Qantas: Investor Day Presentation 2019 #2 – Boeing and Airbus – back to the abacus

Qantas asked for the ‘best and final’ prices on their respective planes touted as being able to fulfil Qantas’s Sunrise Project requirements back in August.

But after analysis, it has now rejected both offers, and send them back to their abacuses to come up with a better price.

Tony La Spina, Qantas international chief executive, has also asked the manufacturers to cover off a range of scenarios to ‘future proof’ the deal, given that the aircraft will be with Qantas for 20 or so years.

Smart Bargaining?

This may just be smart bargaining to get a good price on the planes, or it might be part of a strategy to ‘delay’ some decision making about the Sunrise Project until Qantas has other aspects of the large jigsaw puzzle in place – like an agreement with pilots or cabin staff on pay and conditions, not to mention permissions from safety regulators.

2PAXfly Takeout

Project Sunrise has got more complex, rather than less. As well as some of the issues outlined above, Qantas has to deal with a potential delay to the whole project if it opts for the B777-8X – which hasn’t even flown yet, and also competition from Air New Zealand that has recently announced it will launch a direct route from Auckland to New York, which will compete with the same route of the Sunrise Project.

Joyce’s bargaining position with all these stakeholders – especially with the pilots from which he is demanding a 20 per cent ‘productivity improvement’ is that:

‘I have no problem… in saying ‘we gave it a good try but it didn’t work.’

When in fact – he does. He’s going to look foolish if he doesn’t deliver on this, even though he has many potentially recalcitrant stakeholders to blame. But don’t tell anyone.