Category Archives: Jetstar Airways (Australia)

QANTAS Group issues a loss warning, asks the government for an even playing field

The QANTAS Group (QANTAS Airways) (Sydney) has announced a market update, accelerated cost reductions and a capital expenditure and structural review, in response to fundamentally changed market conditions.

Market update

The Group expects to report an underlying loss before tax in the range of $250 million to $300 million for the six months ending December 31, 2013. Trading conditions saw a marked deterioration in November in particular, with both passenger loads and yields below the already negative trends for the year to date.

The Group can also provide the following guidance for the first half of FY14:

Group capacity is expected to increase by 1.1 per cent in 1H FY14 compared to 1H FY13. Group Domestic capacity (comprising QANTAS Domestic, QANTAS Link and Jetstar Domestic) is expected to increase by 1.9 per cent in 1H FY14 compared to 1H FY13;

Total domestic market capacity is expected to increase by approximately 2.7 per cent, driven by estimated competitor capacity growth of 3.9 per cent;

Group yield (excluding the impact of foreign exchange movements) is expected to be approximately 3.5 per cent lower in 1H FY14 compared to 1H FY13, largely due to increased capacity in the domestic and international markets;

Group loads are expected to be 1.6 percentage points lower in 1H FY14 compared to 1H FY13; and

Underlying fuel costs (excluding the impact of the carbon tax) for 1H FY14 are expected to be approximately $2.27 billion, an increase of $88 million from 1H FY13.

The outlook for the second half of FY14 remains volatile and, given the uncertainty in global economic conditions, fuel prices and foreign exchange rates, it is not possible to provide further guidance at this time.

QANTAS CEO Alan Joyce said the circumstances demanded urgent action.

“We will do whatever we need to do to secure the QANTAS Group’s future,” Mr Joyce said.

“The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better QANTAS for Australia.

“Since the Global Financial Crisis, QANTAS has confronted a fiercely difficult operating environment – including the strong Australian dollar and record jet fuel costs, which have exacerbated QANTAS’ high cost base.

“The Australian international market is the toughest anywhere in the world.

“Our competitors in the international market, almost all owned or generously supported by their governments, have increased capacity to pursue Australian dollar profits, changing the shape of the market permanently.

“Since early 2012, there has also been an unprecedented distortion of the Australian domestic market, with Virgin Australia’s strategy to seek majority ownership and massive financial backing from foreign government-owned airlines (see Appendix 1).

“This foreign government capital has been used to finance dramatic increases in domestic capacity, with profound implications for the future of Australia’s aviation industry. In November, Virgin Australia signaled its intention to continue its strategy, which is designed to weaken QANTAS in the domestic market, with a $300 million-plus injection from its foreign owners.

“The uneven playing field in Australian aviation is being tilted further.”

“We cannot and we will not stand still in these extraordinary circumstances.”

“As we take these urgent actions, we will continue to take the fight to the competition and strengthen our leading position in the domestic market, and we will continue the turnaround of Qantas International.”

Accelerated cost reduction program

The Group will make accelerated cost reductions across all areas of the business, to achieve total cost savings of $2 billion over three years.

The existing QANTAS Transformation program will be accelerated, with an expanded mandate to achieve these targets, including the following steps:

Head count reduction of at least 1,000 positions within 12 months, with an ongoing review

CEO and Board pay cut

Pay freeze and no FY14 bonus for executives

Review of spending with top 100 suppliers

Network optimisation and improved fleet utilization

Further overhead reductions

Mr Joyce said the Group had already made significant progress in becoming leaner and more efficient.

“We have reduced the Group’s unit costs, excluding fuel, by a total of 19 per cent since FY09, including by 5 per cent in FY13 (see Appendix 2).

“But these actions are not enough to deal with the current situation.”

Capital expenditure and structural review

Given the deterioration in earnings, the Group no longer expects to generate positive net free cash flow in the current financial year.

The Group will conduct a review of all planned capital expenditure to achieve further substantial reductions to ensure that the business generates positive net free cash flow from FY15.

This continues the deep cuts to capital expenditure already achieved since 2011.

The Group will also launch an immediate review to identify structural changes that could potentially unlock sources of capital and value for shareholders. No options will be excluded from the review.

Mr Joyce said the Group would take all steps necessary to respond to the toughest market conditions it had ever faced.

