High dollar helps Qantas………

An article by Steve Creedy in The Australian says that the high dollar is helping Qantas deal with a sharp rise in oil prices and has meant the cost of jet fuel in Australian dollars has changed little since May.

Airlines are among the industries to benefit from record levels for the local currency because their fuel, planes and spare parts are costed in US dollars.

Downsides of the increase include a drop in the Australian-dollar value of foreign fares and a fall in overseas demand as Australia becomes more expensive.

A report by analysts JP Morgan says the impact of rising crude prices has been partly offset by the falling US dollar as well as the dropping refining margin for the benchmark Singjet aviation fuel.

West Texas Intermediate crude prices were down to $US50 a barrel in January but had climbed back to $US83 per barrel by the end of last week.

JP Morgan noted that over the same period the Australian dollar had risen from US73c to US88c by the end of last week.  The good news on the fuel front comes as strong economy and the growth of low-cost carriers has prompted US Aerospace giant Boeing to boost its estimate of the number of new aircraft needed in the Southwest Pacific over the next two decades by over 30 per cent.

The aircraft manufacturer last year predicted that Australia, New Zealand and the South Pacific would need 440 planes worth $US60 billion ($66.7 billion). But it has increased the figures in its latest forecast to 580 planes worth $US73 billion, up from 320 today.

Boeing Commercial Airplanes marketing vice-president Randy Tinseth attributed the increase partly to a more bullish view of the region’s economy.

“We expect traffic to grow at 5per cent per year and that’s been driven by 2.9 per cent GDP growth (for the region),” Mr Tinseth said.

“This is up significantly in terms of both GDP growth and traffic growth than last year because the Australian economy has been so strong.

“We expect it to be strong into the future and clearly, when you take a look at this region, the Australian economy drives almost everything,” Mr Tinseth said.

He said the depth and breadth of low-cost carriers in the region also continued to outperform Boeing’s expectations.

Boeing predicts that about half of the deliveries will be single aisle planes with twin aisle aircraft accounting for another 180 worth $US37 billion. Mr Tinseth said the region was more biased towards twin-aisle aircraft that the overall market.

But it was also a big market for large aircraft, which accounted for about 8 per cent of total deliveries.

Asked about delays to the 787 flight tests, Mr Tinseth said Boeing still believed its new fuel-efficient aircraft was on track for delivery to Japan’s All Nippon Airways next May.

Qantas will acquire 65 of the planes and has been monitoring the delays closely.

Mr Tinseth said flight testing was still scheduled to take place between mid-November and mid-December.

However, he admitted the new plane’s compressed flight testing schedule “will be a challenge”.

“What we’ve done is we’ve initiated one of our contingency plans,” he said.

And he added: “We’re working with the (US Federal Aviation Administration) and have their buy-in that we’ll have a very aggressive 24-hour-a-day, seven-day-a-week flight test schedule to meet that first delivery requirement.”

Report by The Mole and The Australian