Qantas cancels jet orders after $256 million loss
Australian air carrier Qantas Group has announced an Aus$256 million loss for this year, the first loss in 17 years since the airline was fully privatised.
A line-end carrier which covers long distances, Qantas has claimed that soaring fuel prices are to blame for its loss in the last financial year, with the carrier’s lack of funds forcing them to cancel their ordering process on 35 Boeing 787 aircraft.
Reducing Capital Expenditure
The group have announced the ‘restructuring’ of their deal with Boeing, as a result of funding difficulties, which has seen them cancel any ‘firm commitments’ on a future delivery of 35 Boeing B787-9 models.
In a statement released on their website, Qantas explained that the reduction in capital expenditure as a result of the Dreamliner cancellation would equal US$8.5 billion.
‘Fifteen B787-8 options and purchase rights will be retained and brought forward by almost two years, available for delivery from 2016. However, firm commitments for 35 B787-9s will be cancelled. The restructure means a two-year delay in the Group’s first B787-9 delivery.’
Qantas Group CEO Alan Joyce said the changes were consistent with the goals of the Group’s broader strategy.
“Qantas continues to practice disciplined capital management and, in the context of returning Qantas International to profit, this is a prudent decision,” Mr Joyce said. “The B787 is an excellent aircraft and remains an important part of our future. However, circumstances have changed significantly since our order several years ago.”
“We have the right fleet strategy to deliver continued customer satisfaction and position us for sustainable growth over the long term, while enabling us to retain flexibility and manage our capital requirements appropriately.”
David Liu, head of research at fund manager ATI Asset Management, which exited all its Qantas holdings over the past two months, told Reuters: "Most of the cancelled aircraft were meant for the overseas routes and with the trading environment for their international operations, it is not surprising"
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany