Commencing in 1990 deliveries of the Boeing 767-338ERs were made to Qantas Airways and eventually 22 aircraft were acquired.
In 2002 Qantas decided to launch a full service low cost operation based in Cairns to serve mainly Asian destinations from Australia. Five aircraft for this operation were selected from the mainline fleet and painted into the striking orange Australian Airlines livery.
Australian Airlines struggled to make a profit and Qantas made the decision to close it down in favour of their already established low cost airline, Jetstar.
While the repainting of the 5 Australian aircraft back into the Qantas livery took place, Qantas leased other mainline Boeing 767s to the airline to cover their schedules until mid 2006. On a couple of other occasions Australian leased additional Qantas Boeing 767-300s to cover the maintenance requirements on their fleet.
Between March and June 2006 all the Australian Airlines' operated aircraft were returned to Qantas and the airline then ceased to exist. In the meantime Jetstar had started long haul operations using their Airbus A330-200s and they became the Qantas Airways low cost long haul carrier.