Qantas to launch new Asia airlines
Sydney, August 16, 2011
Australia's Qantas Airways unveiled plans on Tuesday to set up two new Asia-focused airlines, launch a $9 billion-plus fleet upgrade and cut up to 1,000 jobs as part of a do-or-die makeover.
The plan also gives a major boost to plane maker Airbus.
Qantas, which has been reviewing its offshore operations to cut costs and unprofitable routes, said it will launch a new, premium Asian airline and a Japanese budget carrier, the latter jointly with Japan Airlines and Mitsubishi Corp
These new airlines will fly Airbus A320 jets, cementing their reputation as plane of choice on regional networks over archrival Boeing Co . Qantas plans to acquire up to 110 of them, worth more than $9.4 billion at list prices.
The restructuring announcement immediately drew fire from Australian government and union officials.
Government officials vowed to scrutinise the airline's plan to determine if it violates any laws and union officials called for immediate talks because of the potential job losses.
As Qantas rebases its loss-making international operations in Asia, it also plans to give up some of its long-haul routes and retire older planes as well as cut jobs.
"Right now 82 out of every 100 people flying out of Australia are choosing to fly with an airline other than Qantas, not including Jetstar," the airline's chief executive, Alan Joyce, told a news conference.
"To do nothing, or tinker around the edges, would only guarantee the end of Qantas International in our home Australian market. That would be a tragedy," he said, adding that the international operation's cost base was around 20 percent higher than its major rivals.
Joyce did not say when the new premium airline would be launched, but said it could be based in Kuala Lumpur or Singapore and would not be majority owned by Qantas.
"They really needed to do something. Globally the airline industry is also struggling and they have gone a long way here to address the issues they're facing," said CMC Markets chief strategist Michael McCarthy.
Australian Transport Minister Anthony Albanese said the government will examine Qantas' Asian plan to ensure it does not breach the airline's privatisation rules.
"The Australian government very firmly believes in an Australian-based and majority Australian-owned Qantas," he said.
The Qantas Sale Act of 1992 requires the airline's operational base and headquarters to be in Australia, foreign ownership is capped at 49 percent and the name Qantas is preserved. At least two-thirds of the board and its chairman must be Australians. - Reuters