by the industry) for those 45 options+purchase rights hv been negotiated, inked and signed by Boeing and QF on the 787 contract 11yrs ago and remain valid today.

Yup, AJ being able to buy 787 @ extremely low price today is essentially a windfall /gift /inheritance fm Geoff Dixon.

On the other hand, I recall Geoff Dixon did go absolutely wild with 787 a decade ago when he committed QF for upto 115 units(Firm+Options+Purchase rights) for a design in which the 1st prototype had not even been built yet @ that time..... 

Air NZ as the launch customer of the 789, has being working closely with Boeing on the 789 performance.  As mentioned, Air NZ's own satistics have shown, the 789 is a cost effective aircraft on short,  medium and long flights but is more cost effective on medium to long haul routes as oppose to short haul routes like between NZ and Oz, hence Air NZ's deployment  of the 789's to medium to long haul routes, as these routes have low take off/landing cycles, compared to high take off/landing cycles that ANA 788/789's are doing on domestic and short haul routes.

You also do have to factor in that Japan is around 1.5x the size of Victoria with 6x all of Australia's population (Tokyo alone has more people than Australia and Canada). Surely they can make a few 787s work (Coast 2 Coast and Trans-Tasman) but I don't think overall they'll be a better fit for Oz domestic market.

@Rishi:

"...they can make a few 787s work...but I don't think overall they'll be a better fit fit for Oz domestic market."

Fully agree and not limited to the 787...e.g. 350 will be in the same shoes.  In fact, few domestic markets worldwide can sustain extensive widebody ops like in Japan.

In terms of op econ or fuel burn per seat, a narrowbody(Especially those looong ones like 321Neo or Max9) always beats a widebody on any route within narrowbody payload/range envelope.

However in shorthaul ops, the 787 is equal to(Or even better than) any other widebody types in terms of fuel burn by virtue of having the latest tech(e.g. superior to any 330Ceo or 767) OR the lightest airframe design(i.e. superior to any 350 or 777).  For the most fuel efficient widebody type in shorthaul ops in the future, I believe the 339Neo(338Neo is still too heavy for its size) will be the only widebody competitor that can come close to the 787.

Although I'm not saying they should order all 45 at once though. Also with the 15 options do they have to be ordered or delivered by 2020. Cause if it's the second wouldn't they have to add more to the second 4 on order in the FY19 timeframe? Does that make sense?

@ Christopher:

"...the 15 options do they have to be ordered or delivered by 2020."

Basically yes.  Regardless of customer, every option has a fixed delivery period for an airframe usually in a specific quarter(or even month) in a specific year.  If QF convert all 15options into firm orders, delivery of these 15airframes will start most likely right after delivery of airframe #8(i.e. the final one scheduled to arrive sometime before mid-2019) on QF's existing firm order.

The only trick is that QF must confirm with Boeing(Along with progress payment) to convert any or all 15 options into firm order typically @ least 1.5yr prior to delivery.  This is the minimum delivery lead time for Boeing production planning(e.g to order certain parts or config on a 787 specific to QF but not other customers, plan whether Everett or Charleston will build them, etc.).  Otherwise, each option held by QF, in turn, will lapse /expire and the production slot reassigned to other customers.

If AJ wants 787 airframe #9 to arrive shortly after mid-2019, converting his options into firm in mid-2018 will actually be too late per industry norm.  He must make that decision by early 2018 @ the latest....when QF will be operating just 1 or 2 airframes of 789 @ that time. 

True, but it also might have something to do with the differing cost bases and service standards of Qantas vs. Jetstar.

That's true, although they know without a doubt they will make considerable more money than the 747s. 

They likely would also be getting data from their partners already using 787s such as LAN, JAL and AA.

@ Harry:

"I think they've learnt from their A380 order."

Ahhh..that other huge part(literally too) of QF fleet legacy once again left by Geoff Dixon....

I think it's more about adapting to the evolving global mkt than learning.  To be fair, the Gulf Big3 & their networks were much much smaller potatoes while UA was the only real competitor in nonstop Trans-Pcfwhen Geoff believed QF needed 380-size machines and committed to 12firm+12options 16yrs ago. 

A right decision made 16yrs ago could easily become a wrong decision today in a highly volatile industry such as the airline sector.

