Qantas Cancels Boeing Orders

Following the announcement that Qantas has posted its first loss, the airline company has cancelled orders for new Boeing planes.

The company was set to purchase about 35 news 787 Dreamliner planes.

According to Qantas, the cancellation of purchases would help improve its bottom line but about US$140 million (or $134 million). Industry analysts, however, are concerned whether this is a sound decision since this may affect long-term growth potential of the company.

Qantas reported a $244 million new loss for the first half of 2012, blaming high prices of fuel, fleet grounding, and industrial disputes.

According to reports, Qantas would receive about US$433 million for “contractual liquidated damages.” About US$140 million would be plowed back to the Qantas’ bottom line.

Alan Joyce said this is a good deal for the company. Joyce is the chief executive officer of Qantas.

Qantas walking away from the purchase indeed has raised the eyebrows of industry analysts. Russel Shaw, an equities analyst from Macquarie, said the new planes would have allowed Qantas to compete with other Asian carriers.

Qantas also has purchase rights and options for about 50 787-9 aircraft. These models, however, have been delayed and would not arrive until 2016.

The company remains confident even with the cancellation of the Dreamliners planes. Qantas said it is a deliberate decision to ensure that the company becomes profitable again within the next three years.