Qantas says fleet contest is close

SYDNEY - Qantas Airways, which will seek board approval this week to spend up to A$20 billion ($21.5 billion) on new planes, said yesterday the contest between rival manufacturers was the closest it has seen.

Planemakers Boeing and Airbus are set to end a record year for new plane orders with a decision from Australia's Qantas, which has said it might need as many as 100 new planes.

Qantas Chief Executive Geoff Dixon said management had not decided on a final recommendation for Wednesday's board meeting, but fleet renewal was essential for the carrier, which also wants to expand its low-cost Jetstar airline internationally.

"It's the closest contractual race I have ever seen in my time in industry," Mr Dixon told ABC Television's Inside Business.

"Certainly it will be in the vicinity of A$15 billion to A$20 billion, and that is on top of A$18 billion we already have being expended from 2000 to 2010," he said.

The final cost would depend on discounts that Qantas could wring from manufacturers.

"The tenders we have got are the best we have seen for a roll-over case for aircraft in the history of Qantas," he said.

Planemakers are offering new fuel-efficient, long-range models, such as the Boeing 787, 777-200LR and Airbus A350, which are seen as tools that airlines such as Qantas can use to stay profitable and grow despite increasing competition.

The Qantas board was also likely to consider whether to take Jetstar international, which was linked to the fleet decision as the airline needed fuel efficient planes and a low cost base, Mr Dixon said.

Jetstar would initially fly to destinations within 8-10 hours of Australia, including both new routes and routes no longer serviced by Qantas. Qantas has in the past withdrawn from destinations such as Taipei and Seoul.

Dixon said Jetstar would not compete with Qantas on profitable routes.

"I don't think in our lifetime we'll ever see Jetstar at any more than 20 per cent at maximum the size of a Qantas," he said. If the board approved the plan, Qantas hoped Jetstar would be flying internationally by late 2006 or early 2007.

Jetstar won regulatory approval last month to fly to New Zealand.

Qantas shares closed on Friday at A$3.76, near the top of their trading band in recent years.

- REUTERS