“We will focus relentlessly on cutting costs and improving productivity, while maintaining our competitive advantages as a business,” Mr Joyce said.

Australia’s best airline for customers

Mr Joyce said customers would remain at the heart of the Group’s strategy, with a continued focus on service in all areas.

“We have Australia’s best airline and loyalty program, with nearly 10 million loyal frequent flyers,” Mr Joyce said. “Over the past two years, we have developed a global network based on strategic alliances, including the ground-breaking Emirates partnership and expanding relationships in Asia.

“The QANTAS customer experience is the best it has ever been. After an intensive fleet renewal program, our average passenger aircraft age is now below eight years, the youngest in two decades, and we have revitalised service with a focus on training and new technology. Customer satisfaction is soaring, with record scores in both the international and domestic markets.”

Discussions with the Australian Government

“As we work through our cost reductions, capital expediture and structural review, no options will be off the table,” Mr Joyce said.

“Political leaders recognize QANTAS’ strategic importance, its critical role in providing essential air services, and the benefits to Australia of a strong and viable national carrier.

“None of the measures being discussed with the government would alleviate the need for us to take the comprehensive actions we have announced today. Government action will, however, be key in enabling us to keep competing effectively on a level playing field.”

Read the analysis by Reuters: CLICK HERE

Copyright Photo: John Adlard/AirlinersGallery.com. QANTAS Airways’ Boeing 737-838 VH-VXA (msn 29551) with special “Official Airline of Cricket Australia – Now It’s On Our Turf” color scheme in support of Cricket Australia.

QANTAS Airways:

QANTAS Group returns to being profitable, halving its losses on international routes

QANTAS Airways (Sydney) is already reaping the benefits of its new relationship with Emirates (Dubai) and the changes it has already made on its international route structure. The QANTAS Group has been shedding unprofitable international routes, cutting jobs, reducing capital spending and selling assets in order to reduce its debt. The QANTAS Group reported a fiscal year underlying profit before tax of A$192 million ($171.5 million), a statutory profit before tax of A$17 million ($15.1 million) and a statutory profit after tax of A$6 million ($5.3 million) for the year ended June 30, 2013.

QANTAS Domestic, Jetstar Airways and QANTAS Loyalty were all profitable, while QANTAS International halved its
underlying EBIT losses.

On the domestic front which is softening, QANTAS is facing stiff competition from Virgin Australia Airlines (Brisbane).

Read the analysis by Reuters: CLICK HERE

Read the full report from QANTAS: CLICK HERE

In other news, QANTAS also announced a series of improvements to its international network:

The improvements are:

Starting a new route, Perth–Auckland*, to be offered on a seasonal basis between early December and the end of January, operated by a QANTAS A330 aircraft twice per week.

Upgrading one return Sydney–Hong Kong service to an Airbus A380 aircraft, increasing the number of A380 return services on this route from four to five per week.

Increasing frequency to daily on Brisbane–Los Angeles* using the aircraft made available by the A380 upgrade on the Hong Kong route.

Retiming Qantas’ existing Sydney–Christchurch* service so that it connects with more international services from Sydney and complements the existing Emirates service on this route.

QANTAS Group Chief Executive Officer Alan Joyce and Gareth Evans head the briefing.

*Subject to regulatory approval

The schedule is being progressively loaded from today for travel after 27 October 2013

ROUTE	CHANGE	EFFECTIVE DATE	CUSTOMER BENEFIT
Perth–Auckland	New route, seasonal.Two return services per week, departing Perth on Friday and Saturday, using a QANTAS A330.	First service from Perth will be 6 December 2013.Last service from Auckland will be 1 February 2014.	Adding almost 1,000 seats per week to what is currently a monopoly route over the busy Christmas and summer holiday period.An internationally configured A330 with Skybeds used on the route.
Sydney–Hong Kong	Upgrading one return service per week from a B747 to A380.Increases the number of A380 services on this route from four to five per week, with the remainder operated by B747s.	4 November 2013	Increase in capacity by almost 5 per cent per week.Additional A380 flying into Asia.
Brisbane–Los Angeles	Increase in the number of services on this route from six to seven using a B747.	2 December 2013	Additional convenience of a daily service from Brisbane.Increase in capacity on this route by about 15 per cent per week.
Sydney–Christchurch	QANTAS flight retimed from morning to evening, meaning that the return flight (Christchurch to Sydney) arrives in Sydney at 8:50am instead of 3:55pm. Qantas code available on Emirates flight from Christchurch, which leaves at 4:55pm to arrive in Sydney at 6:15pm. Qantas code also available on Jetstar flight from Christchurch, which leaves at 6.35am to arrive in Sydney at 8.05am.	27 October 2013	Greatly improved onward connections for customers flying from Christchurch to Sydney and then to onward international and domestic flights.Removes need for South Island residents to fly via Auckland to connect with key international flights out of Sydney.Complements the existing Emirates service by providing a double daily service scheduled at either end of the day.

