Qantas cancels or delays 30 Boeing 787 orders

NEW YORK — Qantas Airways Ltd. said Friday it has canceled orders for some Boeing 787s and delayed delivery of others as the recession slows air travel and tight credit hampers purchases of new aircraft.

Like other airlines, Qantas is struggling to fill seats and said two months ago that it was renegotiating the delivery of 787s, originally ordered in 2005.

The “operating environment for the world’s airlines has clearly changed dramatically since then,” said Qantas CEO Alan Joyce.

Besides empty airline seats, carriers are struggling with a global credit crunch.

“Airlines being strapped for cash is half the problem,” said Peter Barlow, partner with Atlanta-based aviation group Smith, Gambrell & Russell. Another problem is that there’s very limited financing for any payments required ahead of the plane’s delivery and for financing the purchase price at delivery.

Qantas and Chicago-based Boeing Co. have agreed to postpone delivery of 15 787-8s by four years and cancel orders for 15 B787-9s, a slightly larger plane.

The move has nothing to do with the airplane maker’s announcement this week of a design problem in the 787 that caused yet another delay of its first test flight, Qantas said. The airline remains one of Boeing’s top 787 customers with 50 of the aircraft still on order.

The Australian national airline also has delayed delivery of four Airbus A380s for up to a year. In addition, it’s postponing delivery of 12 Boeing 737-800s.

In April, Qantas slashed its profit forecast and announced it would ground aircraft and cut 5 percent of staff in the face of slumping travel in international business and first-class.

The airline’s latest move will save it an estimated $3 billion, the estimated cost of 15 787s at current list prices.

Dramatic as that figure sounds, the loss or deferred delivery of that money is part of a global downdraft hammering both carriers and airplane makers.

The International Air Transport Association’s latest figures show passenger numbers plunging: They fell 9.3 percent last month compared with year-earlier levels while freight demand dropped 17.4 percent.

“We are seeing order cancellations and deferrals throughout the industry, signaling greater weakness in the manufacturers’ order books than they are willing to admit,” said Barlow, of Smith, Gambrell & Russell.

By itself the Qantas move does not pose any near-term threat to Boeing. For one thing, its other big 787 customer, All Nippon Airways Co. is standing by its order of 50 aircraft.

For another, the early 787s are seen by as some contributing little to Boeing’s bottom line.

Peter S. Jacobs, senior vice president of Ragen MacKenzie, said that although Boeing is probably disappointed that one of its biggest 787 customers is canceling orders, “as far as earnings, there probably won’t be an impact because the 787 will have a zero profit margin on the first several hundred they build, by my estimate.”

However, the problems with delays on the 787 give airlines an easy out to defer or cancel orders.

He expects more deferrals and cancellations of the aircraft, which is designed as a mid-sized, long-haul jet that seats between 210 to 330 passengers. The passenger jet will have a lightweight composite fuselage, and Boeing says it will be about 20 percent more fuel efficient than planes of comparable size.

Boeing said Tuesday that it needed to reinforce small areas near the connection of the wings and fuselage before conducting the 787’s initial test flight.

(This version CORRECTS Corrects spelling of airline in headlines, slug. Also moving on general news wires.)