Ann: Wet lease agreement options with Qantas Airways Limited, page-7

Yesterday’s AQZ announcement stated they currently had a fleet of 10 E190’s of which Qantas has 4 operating with a further 4 to by flying by 1 February. My assumption with the options over a further 10 E190’s is that QAN has first call to use these if they choose to, but that the dates that they can start using them will reflect the expected timing of the delivery to Australia of these aircraft. AQZ’s risk is that QAN doesn’t exercise these options and AQZ needs to find other uses for the aircraft. Along with Xandrax, I’m relaxed as the cost of mothballing isn’t huge and alternative uses evolving over time are likely to produce a greater financial return to AQZ that flying for QAN would deliver. For all that, I expect passenger demand to boom as COVID restrictions ease, together with the need to compete with new routes opened up by Bonza and the desire to put the squeeze on Virgin will mean that QAN will exercise the remaining 10 options over the coming year.

Failure of QAN to exercise the remaining 10 options also means that Virgin might be interested in expanding their regional flying through use of AQZ spare E190 capacity.