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Monday, 8 October 1984
Page: 1406

Senator WALSH (Minister for Resources and Energy)(6.14) —I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

The purpose of this Bill is to authorise the Treasurer, on behalf of the Commonwealth, to guarantee borrowings raised by Qantas Airways Limited to finance the purchase of two Boeing 767-200 extended range aircraft.

As part of its fleet modernisation program approved by the Government in November last year, Qantas is to acquire a total of six Boeing 767-200 extended range aircraft. The company expects to take delivery of the first two aircraft in July 1985 and to introduce them into service shortly thereafter. The remaining four aircraft are scheduled to be delivered by March 1986. Qantas' fleet modernisation program, which also includes the acquisition of three Boeing 747-300 stretched upper deck aircraft, constitutes the single largest order of aircraft in Australian aviation history.

The new Boeing 767 extended range aircraft will give Qantas greater flexibility and improved operating economics for more lightly trafficked routes to and from Australia. While the Boeing B747 aircraft operated by Qantas are well suited to long haul operations and heavily trafficked regional routes, they present difficulties to Qantas in serving the more lightly trafficked regional routes and the smaller gateway airports opened to international operations in recent years. At around 210 seats, the Boeing 767's passenger capacity is about half that of the Boeing 747 aircraft. The new aircraft will enable the company better to meet consumer expectations and needs.

The new Boeing 767 aircraft are to be operated initially on services to Wellington, and as the company's pilot training programme develops and the remainder of the Boeing 767 aircraft are delivered, the aircraft will be progressively applied to Melbourne-Fiji, Sydney and Melbourne to Noumea and Australia to New Zealand flights. Sydney-Christchurch and Sydney-Auckland flights however will continue to be operated with Boeing 747 aircraft. During the fleet build-up Qantas plans to progressively introduce Boeing 767 extended range flights on selected routes between Australia and South East Asian countries.

Qantas intends to raise loans for the purchase of only two of its Boeing 767s, the remaining four to be financed from Qantas internally generated funds. The three Boeing 747 Suds will be acquired through lease financing, and the $US304m finance package arranged by Qantas for the acquisition of these aircraft is the largest leverage lease deal struck by an Australian company and one of the biggest international multi-currency leases negotiated. To a considerable degree , Qantas' new aircraft will be financed through anticipated earnings and profits , and the company's recent return to profitability was a key factor in the company's program to re-equip. Internal financing will also be assisted by funds obtained from the disposal of six of the company's oldest Boeing 747-200 aircraft.

The provision of a guarantee for Qantas' repayment of, and payment of interest on, amounts borrowed for two of its Boeing 767 ER aircraft and related spare parts and equipment will be limited by the Bill to $US200m or its equivalent in other currencies.

The provision of a guarantee would not involve the Government in any cash outlay but does create a contingent liability for the Commonwealth.

The terms and conditions of Qantas' borrowings are to be subject to the Treasurer's approval. The Bill also provides for proper security to be given to the Commonwealth over such property items as the Treasurer deems satisfactory, and Qantas is to undertake to maintain adequate insurance of the items under the loan guarantee, and to protect the security of the Commonwealth against the sale or mortgage of the aircraft. I commend the Bill.

Debate (on motion by Senator Reid) adjourned.