With international travel almost decimated, and no prospects for a recovery any time soon, Qantas has decided it is time to send its long haul aircraft to the Californian desert.
Australia’s flag carrier is grounding around 100 aircraft, or most of its international fleet, for at least 12 months as it faces up to an extended travel slowdown because of the coronavirus pandemic.
While most of the group’s long-haul aircraft are expected to steadily return to service over time, there is significant uncertainty as to when flying levels will support its 12 Airbus A380s, the world’s largest passenger airliner.
“The A380s have to remain on the ground for at least three years until we see those international volumes brought back,” Qantas CEO Alan Joyce said on Thursday.
“The aircraft are being put in to the Mohave desert because its better for them to be sitting there.
The environment protects the aircraft a lot more, and we have the intention, at the right time, to activate them.”
Qantas said these assets would be idle for the foreseeable future, which represents a significant portion of their remaining useful life.
As a result, the carrying value of the A380 fleet, spare engines and spare parts will be written down, which will constitute the majority of the $1.25 billion to $1.4 billion asset impairment charge in the FY20 result.
But the airline is not giving up its ambition for long haul international flights.
It has got plane maker Airbus to agree to continue holding out terms for a potential order of several A350-1000 planes, which had an original deadline for March 31.
“It is my every intent that when we can turn the business around that we will be doing Project Sunrise and we need our financial strength in order for us to afford those aircraft and take that business opportunity,” Mr Joyce said.
Meanwhile, the airline has deferred deliveries for its A321neo and Boeing 787-9 fleets, and is retiring its six remaining 747s immediately, six months ahead of schedule.
Qantas says it does not expect international air travel to meaningfully resume for another 12 months – until July 2021.
When this does happen, it plans to use smaller aircraft like the Boeing 787s or Airbus A330s to establish an international flight network as quickly as possible.