Australia's Qantas cancels one Dreamliner, 14 still on order

Australian airline Qantas Friday announced it was cutting its order for Dreamliner aircraft by one, but said it had planned the move before the Boeing jets were grounded worldwide and still had 14 on order.

Qantas had initially said it would not be changing its order for 15 of the fuel-efficient aircraft after a Japanese jet was forced into an emergency landing on Wednesday, triggering the halting of flights.

But in a statement on Friday on an update to its fleet, the company said it had cancelled a single Boeing 787-8 Dreamliner on order for low-cost carrier Jetstar.

The remaining 14 B787-8s will be delivered to Jetstar as planned, with the first aircraft to arrive in mid-2013, it said.

Qantas chief executive Alan Joyce said the airline was firmly committed to the Dreamliners for both Qantas International and Jetstar, and it retained options and purchase rights for 50 B787s of either -8 or -9 variants available for delivery from 2016.

"... we are using the flexibility in our agreement with Boeing to cancel a firm order knowing that we can replace it with one of our 50 options for this aircraft down the track, and with a full view of what market conditions are like at the time," he said.

The airline, which is struggling with an underperforming international business, said the decision to amend the B787 order was reached at the end of 2012 and the agreement with Boeing had now been finalised.

Qantas said production of its first B787 aircraft had just begun and it was confident current technical issues would be resolved by Boeing before it took delivery in mid-2013.

A Boeing spokesman said Qantas' decision was a business one, adding that overall customers were standing behind the Dreamliner.

Qantas last year cancelled an order for 35 of the Dreamliner jets to cut costs as it faced its first annual loss since privatisation in 1995 due to high fuel costs and industrial action.

In its fleet update, Qantas also announced it would lease an additional five Boeing 717 aircraft and purchase three Bombardier Q400 planes, due to start arriving from the second half of 2013, to boost domestic operations.

"This expansion to our fleet of 125-seat Boeing 717s and 74-seat Q400s gives us flexibility to pursue growth opportunities in a range of short-haul markets," Joyce said.

"It is a sensible investment in a part of the Qantas Group that is delivering strong returns."

Qantas said the fleet changes would have no material impact on the group's planned capital expenditure.

The US Federal Aviation Administration has grounded Dreamliners with effect worldwide after several recent incidents believed to be related to complex electrical systems and the batteries used in the next-generation aircraft.