Qantas offloads cargo freighter plan
The latest figures from the peak airline body also show that while the global air-freight market recorded modest growth in July, cargo demand in the Asia-Pacific region fell 1.4 per cent, partly due to sluggish business activity in China.
Qantas had intended to take on the 747 freighter later this year, replacing a contract it has with US air cargo company Atlas Air to lease an older jumbo and crew - known as a wet lease.
A wet lease Qantas has on another Atlas Air jumbo also expires in 2015. But Qantas said it decided not to finalise the new lease agreement for the 747 freighter because of softness in the global air-freight market.
"The air freight industry is cyclical and Qantas will re-examine options when the markets have strengthened," a spokesman said.
Last week, Qantas gave an insight into the weak state of the freight market when it released its annual results. Its freight division booked a 20 per cent fall in pre-tax profit to $36 million in the year to June, which the airline said reflected an 11 per cent fall in its international cargo capacity.
Qantas' freight unit has a fleet of 13 aircraft, including three 747s, one Boeing 767 used on the trans-Tasman route, and four 737 freighters. Freight is also carried on Qantas and Jetstar passenger jets.
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Qantas cancelled the plan because of continued weakness in the international air-cargo market. The airline said softness in global air freight made it unwise to finalise a new 747 lease, and a spokesman noted the air freight industry is cyclical and options will be re-examined when markets strengthen.
Qantas had intended to take on a near-new Boeing 747 later this year to replace a wet lease it currently has with US air-cargo company Atlas Air. The wet lease involves leasing an older jumbo plus crew, and Qantas decided not to finalise the new lease agreement because of weak cargo demand. Another wet lease with Atlas Air also expires in 2015.
According to the industry figures cited, the global air-freight market recorded modest growth in July, but cargo demand in the Asia-Pacific region fell 1.4%, partly due to sluggish business activity in China.
Qantas’ freight division booked a 20% fall in pre-tax profit to $36 million for the year to June. The airline said this reflected an 11% fall in its international cargo capacity.
A wet lease is a contract where an airline leases an aircraft together with crew (and often maintenance and insurance). Qantas uses wet leases with Atlas Air for jumbo freighters and had planned to replace an older wet-leased jumbo with a near-new 747 before deciding not to finalise the agreement amid weak demand.
Qantas’ freight unit has a fleet of 13 aircraft, including three 747s, one Boeing 767 used on the trans-Tasman route, and four 737 freighters. In addition to dedicated freighters, freight is also carried on Qantas and Jetstar passenger jets.
For investors, the decision signals Qantas is responding to weak cargo demand by avoiding extra capacity and related costs until markets improve. It reflects the cyclical nature of the air-freight industry and the company’s focus on managing freight capacity and profitability.
Qantas said it will re-examine freighter options when the air-freight markets have strengthened, reflecting the cyclical dynamics of the industry.
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