Qantas will close Jetstar Asia, the group’s Singapore-based low-cost subsidiary amid rising costs and intensified competition in the region.
Key Takeaways
- Qantas will close its Jetstar Asia subsidiary in a bid to strengthen its core businesses in Australia and New Zealand.
- The closure of the airline is set to bring $500 million in capital back to the group to support its historic fleet renewal program.
- Sixteen intra-Asia routes will be impacted by the closure, with no changes to Jetstar Airways and Jetstar Japan services to Asia.
- The decision comes amid rising supplier costs, high airport fees and intensified competition in the region.
- The airline is expected to post a $35 million underlying EBIT loss this financial year, prior to the closure decision.
Key background
Jetstar Asia, a Singapore-based low-cost airline headquartered at Changi Airport, launched in 2004, with the inaugural flight taking off for Hong Kong on 13 December, 2004. It flew to 16 popular destinations across the region.
Qantas, the airline’s operator, announced it would shut Jetstar Asia after facing growing challenges, including rising supplier costs, high airport fees and intensified competition in the region. The company will continue to operate flights for the next seven weeks on a progressively reduced schedule, before finally ceasing operations on 31 July, 2025.
Big numbers
$35 million. That’s how much the airline is expected to post in underlying EBIT loss this financial loss, prior to the closure.
$500 million. That’s how much the closure of Jetstar Asia is set to unlock in fleet capital to be recycled back into the Group’s core businesses.
$175 million. That’s how much the closure is set to impact Qantas’ bottom line, with approximately a third in FY25 and the remainder across FY26.
“The closure of Jetstar Asia will result in one-off redundancy and restructuring costs as well as the non-cash expensing of historical foreign currency translation losses from equity reserves and asset write-downs from consequential changes in the Group’s fleet structure,” Qantas said in a statement.
Crucial quote
“This is a very tough day for them. Despite their best efforts, we have seen some of Jetstar Asia’s supplier costs increase by up to 200 per cent, which has materially changed its cost base.” – Qantas Group CEO Vanessa Hudson.
What we know
This closure won’t impact Jetstar Airways’ domestic and international operations in Australia and New Zealand or Jetstar Japan, and Jetstar Asia customers with existing bookings on cancelled flights will be offered full refunds.
We know Jetstar Asia’s 13 mid-life A320 aircraft will be redeployed to Australia and New Zealand to support fleet renewal and the airline claims it will create more than 100 local jobs and more low fares.
“We are currently undertaking the most ambitious fleet renewal program in our history, with almost 200 firm aircraft orders and hundreds of millions of dollars being invested into our existing fleet,” Hudson said.
“We’re making disciplined decisions which recycle capital across our business and prioritise it to stronger performing segments as well as strategic growth initiatives like Project Sunrise.”
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