Long-term: Qantas focuses on direct flights from Sydney-London with Airbus booking

  • Ordering 12 Airbus ultra-long-haul A350-1000 aircraft
  • Commercial direct flights from Sydney-London will start in late 2025
  • 20-hour trip to be the world’s longest direct flight
  • Order 20 A321XLR and 20 A220s to renew the domestic fleet
  • Total Airbus deal could be worth more than $ 4 billion – Barrenjoey

SYDNEY, May 2 (Reuters) – Qantas Airways (QAN.AX) will fly direct from Sydney to London after ordering a dozen special Airbus (AIR.PA) jets, charging higher prices in a multi-billion dollar effort that pilots will pay a premium to save four hours on the popular route.

Launched in late 2025, flights will use A350-1000 aircraft, specially configured with extra premium seats and reduced total capacity, to ferry up to 238 passengers on a 20-hour journey – the world’s longest direct commercial flight.

The loss-making carrier announced plans for the service on Monday, saying a sharp improvement in the domestic market and signs of an improvement in international flights after the worst of the COVID-19 pandemic had given it the confidence to make a major investment in its future. Qantas forecasts a return on profit in the financial year starting in July.

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The order from the European aircraft manufacturer also includes 40 narrow-body aircraft A321XLR and A220 to start the replacement of Qantas’ aging domestic fleet, with deliveries spread over a decade. The airline did not disclose the value of the Airbus deal, but analysts at Barrenjoey estimated in a customer note that it would cost at least $ 6 billion ($ 4.23 billion).

“Since the start of the calendar year, we have seen a huge increase in demand,” Qantas CEO Alan Joyce told reporters at Sydney Airport, where an Airbus A350-1000 test aircraft flown from France was adorned with the Qantas logo and “Our Spirit flies”. further “was parked in a hangar as a backdrop for the announcement.

Qantas shares rose as much as 5.5% on Monday to the highest level since November after also saying that debt levels had fallen to pre-COVID levels faster than market expectations.

The A350-1000 order was the culmination of a challenge called “Project Sunrise” set for Airbus and its rival Boeing Co (BA.N) in 2017 to build aircraft capable of the record-breaking flights.

Airbus was chosen as the preferred supplier at the end of 2019, but Qantas delayed placing an order for two years due to financial challenges during the COVID pandemic.

Airbus Chief Commercial Officer Christian Scherer said the aircraft to be used on the Sydney-London flights will offer more fuel storage than the A350-1000 which is currently in operation with other airlines.

The Qantas aircraft will carry passengers across four classes and will have around 100 fewer seats than rivals British Airways (ICAG.L) and Cathay Pacific Airways Ltd (0293.HK) use on their A350-1000. The Australian airline will dedicate more than 40% of the jets’ cabins to first-class seating.

CEO Joyce said that the demand for direct flights had grown since the pandemic, when complex travel rules came into place. Rising fuel costs can be covered through higher prices, he said, as the airline had previously done on its direct flights from Perth-London.

In a market update, Qantas said that while they expect an underlying operating loss for the fiscal year ending June 30, 2022, the second half of the year will benefit from improved domestic and international demand, with free cash flow increasing further in the current quarter.

Barrenjoey analysts estimate that Qantas could achieve a 20% revenue premium on the ultra-long flights, which Joyce said will also go to New York from the end of 2025 and possible future destinations such as Paris, Chicago and Rio de Janeiro.

Qantas’ estimated Project Sunrise would have an internal rate of return of around 15%.

($ 1 = 1.4180 Australian dollars)

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Reporting by Jamie Freed; Additional reporting by Sameer Manekar in Bengaluru; Edited by Diane Craft, Sam Holmes and Kenneth Maxwell

Our standards: Thomson Reuters Trust Principles.

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