Copyright Photo: John Adlard/AirlinersGallery.com. Airbus A380-842 VH-OQD (msn 026) is pictured in action at the Sydney base.

QANTAS Airways:

Jetstar Airways celebrates its 100th aircraft with a special livery

Jetstar Airways (Australia) (Melbourne) this month celebrated reaching 100 aircraft, a milestone reflecting the impressive scale of the airline across Asia Pacific.

Since launching in 2004, Jetstar has grown from a small domestic carrier – with just 14 aircraft flying up and down the east coast of Australia – to become the fastest airline brand in Asia Pacific to grow its fleet to 100 aircraft.

Jetstar Group Chief Executive Officer Jayne Hrdlicka said this milestone was only possible because of the 400,000 passengers who choose to fly with the Jetstar Group each week.

To commemorate this milestone, Jetstar has applied a special 100th aircraft livery on its first Sharklet-equipped Airbus A320.

The livery features 132 people doing the Jetstar star jump including passengers and ambassadors from across Asia Pacific representing the five Jetstar branded airlines.

“This aircraft also celebrates the huge achievement of carrying more than 100 million passengers in our nine year history,” Ms Hrdlicka added.

“The delivery of this new A320, with its remarkable wing-tip technology, reflects our on-going commitment to invest in modern aircraft and innovation to benefit our customers.

“The distinctive wing-tips bring about higher fuel efficiencies and help us to continue to deliver everyday low fares to our customers.”

The Jetstar Group now has three aircraft fitted with the fuel saving Sharklets – one each for Jetstar Asia, Jetstar Japan and now Jetstar Australia and New Zealand.

The Airbus A320-232 with the special 100th livery registration of VH-VFN (msn 5566) will be flown on major domestic routes and over the coming months and is expected to visit New Zealand, Singapore and Japan.

The Jetstar Group is made up of Jetstar Airways (subsidiary of the QANTAS Group) in Australia and New Zealand, Jetstar Asia in Singapore, Jetstar Pacific in Vietnam and Jetstar Japan in Japan.

Subject to regulatory approval, Jetstar Hong Kong will fly to destinations in Greater China, Japan, South Korea and South East Asia later this year.

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Jetstar Airways (Australia):

QANTAS Group announces a fleet update, will retire its last Boeing 737-400 and 767-300, the Boeing 737-800 fleet will grow to 75

The QANTAS Group (QANTAS Airways) (Sydney) has announced it will upgrade its entire fleet of Airbus A330s and order new Boeing 737-800s to drive its strategy in the international and domestic markets.

Beginning in late 2014, the Group will reconfigure the interior of 10 Airbus A330-300s and 20 A330-200s with a new flat seat in business class, refreshed economy cabin and a new inflight entertainment offering.

The A330-300s will be operated by QANTAS International on its network between Australia and Asia, while the A330-200s will be operated by QANTAS Domestic on routes between the east coast and Perth – enabling the final retirement of the Group’s Boeing 767s.

The Group will also purchase five additional Boeing 737-800 aircraft for QANTAS Domestic (for delivery during 2014) and extend the leases on two existing Boeing 737-800s this year.

The A330 reconfiguration program and the additional Boeing 737-800 orders do not affect the Group’s planned capital expenditure of $1.6 billion in 2012/13 and $1.5 billion in 2013/14..

The airline will also upgrade 20 A330-200s for QANTAS Domestic’s wide body fleet – meaning the trans-continental flights will be operated by aircraft featuring lie-flat beds in business and the latest inflight entertainment technology.

The Boeing 737-800 fleet will ultimately grow to 75 aircraft.

The older narrow body Boeing 737-400s will be phased out by the end of 2013 and Boeing 767s by mid-2015.

The group recently announced new orders for five additional Boeing 717 aircraft and three additional Bombardier Q400s for its regional operations.

