Qantas woes have shone light on aircraft procurement

The near-disaster involving a Qantas A380 shortly after take off from Singapore last November has shone the spotlight on aircraft procurement and Qantas’s decision to pour billions into new models of passenger jets.

Over the next decade Qantas is due to take the keys to more than 150 aircraft, purchasing decisions which will prove critical in the long term for Australia’s biggest airline.

A lawsuit filed last month against Rolls-Royce, the maker of the engines for the A380s, offers a rare glimpse into the purchasing process and the decision-making from the Qantas hierarchy.

As far back as 2000, the court documents reveal unease from some quarters of the Qantas board about putting its faith in the A380 - or the A3XX as it was then known.

Qantas was weighing up its choice of replacement 500-seat aircraft for '2006-07 onwards' - the A380 or a stretched version of Boeing's 747.

Qantas eventually selected the Rolls-Royce Trent 900 engine for its A380s over that from an alliance of GE and Pratt & Whitney because it offered the 'lowest capital requirement and superior NPV [net present value]', confidential minutes from a meeting of Qantas committee members reveals.

The setbacks and the latest A380 incident have raised questions about Qantas's mix of aircraft and why it did not buy Boeing's much lauded 777 aircraft, which has proved highly valuable for Singapore Airlines and Cathay Pacific in the aftermath of the global financial crisis.

Even those who speak in defence of Qantas's aircraft purchases believe the latest woes reinforce the need for contingency plans to cope with unforseen events such as fleet groundings and late deliveries.

The enormous fallout from the grounding of Qantas’s A380 fleet shows the importance of these purchasing decisions and given that some passenger jets can remain in service for more than 20 years, choosing the right aircraft and engines is paramount.

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