QANTAS BOARD ANNOUNCES 10-YEAR FLEET PLAN

 Qantas Airways today announced its decision to purchase 31 new aircraft as part of its long-term fleet plan to provide for market growth and for replacement of existing aircraft.

The plan includes:

· 13 Airbus A330-200 and A330-300 aircraft for delivery between 2002 and 2005 to provide for growth on domestic routes with flexibility for regional international operations;

· Six Boeing Longer-Range 747-400 aircraft with enhanced performance capability for delivery between 2002 and 2006 to handle growth on international long haul routes;

· 12 Airbus A3XX aircraft for delivery between 2006 and 2011 to meet passenger growth on selected long haul routes.

Chairman, Margaret Jackson, said the decision was the result of an intensive study involving the Board and all areas of the company and took account of the airline’s major capital needs and core business strategies.

She said the fleet plan represented an approach consistent with the airline’s growth over the past five years.

“The total cost of these announcements, including start-up expenses, infrastructure, engines and parts, is approximately US$4.6 billion over the next 10 years. At today’s exchange rate this is approximately A$9 billion.

“Qantas will fund the capital investment by a mixture of operating cash flow, debt and equity in order to maintain existing target gearing levels.

“This fleet plan also signals clearly the Board’s intention to continue the strategies that have served Qantas well. These include managing carefully the asset base, maintaining the emphasis on productivity and efficiency and meeting the competition in a vigorous manner.”

Ms Jackson said the fleet strategy was designed to provide Qantas with optimum flexibility to respond to changing competitive and market conditions over the 10-year period.

“These purchases have been structured to provide maximum risk protection to Qantas,” she added.

Chief Executive, James Strong, said the plan represented important decisions on aircraft types that would set the basic structure of the domestic and international aircraft fleets for Qantas for the next decade.

“The plan takes into account expected steady growth in key Qantas markets, plus replacement of several fleet types during the same period,” he said.

“The airline expects to retire its Boeing 747 Classic aircraft from the international fleet, as well as B767-200 aircraft from the domestic fleet.

“In addition to the firm orders for 31 aircraft, there are options with a great deal of flexibility to adjust to changing circumstances of faster or slower growth rates in the market,” Mr Strong said.

Chief Executive Designate, Geoff Dixon, said that during its 80-year history Qantas had developed a leadership role in the selection of new aircraft types, such as its decision to purchase Lockheed Constellations in the late 1940s, Boeing 707s in the 1950s and the Boeing 747 a decade later.

“It is appropriate that Qantas will be a launch customer for the A3XX - the world’s largest commercial aircraft – to meet longer-term passenger growth on key routes between Australia and the United Kingdom and the United States,” he said.

“We selected the A3XX for a variety of reasons, including its payload capability, operational and economic advantages and its developmental potential as the start of a new aircraft type.

"Importantly, it will assist us to meet growth at slot-constrained airports on our key routes. The aircraft also will enable us to further enhance our onboard customer product consistent with our recognised tradition as a pioneer in the development of long-haul air travel.”

Mr Dixon said Qantas was the first airline in the world to order the Boeing Longer Range 747-400 aircraft with Increased Gross Weight (IGW). It would be used to meet passenger growth on international long haul routes.

“This model is a further development of the existing B747-400 and will fit seamlessly into the existing Qantas fleet of Boeing 747s.”

Mr Dixon said that Qantas had selected the A330-200 and the A330-300 aircraft because of the flexibility to meet changing requirements in the domestic and the international markets.

“Our order includes seven of the 200-model aircraft and six of the 300-model. The A330 is a new-technology, twin-engine aircraft that is capable of shorter and medium range operations and will provide our customers with a wider and more spacious cabin,” he said.

Mr Dixon said existing aircraft types that would remain as integral components of the fleet throughout the 10-year period were the B747-400, B767-300 and B737 models.