Qantas pares domestic capacity growth; Perth and Brisbane remain key battlegrounds
Qantas yesterday announced a further downward adjustment in planned domestic capacity growth and a corresponding reduction in capital expenditure for the next two years in response to weaker-than-expected demand and high fuel costs.
The Qantas Group is now targetting 5.5% domestic capacity growth for 2011/12 compared with the 8% planned previously. The Group is also reducing its fleet growth and now expects to take delivery of 34 aircraft in 2011/12 compared with 43 previously. Orders for 12 narrowbody jet aircraft will be cancelled or deferred, including three aircraft in the second half of 2010/11.
Qantas CEO, Alan Joyce, said the measures would "help maximise the Qantas Group’s competitive position in the domestic market".
According to CAPA's analysis of forward schedule data from Innovata, Qantas Group will grow capacity on its top 10 domestic routes by an average of 3.3% between now and the start of the next scheduling season at the end of Oct-2011. Qantas is retrenching capacity on two of the 10 leading routes (Sydney-Melbourne and Melbourne Adelaide), but expanding aggressively on routes to Perth from Sydney (+20.9%) and Melbourne (+9.1%) where it faces rising competition from Virgin Australia. Brisbane is another key battleground and Qantas Group is expanding there from Sydney (+7.0%) and Melbourne (+7.8%).
Qantas Group's top 10 routes capacity (seats per week): 13-Jun-2011 vs 31-Oct-2011
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Qantas' share price has fallen by over 35% since recent highs in Oct-2010.
Qantas' share price over the past 12 months
Qantas' top 10 domestic routes (by seats per week): 13-Jun-2011 to 19-Jun-2011
Qantas' top 10 domestic routes (by ASKs per week): 13-Jun-2011 to 19-Jun-2011