Ironically, Goeff's original decision in 2000 to firmly commit to 380 x12 for QF is still right for today......QF currently has no problem to fully utilize its 380 x12 fleet @ reasonable or even favorable R.o.I.

Do you have a URL that exposes the scrapping of RR and GEnx replacement?  Bloomberg only highlights that RR will replace the blades on all 100 engines (which I assume for nix as they are under TotalCare) - the cost of such a transition is market moving for GE and RR..

https://www.bloomberg.com/news/articles/2016-08-30/ana-to-replace-some-rolls-royce-engines-on-boeing-dreamliners

Hi ASW,

Wish I had included the original link in my post. It appeared on Yahoo Finance approx 8 hrs ago, but appears to have been redacted and re-edited to indicate that 'ANA is working with RR to "replace" fan blades.'

This is now in-line with later reports being carried on sites such as Reuters, Bloomberg and Business Insider.

Irrespective of ANA 'working with RR', the mere fact that RR is committed to repacing ALL engines on ANA's entire B787-9 fleet should still raise some red flags - given ANA's prominence as the largest operator of the type .. and the 3 reported engine failures.

Apologies .. but just reporting in-situ. Regrettably, in a fast-paced world, redactions and re-writes do happen.

Agree - better to have fast reporting with an occasional redaction than wait for perfection..  

Rishi the full order has been public for ten years or more. They reduced it slightly a couple of years back but they have locked in (low) price for 45 (I think), so they will be taking 4-5 a year for quite some time. Maybe a few more a year after the first 8 but it will probably be only one every couple of months just for logistical reasons.

Yes I knew that they had 40+ purchase rights that's why I was wondering why they didn't order more than 8 since they were already very profitable and had the capacity to order more. I was thinking perhaps they'll convert to 777-9x orders.

The B777X only has the X when you when you mean as the airline 777X family. There is no X when you say B777-9 or B777-8. 

Boeing changed the naming of the B777X family earlier this year.,

Apologies, last time I checked Boeing they were throwing around 777-8x and stuff, wasn't aware they changed it.

@ Rishi:

But U've forgotten that QF was NOT profitable before 2014/15.  In fact, it made 1 of the biggest lost in QF history in 2013/14.  The order for eight 789s was placed in mid-2015 right after the 1st yr when QF returned fm deep red to black ink.  To convince the QF board+major shareholders to commit to significantly more 787 than that, I imagine any rational CEO like AJ would like to see 2-3yrs of consecutive solid profitability before asking....which will take us to right around end-2017.....

If I was QF CEO and not as gutsy as AJ, I might hv only ordered 5-6 back in 2015 just in case the global air travel or oil mkt do funny things again to my airline's P&L/income statement in the nex few yrs.....

The original order, in 2004, was for 115 787s with 65 firm orders and the rest a mix of options (20) and rights (30).

In 2009, 15 firm orders were cancelled. In 2008 another 35 were cancelled, leaving 15 orders.

11 of those remaining orders were taken as 787-8s for JQ. Another 1 was cancelled and the remaining 3 converted to the first QF 787-9s with 5 of the options firmed, leaving the current book of 8 orders, 15 options and 30 rights.

Thus, of the original firm order, 11 have arrived for JQ, 51 have been cancelled and the last 3 arrive next year. Everything QF has now, without a new order (and likely different prices to the current book) are the original options and rights made in 2004.

*In 2012 another 35... ^^;;

@ Himeno:

Excellent summary of 787 commitment history by QF Group across  the last 11-12yrs.

I'd suggest that the 4 year late delivery (planned for 2007, delivered by Boeing finally 2010-2011) might have been the first hint. Add in the issues over exploding batteries and grounding of worldwide B787-8 fleets - and there's the 2nd hint.

Mind you, those 'delayed delivery compensation payments' which QF received from both Boeing - and Airbus for the less delayed A380's - did prove to be more than fortuitous for the bottom line, at the time.

For all of QF's faults, it is still a 'safety-conscious' carrier - and by definition, always respectably cautious.

@ zoomzoom:

It is a great aircraft but unfortunately, won't be available @ a great price for QF.....@ least nowhere near the price level all of us can   imagine being stated on QF's 787 contract signed 11yrs ago.

That ship for QF to get deep launch discount for 350 has sailed a long time gone when Geoff Dixon betted on 787 instead.