The Qantas Group is looking forward to new aircraft deliveries and has no intention of pulling back on Asian expansion just because Jetstar’s Asian division reported an underlying loss before interest and tax of AUD 33 million in the first half of the financial year.
Qantas chief executive Alan Joyce and other senior Qantas and Jetstar executives have been attending the International Air Transport Association (IATA) annual meeting in Miami, Florida.
Joyce said planned purchases of B787-9 Dreamliners would not be put on hold while the airline’s debt shrinks, the Australian reported.
Joyce said the airline did not have to choose between regaining its investment credit rating and buying the B787s. Improving performance and cutting the debt would qualify the company for the investment grade rating.
The Qantas chief used the memorable phrase: “We believe you have to chew gum, walk and sing at the same time,” the paper reported.
Qantas has 50 purchase rights and options on the 787-9s. Whether it will exercise all of them, and when, has still not been announced.
Joyce is currently finalising a deal with long-haul pilots to make sure Qantas International works for the future.
Joyce told the Sydney Morning Herald that Qantas was similarly bullish about Asia. It would not halt investment in Jetstar’s Asian arms, despite losses, because the growth potential is so big.
While most Qantas divisions are turning around, sparking forecasts the airline may even report an underlying pre-tax profit approaching AUD 1 billion, Jetstar’s Asian ventures, including businesses in Singapore, Japan, Vietnam and Hong Kong, continue to languish.
Joyce told the Herald the Qantas Group was in reality investing “a very small amount of capital” in Asia. And the Asian market was the fastest-growing aviation market in the world, he stressed.
Singapore-based Jetstar Asia and Vietnam-based Jetstar Pacific are expected to turn a profit in the second half of the financial year. Jetstar Japan remains loss-making and Jetstar Hong Kong is still stymied by Hong Kong bureaucracy.
Qantas International chief executive Gareth Evans said the airline planned to keep its fleet of A380s at 12 aircraft to operate routes such as Los Angeles, Dallas Fort Worth and London.
The division has been able to keep raising its average fares even when fuel costs were falling because rival carriers are not adding much capacity into the Australian market, the Australian Financial Review reported.
The capacity war in the Australian domestic market appears to have ceased for the meantime as well.
Written by Peter Needham