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Qantas Unveils Short Haul Fleet Plan for the Next Decade

by Philip Morton, Investors

16 November 2007

Australian airline, Qantas announced on Wednesday that it will acquire up to 188 narrow body aircraft to support the further growth of its two brands, Qantas and Jetstar, in Australia and Asia.

The aircraft will be used to defend a minimum 65% Group share of the Australian domestic market, and to expand low cost services to South East Asia.

The plan will involve Jetstar opening new regional aviation bases in both Darwin and Perth over the next two years to serve fast growing Asian markets.

Qantas Chief Executive, Geoff Dixon revealed that the aircraft would be principally B737-800s, which were Qantas' main narrowbody aircraft, and A320s, which were the core aircraft in Jetstar's short haul fleet.

"The order also includes larger A321 aircraft, which will have up to 213 seats compared with 177 on an A320 in a Jetstar single-class configuration," he explained, continuing:

"The first aircraft to arrive in February next year will be an A321 and we expect to take at least 17 of those aircraft to expand Jetstar's opportunities in its fastest growing markets."

The Group will acquire: 68 A320/A321 aircraft, plus 40 options and purchase rights; and 31 B737-800 aircraft and 49 options and purchase rights.

The firm aircraft will be delivered over a six year period, while options secured additional delivery slots through to 2017.

Mr Dixon went on to state that the Group had the ability to fund the aircraft without affecting its investment grade credit rating.

"This decision, together with existing A380 and B787 fleet commitments, secures an order stream for next generation aircraft that will allow the Group to meet long term demand growth and replace older aircraft over the next decade," he announced, adding:

"The plan provides maximum flexibility to respond to changes in the market and competitive situation. "In an environment where our customers have more options than ever before, this investment will ensure that Qantas and Jetstar continue to provide customers with superior network reach, choice and product."

Mr Dixon said the B737-800s would all have the latest inflight entertainment technology, and would be delivered from early 2009.

"This further investment in the latest aircraft technology will also underpin our efficiency drive by lowering operating costs, while at the same time minimising the Group's environmental impact as we grow," he explained.

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