Qantas has joined the great international airline rush to snap up new passenger jets between now and 2017.
A plethora of orders for Airbus and Boeing jets has been reported in recent days, centred on the Dubai air show where around 290 Airbus planes have been ordered and just on 200 Boeing jets, mostly its new Dreamliner.
The order for new Airbus and Boeing Dreamliners, some 188 in all, dominated yesterday's Qantas AGM in Melbourne.
Qantas said its orders were worth around $US8 billion and would take the value of all existing orders to around $35 billion.
Emirates last week signed contracts for a 120 Airbus A350s, 11 A380s, and 12 Boeing 777-300ERs, worth an estimated $US34.9 billion in list prices
This is on top of a string of other orders in the past couple of months.
The news seems to have spooked the market a bit with Qantas shares shedding 7c to $5.77 after the order was announced. That's a long way from its recent peak of $6.06.
But of greater importance was the news of greater financial disclosure in the interim profit report next February, with both retiring chairman, Margaret Jackson and CEO, Geoff Dixon, revealing details of what will be a revolutionary change in disclosure at the normally tight lipped airline.
Important as that was, there was no update in the prepared speeches from the chairman and the CEO for current trading conditions.
The closest CEO Mr Geoff Dixon came to saying anything about current trading in his speech was this:
"To succeed at Qantas we have no alternative but to be competitive on a cost basis, an issue especially important as crude oil prices move close to $100 a barrel! We have hedged 79 percent of our crude oil needs for this financial year and we have been largely able to mitigate the current impact because of the strong demand environment, the escalating Australian dollar and the use of fuel surcharges. But we will still need to monitor developments closely."
So some things stay the same at Qantas, despite the appearance of changes.
That was a source of much criticism during the abortive Airline Partners Australia takeover battle which kicked off just under a year ago.
Mr Dixon told the AGM that "As well as disclosing the profitability of our Frequent Flyer Program and Freight businesses for the first time when we report our half year results in February, we will also update the market on the progress of our growth strategies for these businesses.
"We are, as previously announced, working on a separate fleet ownership vehicle and will have more to say about that at our half year results as well.
"There has also been a great deal of market speculation about what we might do with Qantas Holidays. Suffice to say we have every intention of growing and expanding the business whichever direction we choose to take with it.
"Be assured the Board and Management are very mindful of the linkages between our businesses and the immense value of these connections…. as such, we will always retain control where deemed necessary and will proceed only on the basis of delivering greater value to shareholders."
The retiring chairman told the meeting that further value will be unlocked with the establishment of the Frequent Flyer Program and the Freight business as separate entities within the Group. Qantas will separately disclose the profitability of these businesses in its results for six months to 31 December this year.
Ms Jackson said, "Qantas is also working on enhancements to the Frequent Flyer Program which will make it even more rewarding for members and drive future program growth. Qantas is also investigating the formation of a Fleet vehicle.
"By giving Qantas a more accurate picture of cost structures, the segmentation program has allowed the Group to make widespread improvements, for a major long-term effect on the bottom line."
Qantas said its aircraft order was the biggest in aviation history, buying up to 188 narrow body aircraft for short haul flights in a move that will almost double its fleet.
Firm orders for 99 aircraft have been placed, with options and purchase rights for another 89.
The Group will acquire:
* 68 A320/A321 aircraft, plus 40 options and purchase rights; and
* 31 B737-800 aircraft and 49 options and purchase rights.
These are on top of the Airbus A380s and the Boeing Dreamliners already ordered. The first of the A380s will be delivered next August, half a year or more late, for the Qantas mainline international fleet. The Dreamliner should be delivered soon after for Jetstar's long haul international routes.
The firm aircraft orders announced yesterday will be delivered over a six year period, while options secured additional delivery slots through to 2017.
Mr Dixon said that the Group had the ability to fund the aircraft without affecting its investment grade credit rating.
"This decision, together with existing A380 and B787 fleet commitments, secures an order stream for next generation aircraft that will allow the Group to meet long term demand growth and replace older aircraft over the next decade," Mr Dixon said in a statement issued to the ASX after the announcement was made to the AGM.
"The plan provides maximum flexibility to respond to changes in the market and competitive situation."
He said new aircraft will be used to defend Qantas' minimum 65% share of the Australian domestic market and to expand low cost services to South East Asia.
The plan also involves Jetstar opening new regional aviation bases in both Darwin and Perth over the next two years to serve fast growing Asian markets.
Most of the new aircraft will be Boeing 737-800s, and Airbus A320s.
The larger A321 aircraft in the order will have up to 213 seats, compared with 17