On the financial side, the Group announced the following statement:

The Qantas Group has announced a statutory profit after tax of A$111 million (all currencies in Australian dollars) (and an underlying profit before tax of A$223 million) for the six months ended 31 December 2012.

Key points:
-Statutory Profit After Tax: $111 million, up 164 per cent
– Underlying Profit Before Tax1: $223 million, up 10 per cent
– Qantas Loyalty: record result2, underlying EBIT up 15 per cent
– Qantas International: 65 per cent improvement, turnaround on course
– Qantas Domestic and Jetstar: solid earnings despite excess capacity in domestic market
– Emirates partnership announced, interim authorisation granted, fares on sale
– No interim dividend declared

The result is in line with previous guidance and reflects progress in the Group’s strategy, despite challenging conditions in international and domestic air travel markets.

All operating segments of the Group’s portfolio were profitable with the exception of Qantas International. However, losses in QANTAS International were reduced by 65 per cent in 1H13 compared with 1H12.

Underlying profit before tax for the first half included $125 million in revenue from the agreement negotiated with Boeing in August 2012 to restructure the Group’s Boeing 787 order.

The Group incurred $136 million in one-off transformation costs during the first half, which have been recognised as items outside of underlying profit before tax.

CEO commentary and Group performance

Qantas CEO Alan Joyce said the Group was delivering against all its strategic goals.

“During 1H13 we increased underlying profit by 10 per cent, announced a global aviation partnership with Emirates3, launched Jetstar Japan, reinforced our position in the Australian domestic market, reduced comparable unit costs by 3 per cent4, announced the early repayment of $650 million in debt, commenced a share buy-back and sold non-core assets,” Mr Joyce said.

“In total, the Group achieved $172 million in transformation benefits in 1H13.

“The operating environment remains complex and volatile, but we are now beginning to realise the benefits of the tough decisions that we have made over the past 18 months.

“This progress would not have been possible without the passion and commitment of everyone at the Qantas Group, right across the company, and I thank all our people for their contribution.”

QANTAS International

QANTAS International reported an underlying EBIT loss of $91 million in 1H13 – an improvement of $171 million compared with 1H12.

“QANTAS International is well advanced in its turnaround plan,” Mr Joyce said.

“The 65 per cent improvement in QANTAS International’s underlying EBIT is testament to the steps taken to remove cost from the businesses, from closing down loss-making routes to retiring aircraft and consolidating
operations.

“But we have also moved to renew QANTAS International: nine Boeing 747s have been upgraded with A380- standard cabins, we have strengthened our alliances with American Airlines and LAN Airlines around the new hubs of
Dallas/Fort Worth and Santiago, and we are introducing new customer services such as chauffeur transport. International customer satisfaction has reached the highest level ever recorded.5

“From March 31, subject to final regulatory approval, our partnership with Emirates will take effect – giving our customers one-stop access to over 65 destinations in Europe, the Middle East and North Africa, via a superb hub in Dubai.

“At the same time, we will strengthen our network in Asia. Earlier this month we announced a new schedule for QANTAS services to the region, increasing dedicated capacity.

“Taken together, these measures provide a platform to return Qantas International to profit and, over the long term, target growth opportunities.”

QANTAS Domestic

QANTAS Domestic reported underlying EBIT of $218 million in 1H13, down from $328 million in 1H12.

“Clearly the Australian domestic market is highly competitive,” Mr Joyce said. “We have seen elevated levels of capacity growth from competitors attempting to claim market share from QANTAS Domestic.

“This has put pressure on yield for all airlines – but QANTAS Domestic has remained the airline of choice for business travellers, maintaining its 84 per cent share of the corporate market. During the first half we renewed 40 accounts and won 39 new accounts, including four won back from the competition.6

“We have continued to invest in the domestic business, with new and upgraded aircraft and a big focus on improving customer service through training and technology. Qantas Domestic consistently outperformed its main competitor for on-time performance during 2012 and achieved record customer satisfaction.7

“We also continue to grow in regional Australia, both through QantasLink and through our expanding charter business in mining regions. We are confident that with our balanced portfolio of domestic airlines we will
remain the leader in every segment of the market.”

Jetstar Airways:

Jetstar Airways reported underlying EBIT of $128 million in 1H13, down from $147 million in 1H12, reflecting domestic market conditions and start-up investments in Jetstar Japan and Jetstar Hong Kong.

