All note the last paragraph. The man who should be running Qantas is doing a fine job at VA. Slash and burn and continue to shrink the business continues at QF. GLTA @ QF !
Qantas will postpone A380 deliveries to cut capital outlays. Photo: Getty Images Qantas will delay the delivery of its next two new A380 superjumbos by almost four years as part of further spending cuts and has announced a significant boost to flights on domestic routes in an effort to combat Virgin Australia's assault on its business flyers.
The large increase in flights raises the prospect of heavy discounting of fares by Qantas and Virgin Australia in the coming months as they slug it out for lucrative corporate travellers. The price war also threatens to flow into the low-cost end of the market with Qantas's budget offshoot, Jetstar, to boost flights.
Qantas revealed today that it will slash spending by a further $400 million next financial year, which is in addition to $500 million in cuts announced in February.
Advertisement: Story continues below The latest cuts take Qantas' capital expenditure next financial year to $1.9 billion or less.
The airline will achieve the spending cuts by delaying the delivery from Airbus of its next two A380s. They were due in Australia early next year but will now not arrive until 2016-17. The final six A380s destined for Qantas's fleet will be delivered from 2018-19.
Qantas's chief executive, Alan Joyce, said the ''significant capacity'' increases in the domestic market were focused on core business and leisure routes, and aimed at retaining its 65 per cent market share.
Mr Joyce and Virgin Australia's chief executive, John Borghetti, have recently upped the ante as they jostle for lucrative business travellers. Mr Borghetti recently hit out at Mr Joyce's insistence he will maintain its 65 per cent market share, telling the Qantas boss to ''get a new line''.
Virgin is trying to break Qantas's stranglehold on the corporate travel market by putting new A330 wide-body aircraft on key business routes, renovating airport lounges in Sydney and Melbourne, and boosting its loyalty travel scheme. It is also expected to roll out a rival to the invitation-only Qantas Chairman's Lounge.
But as part of its response to its rival's challenge, Qantas said today that it would boost capacity by adding extra services during peak hours on core east coast routes between Sydney, Melbourne and Brisbane.
It will reintroduce Boeing 747-400 services between Sydney and Perth, and put more wide-body Airbus A330 planes on the Melbourne-Perth run.
Qantas's budget offshoot, Jetstar, will also raise capacity in its key leisure markets, while regional subsidiary QantasLink will increase services in Queensland.
''We are in a good position to reduce capital expenditure, targeting investment at business areas that deliver sustainable returns while maintaining flexibility in forward fleet commitments,'' Mr Joyce said.
''With 12 A380s now in service and our Boeing 747 reconfiguration program well underway, we have made the financially prudent decision to reschedule a further two A380 deliveries – enabling significant capital expenditure savings.''
The company reiterated that it will be announcing its decision about its three heavy maintenance bases in Melbourne, Avalon and Brisbane by the middle of this month. The base at Melbourne's Tullamarine Airport is expected to be closed, while the future of the Avalon facility near Geelong hangs in the balance.
Shares in Qantas closed down 1 cent at $1.625 yesterday, while Virgin rallied more than 6 per cent to 41 cents after Mr Borghetti outlined his strategy at a broker conference in Sydney.
(20min delay)