Qantas bucks plane order slump

Geoff Dixon: "The domestic market has changed fundamentally"

Australian flag carrier Qantas is to back its domestic operations with 17 new aircraft, in one of the few fresh plane orders announced since the 11 September attacks.

The order, worth 1.5bn Australian dollars (£526m; $761m), will give Qantas up to 70% of the capacity in the Australian domestic market following the collapse of rival Ansett.

"The domestic market has changed fundamentally and irrevocably over the past year and our new strategy will enable us to meet the increasing customer focus on flexibility," Qantas chief executive Geoff Dixon said.

Qantas also confirmed plans to modernise its existing fleet were on track and that British Airways, a 25% stakeholder in the Qantas, was keen to hold onto its shares.

New planes

The airline will buy 15 long range, narrow body aircraft, either Boeing 737-800s or Airbus A320s, and two Dash 8 aircraft.

Mr Dixon said the outcome of talks with Airbus and Boeing would be announced next week.

Airbus, a unit of the European Aeronautic Defence and Space (EADS) and BAE Systems, on Thursday lowered its global delivery forecast for 2002 to 315 aircraft from a previously estimated 413.

Qantas has about 85% of the domestic market after the federal government asked it to pick up Ansett routes.

Qantas also said it was on schedule for a $4.6bn fleet upgrade, in addition to Thursday's order.

"The first aircraft will be coming in November of next year and it's on track and it has not changed," Mr Dixon said.

Financial results

Qantas chairman Margaret Jackson said the airline expects, later on Thursday, to deliver a pre-tax profit for the current financial year but warned of the difficulty of making accurate forecasts.

Qantas said it saw a "major upsurge in cancellations" following last month's attacks.

The weakness of the Australian dollar, which has raised costs of imported fuel, may also continue to affect earnings, Ms Jackson said.

But she added that the carrier was "relatively confident" of prospects.

Speculation has also mounted that British Airways has sought to sell its A$1bn (£351m; $510m) stake in Qantas amid the current downturn in the global aviation market.

Qantas chief executive Geoff Dixon said he had spoken on Wednesday to BA chief executive Rod Eddington, who had: "expressed his desire to be able to keep his Qantas shares but these are very volatile times".

Trading in Qantas shares was halted on Thursday ahead of a A$300m equity raising to partly fund the new aircraft purchases.