SYDNEY: Australian flag carrier Qantas on Tuesday announced a major restructuring that will see it buy up to 110 Airbus A320s and focus on Asia to stem financial losses and a decline in market share.
The bold new strategy for its international operations will include the airline slashing up 1,000 job cuts while deferring delivery of six Airbus A380 super-jumbo jets for up to six years.
Part of the business plan will also see Qantas, Japan Airlines and Mitsubishi Corp. launch a new low-cost domestic airline, Jetstar Japan, by the end of next year.
The carrier will also launch a new joint-venture premium airline based in Asia, with the location yet to be finalised as it sets its sights firmly on the growth region.
Qantas has been grappling with disasters and surging fuel costs that have hit its bottom line and chief executive Alan Joyce said change had to happen.
"Qantas International is a great airline with a proud history," he said.
"But it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change.
"Qantas International takes up enormous amounts of capital, and our cost base is around 20 per cent higher than that of our key competitors," he added.
"To do nothing, or tinker around the edges, is not an option."
The key objective of the new five-year plan was to return the airline's international operations to profitability, with a new focus on Asia, which Joyce said was the airline's most important region.
"As a nation we used to fly over or via Asia, on our way to Europe," he said.
"Now we fly to Asia, both for business and relaxation. And as Asian economies grow, the future will be about travel to and within Asia.
"Our customers want to do business in Asia, and so do we."
As part of the focus on Asia, Qantas will strengthen its relationship with British Airways, which will carry more passengers between Qantas' Asian destinations and Europe.
From early 2012, the Australian airline will still fly from Australia to Bangkok and Australia to Hong Kong, but British Airways will operate the Bangkok-London and Hong Kong-London sectors.
British Airways will no longer fly from Bangkok to Sydney, with Qantas picking up that route.
Qantas also announced its new gateway to South America would be the Chilean capital, Santiago, with a direct flight replacing its Sydney-Buenos Aires route.
To meet its objectives, Qantas will buy up to 110 Airbus A320 aircraft to
support fleet renewal and growth over the next 10 to 15 years, with 194 rights
and options on further purchases.
It will also defer delivery of six double-decker Airbus A380s for up to six years.
"Smart investment in aircraft is part of the Qantas Group's five-year plan to build a truly modern, customer-focused and competitive global airline business," it said.
Joyce said the purchases would position Qantas "very strongly in the competitive Asia-Pacific aviation market, while containing costs".
"The first of the A320s will be allocated to the new Jetstar Japan venture between the Qantas Group, Japan Airlines and Mitsubishi," he said.
The venture will be one-third owned by each company and commence by the end of 2012 with three new A320s, growing to 24 aircraft within its first few years.
It will initially fly domestically from Tokyo's Narita airport and Osaka, with plans to offer short-haul international services to key Asian cities.
A new premium joint-venture Qantas airline based in Asia is also core to Qantas' revised strategy. It will not be branded under the Qantas name but will use the airline's know-how. Eleven A320 aircraft will initially be used, Joyce said.
The market welcomed the news, with Qantas shares trading nearly five percent higher at A$1.60.
Source: http://www.channelnewsasia.com
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