Qantas today placed firm orders for 45 Everett-built 787 jetliners, the first of what eventually could amount to more than 100 Dreamliners the Australian airline ends up buying from the Boeing Co.
“It’s a very clear commercial decision, and a very merry Christmas for Boeing,” Qantas Chairwoman Margaret Jackson said at a Sydney, Australia, press conference announcing the decision.
On top of the firm order for 45 787s, Qantas took options on 20 more 787s and secured the right to buy another 50.
The airline’s chief executive, Geoff Dixon, said he regarded the options “as basically a done deal” and predicted that Qantas would exercise all of them, and most of the purchase rights as well.
“We would expect to take up, over a period of years, about a hundred of those,” he said.
The 65 firm orders and options are worth about $9.75 billion. However, analysts say airlines have been negotiating discounts of about 25 percent, and Dixon made it clear that Qantas had cut a particularly good deal.
“We believe our people have negotiated an extremely competitive contract,” he said, adding that price was a major factor in the decision to reject a competing bid for Airbus A350s.
Qantas surprised some observers, who had expected it to order a significant number of 777s, particularly the ultralong-range 777-200LR model.
“If Qantas had bought the LR, it would have been a huge stamp of approval,” said Scott Hamilton, an analyst with Leeham Co. in Sammamish.
Boeing’s 787 program chief, Mike Bair, said the company expects Qantas to come back later to order 777s.
But even without the 777 order, “this is a spectacular win for us,” Bair said. “Life is good.”
Hamilton agreed. “It sure was a big blow to Airbus.”
The first 10 planes will be 787-8s, which Qantas will turn over to its Jetstar subsidiary, which is poised to begin international service in 2007. The contract gives Qantas the right to decide later whether it wants more of the 250-seat 787-8s, or larger 787-9s.
Boeing committed last week to delivering the first two 787s in 2008. Dixon said that was a “pretty big determinant in our final decision. The board was very anxious that we try to get Jetstar up as soon as possible.”
The bulk of the planes will be delivered from 2010 on, Bair said. Boeing has essentially sold out its first three years of 787 production, 2007-09, but it held on to “a small handful of early positions we were protecting for strategic opportunities,” he said.
Bair said he believes Qantas moved to take advantage of those few remaining early 787s now, while continuing to study what to do about larger planes. Eventually, they’ll come back to order 777s, he predicted.
Dixon said the airline will continue to study its options. But for now, the long-range 777s – and Airbus’ competing A340-500s – “are out of the picture,” he said.
Qantas is looking for jets with the range to fly nonstop from Sydney to London, but at this point neither Boeing nor Airbus has a plane that could carry enough passengers and cargo for Qantas to offer the service at competitive fares, he said.
“We’ll continue to assess the 777-LR and others of them,” he said, but “we do not believe that the 777 at this stage suits our long-range plans.”
The Qantas order is the second of three major deals involving Asian-Pacific airlines expected to be completed this winter, and the second to go to Boeing.
Earlier this month, the first domino fell Boeing’s way when Cathay Pacific ordered 12 777s, rejecting an Airbus offer of A340s.
Singapore Airlines remains in the market, reportedly seeking to buy up to 60 long-range jets.
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