Shares of Boeing were down after Australia's Quantas Airways announced that they would be cancelling their order for 35 Boeing 787 Dreamliners valued at $8.5 billion. Qantas said it has retained options and purchase rights for 50 of the 787-9 aircraft, a large version of the 787 that can fly longer distances than the 787-8. This marks the second cancellation for the 787 program, as China Eastern Airlines killed its order for 24 of the jets last October.
Quantas poor financial results was the reason for the decision. The Sydney-based company booked a net loss for the year to June 30 of A$245 million (US$257.4 million), compared with A$250 million profit a year earlier. It was the airline's first annual loss since it was privatized by the Australian government in 1995.
Qantas faces its own unique challenges. The airline is fighting to hold on to its coveted investment-grade credit rating as a robust performance from its domestic-flights operation is offset by heavy losses at the international division. Based deep in the southern hemisphere, Qantas is an end-of-line carrier that is more exposed to soaring jet-fuel costs, and the long-delayed arrival of the 787s has lumbered it with fuel-guzzling 747s longer than it expected.
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