Australia’s flagship carrier Qantas Airways has cancelled orders for 35 Boeing Dreamliner jets to further cut costs after posting a full-year net loss for the first time in 17 years, due to its struggling international division. The airline has also recently been hurt by rising fuel prices and a series of strikes that temporarily grounded its fleet.
The airline reported a shortfall of A$244 million in the 12 months ended June 30, with the biggest impact on Qantas’ earnings coming from the losses at its international operations, which reported a net loss of A$450m.
Chief Executive Alan Joyce declined to give any guidance for earnings in the current year due to the uncertain global market conditions, but said the airline remained committed to reaching break-even in its international business in financial 2015. Joyce cited “lower growth requirements in this uncertain global context” as the main consideration for cancelling the Boeing order.
Qantas embarked on a five-year turnaround strategy announced last year and is now separating its loss-making international business from its profitable domestic unit, aiming to eliminate loss-making routes. This measure is also expected to see 2,800 airline jobs cut.
The carrier has confirmed that deliveries of 15 787-8s to Jetstar, its low-cost subsidiary, will continue as planned, which will allow the transfer of Airbus A330s from Jetstar to Qantas Domestic, and the eventual retirement of Qantas’s Boeing 767 fleet.
Boeing has not issued a statement on how the cancellation will affect results moving forward.