Qantas to Add 43 New Aircrafts in Its Operations

In an attempt to shore up margins and give a boost to profitability, Qantas Airways (QAN), is planning to spend as much as $4.4 billion over the next two years. This includes the amount that the airline is willing to spend to buy 43 aircrafts including eight Airbus SAS A380s. Qantas will spend about $1.7 billion in the 2010 financial year and $2.7 billion more in the following year. According to Colin Storrie, the chief financial officer of Qantas, the funding for purchasing the planes is in place till the next October. The airline is currently fighting to survive in a tough market condition where the sales has dropped at an alarming rate after executives were forced to reduce business travels due to the worldwide financial crisis.

The Chief executive of the company Alan Joyce is currently seeking to reduce the costs by as much as $1.5 billion within three years. Earlier this month, Qantas took initiatives to boost up the check-in process for the travelers to reduce costs. Under the program, the regular travelers under the silver level upward their own personal boarding pass and permanent bag tag. Mr. Joyce stated that the program will be initiated in 2011 in Perth and gradually will be expanded to other cities over the year. The chief executive officer also added that the processing of more customers under the current facilities will allow the company to obtain long term growth at a lower cost.

Mr. Joyce also said that although the program will increase the costs in the short run, but at the end of the day the carrier will be able to increase its profitability as the workers are reassigned for other tasks. In the last fiscal year, Qantas saw its profit margin slipping down to 0.9 percent from 6.8 percent of a year earlier as the number of customers fell significantly. At the beginning of this year, the airline reduced its capacity, cancelled orders for new planes and kept its carriers grounded in an attempt to fight the poor market condition. However, in the present situation these measures are no longer required, Mr. Joyce mentioned. He also stated that the average airfares were moving upwards with improvements in the demand for leisure travel.