Qantas to buy 8 Dreamliners

The order for eight fuel-efficient Boeing Dreamliner aircraft will contribute to the narrative that Qantas has found its feet again after its toughest years since its 1993 privatisation and is back on a growth trajectory.

Qantas has finally committed to buying a fleet of new Boeing 787-9 Dreamliners for its long-haul fleet and will make its first payout to shareholders in six years after swinging to a $975 million annual pre-tax profit.

Qantas said it would order eight 787-9s, with the first four to arrive in the 2017/18 financial year and the next four in 2018/19.

Qantas has posted its largest profit since 2008.

Qantas’ under-pressure international arm reported earnings of Aus$267 million, a significant turnaround from the Aus$497 million loss in the previous financial year, which it attributed to better revenues and cost-cutting.

No dividend was declared but the airline announced a one-off 23 cents per share capital return to shareholders, amounting to Aus$505 million.

“We are halfway through the biggest and fastest transformation in our history”, he said.

Joyce had set out three criteria for any potential Dreamliner order, namely Qantas International’s return to sustainable profitability, repaying $1 billion of debt and establishing appropriate staff conditions to ensure the business case for the new aircraft type stacked up.

While Jetstar took the keys to the first of 11 Dreamliners in late 2013, Qantas management had delayed pushing the go button to buy new planes for its premium international operations.

Earlier this year Qantas also announced a $90 million bonus distribution to employees, by far the most generous yet made by a mainline Australian airline.

Underlying EBIT for the Jetstar group of airlines came in at $230 million, a turnaround from a loss of $116 million in the prior corresponding period.

Meanwhile, Qantas’s loyalty business lifted its earnings to $315m, from $286m a year ago.

However, capacity in the domestic market was expected to be flat to -1 per cent in the first half.

The ASX announcements will be followed by a media conference later this morning.