Qantas Airways Ltd, Australia's biggest airline and a key Boeing customer, said on Monday it would buy 23 new Airbus planes worth about $1.15 billion for its new low-cost carrier, Jetstar.
The deal gives Airbus a firmer foothold in a fleet dominated by Boeing Co and strengthens its presence in the fast-growing and profitable Asian market, where Singapore Airlines, China Airlines and Malaysian Airlines use its aircraft.
"Airbus is making substantial inroads into the market. Boeing is still a large presence here but not as large as it was," said Ian Thomas, an analyst at Sydney-based Center for Asia Pacific Aviation.
"Qantas has traditionally been an all-Boeing fleet as has Air New Zealand," Thomas said, noting that the proportion of Airbus aircraft was rising in a Qantas fleet, where seven of 10 planes are Boeings.
Air New Zealand broke its exclusive relationship with Boeing earlier this year, agreeing to introduce 15 A320 planes at a cost of $400 million.
Qantas said the new airline would use new Airbus A320 aircraft from June 2004 and would eventually have an all-A320 fleet.
However, Qantas Chief Executive Geoff Dixon offered some solace for Boeing, announcing the purchase of an additional five Boeing 737-800s for the full-service domestic operation, which would only operate Boeing planes.
The move would "differentiate one product from another," said Thomas. "Boeing will deal with the business class product and Airbus for all-economy."
Jetstar, which begins operating in June, will be an all-economy carrier aimed at challenging Richard Branson's Virgin Blue airline, which in the space of three years has snared 30 percent market share to Qantas' 70 percent.
Qantas shares closed up a cent at A$3.34. The shares fell to a two-month low on Friday on news that Branson's Virgin Atlantic had won the right to fly to Sydney, allowing it to feed passengers to its domestic namesake.
Qantas Chief Financial Officer Peter Gregg Qantas put the cost of the Airbus planes at about $1.15 billion -- "if you multiply 23 by about $50 (million) you get an idea" -- adding that the start-up capital cost of the airline was about A$100 million ($72 million).
However, Qantas was widely expected to have negotiated at least a 20 percent discount on the sticker price, said one analyst who requested anonymity.
Airbus was also believed to have agreed to find buyers for Qantas' aging Boeing 717s as they were retired in years ahead, the analyst said.
The new discount carrier, to be based in Melbourne, would have a workforce of about 2,000, Jetstar Chief Executive Alan Joyce said. About 600 of the new airline's staff would migrate from regional carrier Impulse, a unit Qantas acquired two years ago, with 1,400 new hires.
Dixon downplayed concerns that Australia, a market of only 20 million people, was not big enough to handle Jetstar without cannibalizing Qantas's full-service main carrier.
"We believe they can both operate side-by-side, along with Virgin, and all be successful," he said.
Qantas' fleet is dominated by Boeing aircraft, accounting for 72 percent of its 179 planes, including 50 737s. It has four Airbus A330s with another nine on order and 12 Airbus A380 planes due to be delivered from 2006 to 2011.
The deal gives Airbus a firmer foothold in a fleet dominated by Boeing Co and strengthens its presence in the fast-growing and profitable Asian market, where Singapore Airlines, China Airlines and Malaysian Airlines use its aircraft.
"Airbus is making substantial inroads into the market. Boeing is still a large presence here but not as large as it was," said Ian Thomas, an analyst at Sydney-based Center for Asia Pacific Aviation.
"Qantas has traditionally been an all-Boeing fleet as has Air New Zealand," Thomas said, noting that the proportion of Airbus aircraft was rising in a Qantas fleet, where seven of 10 planes are Boeings.
Air New Zealand broke its exclusive relationship with Boeing earlier this year, agreeing to introduce 15 A320 planes at a cost of $400 million.
Qantas said the new airline would use new Airbus A320 aircraft from June 2004 and would eventually have an all-A320 fleet.
However, Qantas Chief Executive Geoff Dixon offered some solace for Boeing, announcing the purchase of an additional five Boeing 737-800s for the full-service domestic operation, which would only operate Boeing planes.
The move would "differentiate one product from another," said Thomas. "Boeing will deal with the business class product and Airbus for all-economy."
Jetstar, which begins operating in June, will be an all-economy carrier aimed at challenging Richard Branson's Virgin Blue airline, which in the space of three years has snared 30 percent market share to Qantas' 70 percent.
Qantas shares closed up a cent at A$3.34. The shares fell to a two-month low on Friday on news that Branson's Virgin Atlantic had won the right to fly to Sydney, allowing it to feed passengers to its domestic namesake.
Qantas Chief Financial Officer Peter Gregg Qantas put the cost of the Airbus planes at about $1.15 billion -- "if you multiply 23 by about $50 (million) you get an idea" -- adding that the start-up capital cost of the airline was about A$100 million ($72 million).
However, Qantas was widely expected to have negotiated at least a 20 percent discount on the sticker price, said one analyst who requested anonymity.
Airbus was also believed to have agreed to find buyers for Qantas' aging Boeing 717s as they were retired in years ahead, the analyst said.
The new discount carrier, to be based in Melbourne, would have a workforce of about 2,000, Jetstar Chief Executive Alan Joyce said. About 600 of the new airline's staff would migrate from regional carrier Impulse, a unit Qantas acquired two years ago, with 1,400 new hires.
Dixon downplayed concerns that Australia, a market of only 20 million people, was not big enough to handle Jetstar without cannibalizing Qantas's full-service main carrier.
"We believe they can both operate side-by-side, along with Virgin, and all be successful," he said.
Qantas' fleet is dominated by Boeing aircraft, accounting for 72 percent of its 179 planes, including 50 737s. It has four Airbus A330s with another nine on order and 12 Airbus A380 planes due to be delivered from 2006 to 2011.
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