The Qantas Airways Limited (ASX: QAN) share price is down 0.2%, underperforming the ASX 200 (ASX: XJO) by more than 1%, after revealing another plane investment.
Qantas invests in regional fleet
Qantas announced today it’s buying 14 additional mid-life Dash 8-400 (Q400) aircraft, while 19 smaller Q200 and Q300 turboprop aircraft will be “gradually phased out” of the fleet.
The first aircraft will join the QantasLink fleet by the end of the 2024 calendar year.
According to Qantas, Q400 aircraft are 30% faster than the Q200 and Q300 aircraft. These newer planes will help save customers time, whilst also improving operational reliability.
This investment will bring the number of Q400 aircraft in the fleet to 45. Qantas said it would be consolidating of three sub-fleets into a single fleet of turboprops, providing “further scale benefits and efficiencies for QantasLink, including lower maintenance and operating costs.”
Management quotes
The Qantas CEO Vanessa Hudson said:
As the national carrier, we are proud of the role we have played for more than 100 years keeping regional communities connected, and this investment ensures there will be ongoing reliable air services across many parts of regional Australia.
QantasLink turboprops carry more than 3.5 million customers to more than 50 destinations around regional Australia every year, and these next-generation aircraft allow us to improve the travel experience with a faster and more comfortable experience.
By consolidating our turboprops into a single fleet type, we’ll be able to further improve our reliability and provide a better recovery for our customers during disruptions as well as reducing complexity and cost for our operation.
We know sustainable travel is important for our customers. These additional Q400s allow us to provide certainty to the regions over the next decade while we work with aircraft manufacturers and other suppliers on electric or battery powered aircraft that are the right size and range for our network.
Total aircraft cost
Qantas is working on renewing its broader fleet, with QantasLink’s third Airbus A220 aircraft to be delivered in the coming weeks.
The net investment in the fleet will be predominately spread across FY25 and FY26, with the majority in FY25. The investment in FY25 will be managed within existing net capital expenditure guidance of between $3.7 billion to $3.9 billion.
This seems like a good move by the airline. Replenishing the fleet is a smart move in my opinion, and can help Qantas shares over time if it improves performance, customer loyalty and operational costs. The airline may be cheap at the current Qantas share price, though it depends if travel demand remains high.
