Blow for Boeing as Qantas flies with Airbus for mega domestic fleet replacement project

Boeing and its 180-seat 737 MAX have been dealt a hammer blow after long-time customer Qantas abandoned the Seattle aerospace giant in favour of Europe’s Airbus and its A320neo family of narrow-body jets as part of its Project Winton fleet refurbishment.

Qantas has also ordered the smaller Airbus A220 for its regional operations.

Both aircraft types are expected to cut airport noise by up to 50 per cent and emissions by about 20 per cent.

Subject to final board approval, an order is expected by mid-next year and will consist of 40 firm commitments – 20 A321neoXLR (extra long-range) and 20 A220 aircraft – and 94 purchase right options, with flexibility on timing and mix of aircraft from the two aircraft families.

Once finalised, it will the largest aircraft order in Australian aviation history.

Aircraft would start arriving by the first half of the 2024 financial year, with deliveries spread over the following 10-plus years, as the airline’s existing Boeing 737-800s and 717s reach the end of their lifespan.

Airbus A320 and A220 side by side.
Camera IconAirbus A320 and A220 side by side. Credit: Credit Airbus

Qantas has 75 174-seat 737-800s and 20 100-125 seat 717s. The shortlisted replacement aircraft are the Boeing 737 MAX, Airbus A320neo, at the higher capacity end, and the Airbus A220 and Embraer E-195 E2 with smaller capacity.

The order is in addition to Jetstar’s existing agreement with Airbus for more than 100 aircraft in the A320neo family.

This is a long-term renewal plan with deliveries and payments spread over the next decade and beyond, but the similarly long lead time for aircraft orders means we need to make these decisions now.

Qantas said part of the appeal of the new deal was the ability to combine two orders so the airline could draw down on a total of 299 deliveries across both the A320 and A220 families as needed over the next decade and beyond for Qantas, QantasLink and Jetstar.

Financial details of the deal are confidential but represent a material discount from list prices.

The A321neoXLR can carry around 15 per cent more passengers on each flight than the airline’s existing B737-800s, making it well suited to busy routes between capital cities like Melbourne, Sydney and Brisbane. Its longer range means it can also be used to open up new city pairs from Perth.

The small and medium-size A220s provide Qantas with flexibility to deploy the aircraft throughout most of its domestic and regional operations. They could also be used during off peak times between major cities and on key regional routes to increase frequency.

Both aircraft types will be powered by Pratt and Whitney GTF engines and will deliver fuel savings of between 15 and 20 per cent, contributing to the airline’s broader emission reduction efforts.

Alan Joyce, chief executive officer of Qantas Airways Ltd.
Camera IconAlan Joyce, chief executive officer of Qantas Airways Ltd. Credit: Brent Lewin/Bloomberg

Qantas chief executive Alan Joyce said the long-term renewal plan, with deliveries and payments spread over the next decade and beyond, meant a decision on orders needed to be made now.

“This is a clear sign of our confidence in the future and we’ve locked in pricing just ahead of what’s likely to be a big uptick in demand for next-generation narrow-body aircraft,” Mr Joyce said. “That’s good news for our customers, our people and our shareholders.

“The Airbus deal had the added advantage of providing ongoing flexibility within the order, meaning we can continue to choose between the entire A320neo and A220 families depending on our changing needs in the years ahead. The ability to combine the Jetstar and Qantas order for the A320 type was also a factor.

“The A320 will be new for Qantas domestic, but we already know it’s a great aircraft because it’s been the backbone of Jetstar’s success for more than 15 years and more recently operating the resources industry in Western Australia.

“The A220 is such a versatile aircraft which has become popular with airline customers in the United States and Europe because it has the capability to fly regional routes as well as longer sectors between capital cities.

“The combination of small, medium and large jets and the different range and economics they each bring means we can have the right aircraft on the right route.

“Importantly, these aircraft will deliver a step change in reducing fuel burn and carbon emissions compared with our current fleet, which gets us closer to the net zero target we’ve set.”

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