Qantas Airways (ASX:QAN) this week said it is cancelling an order for 35 of Boeing Co.’s (NYSE:BA) new 787-9 airplanes, a deal that was worth $8.5 billion.
The struggling Australian airline said it was dropping the order as part of a plan to cut costs at its loss-making international business, after it confirmed its first full-year net loss since it was privatized almost two decades ago.
Qantas posted a $257 million loss for the twelve-month period ending June 30, on rising fuel prices and after series of strikes wreaked havoc at its international division.
The Boeing 787-9 Dreamliner is a slightly larger version of the 787-8 and can carry 250 to 290 passengers on routes spanning 8,000 to 8,500 nautical miles. The 787 provides airlines with higher fuel efficiency, resulting in high environmental standards. According to Boeing, the airplane uses 20 per cent less fuel than its peers.
Boeing is the largest aircraft manufacturer in the world based on revenues, orders and deliveries, and is also one of the largest aerospace and defense contractors.
In its 2012 current market outlook, Boeing said it estimates a $4.5 trillion market for 34,000 new commercial airplanes over the next 20 years.
The company said airline traffic is forecast to grow at a five per cent annual rate over the next two decades, with cargo traffic projected to grow at an annual rate of 5.2 per cent.
Boeing recently raised its full-year 2012 earnings per share guidance to a range of $4.40 to $4.60, versus its earlier guidance range of $4.15 to $4.35. The company's revenue guidance for 2012 is in the range of $79.5 to $81.5 billion, versus the earlier range of $78.0 to $80.0 billion.
The aircraft maker said it expects to deliver between 585 and 600 commercial airplanes for the full-year 2012, including an expected 70 to 85 787 and 747-8 deliveries. Commercial airplanes' 2012 revenue is expected to be between $47.5 billion and $49.5 billion.
Boeing expects defense revenue for 2012 to be between $31.5 billion and $32.0 billion.