August 28, 2014 / 2:10 AM / 6 years ago

Qantas converts Airbus A320 orders to upgraded A320neo variant

Qantas Airways Ltd Chief Executive Alan Joyce reacts during a media conference in Sydney August 28, 2014. REUTERS/David Gray

SINGAPORE (Reuters) - Qantas Airways said on Thursday that it has converted orders for 21 Airbus A320 aircraft into the re-engined A320neo variant and deferred the delivery by four years.

This means Australia’s flag carrier now has orders for 99 Airbus A320neos, and the airline said the move is part of the latest restructuring of its order book.

The decision will help cut capital expenditure at Qantas. The carrier reported a record annual loss of A$2.8 billion ($2.6 billion) on Thursday, partly due to A$2.6 billion that it wrote off the value of its fleet following a company restructuring.

The airline also said on Thursday that it has delayed the first of its options and purchase rights for 50 Boeing 787 planes by a year to 2017.

Earlier this year, Qantas deferred the delivery of its final eight Airbus A380 jumbo jets as it reviewed its potential future requirements. Three 787s that were part of a 14-aircraft order for its low-cost subsidiary Jetstar were also deferred.

“Of the A$2 billion permanent cost reductions we are seeking over three years, A$600 million will come from fleet and network initiatives,” Qantas Chief Executive Alan Joyce said in a statement on Thursday.

The airline is accelerating the retirement of some older Boeing 747-400s and Boeing 767-300s to reduce costs.

It is also using more Airbus A330s on routes to Asia and refurbishing the Boeing 737-800s it uses on domestic services, giving passengers a newer product as the airline copes with intense competition in the Australian market.

“We are using our fleet more efficiently to help deliver the goals of our accelerated Qantas Transformation program,” said Joyce, referring to a business plan that the management hopes will make the company profitable on a sustainable basis.

Reporting by Siva Govindasamy; Editing by Ryan Woo

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