“Jetstar’s revenues increased by 12 per cent as it positioned itself for a new phase of growth,” Mr Joyce said.

“Jetstar Japan commenced domestic operations in July and has made a strong start – with over 600,000 passengers carried in its first six months.

“Singapore-based Jetstar Asia continued to grow, with an improvement in profitability, while the performance of Vietnam-based Jetstar Pacific is also improving after an ownership restructure and fleet renewal program.

“Jetstar Hong Kong’s application for regulatory approval is well underway, and though we do not take the outcome for granted, we believe there is a compelling case for a new low cost airline in this market.

“Already the largest low cost carrier in the Asia Pacific by revenue, we are now building up Jetstar’s scale across the region to support forecast passenger demand – using a capital-light model that draws on close
partnerships with local market leaders.”

Group financial position

The Group’s liquidity position is strong at $3.5 billion and disciplined financial management remains a core priority.

“In August 2012 we said that we would focus on debt reduction after a period of relatively high capital expenditure, and that’s what we have done,” Mr Joyce said.

“During the first half we announced the early repayment of over $650 million of debt. At the same time, we launched a share buy-back, reflecting the Board’s confidence in the Group’s underlying financial strength and long term strategy.

“These steps were enabled by $750 million in cash generated by the sale of our stake in StarTrack to Australia Post and the restructure of our Boeing 787 delivery schedule – prudent transactions in keeping with our commitment to disciplined financial management.”

Planned capital expenditure has been reduced by $600 million, with a forecast of $1.6 billion in 2012/13 and $1.5 billion in 2013/14.

Net free cash flow in 1H13 was $205 million and the Group continues to target positive net free cash flow9 on a full-year basis.

Outlook

The operating environment for the QANTAS Group in 2H13 remains challenging and volatile.

Group capacity is expected to increase by 0.5-1.5 per cent in 2H13 compared with 2H12. Group domestic capacity is expected to increase by 5-7 per cent in 2H13 compared with 2H12, while maintaining flexibility.

Underlying fuel costs for the Group are expected to be approximately $2.25 billion10 in 2H13.

No Group profit guidance is provided at this time due to the high degree of volatility and uncertainty in the competitive environment, global economic conditions, fuel prices and foreign exchange rates.

Copyright Photo: John Adlard. The last Boeing 767-300 will be retired by mid 2015. Boeing 767-336 ER VH-ZXB (msn 24338) in the special QANTAS Socceroos livery is pictured at the Sydney hom and base.

QANTAS Airways:

QANTAS cancels 35 Boeing 787-9 Dreamliners

QANTAS Group (QANTAS Airways and Jetstar Airways) (Sydney) has restructured its fleet plans which includes the cancellation of 35 Boeing 787-9 Dreamliners after reporting its financial results for its fiscal year.

The issued the following statement:

“The Qantas Group announced it would restructure its Boeing 787 aircraft delivery schedule as part of the five-year Qantas International turnaround plan.

There is no change to the Group’s plans for the Boeing 787-8 aircraft. Deliveries of 15 Boeing 787-8s to Jetstar Airways will continue as planned, with the first aircraft to arrive in the second half of 2013. This will enable the transfer of Airbus A330 aircraft from Jetstar to Qantas Domestic, and the eventual retirement of Qantas’ Boeing 767 fleet.

Fifty Boeing 787-9 options and purchase rights will be retained and brought forward by almost two years, available for delivery from 2016. However, firm commitments for 35 Boeing 787-9s will be cancelled. The restructure means a two-year delay in the Group’s first Boeing 787-9 delivery.

The changes will result in a reduction in capital expenditure commitments that would equal US$8.5 billion at list prices.

Qantas Group CEO Alan Joyce said the changes were consistent with the goals of the Group’s broader
strategy.

“Qantas continues to practice disciplined capital management and, in the context of returning Qantas International to profit, this is a prudent decision,” Mr Joyce said. “The Boeing 787 is an excellent aircraft and remains an important part of our future. However, circumstances have changed significantly since our order several years ago. It is vital that we allocate capital carefully across all parts of the Group.

“Qantas has always maintained flexibility in its fleet plan and made changes when required. We have now substantially completed our fleet renewal program for the Qantas Group, with 114 new aircraft delivered over the past four years. Our average scheduled passenger fleet age is 8.3 years, the lowest since privatisation and highly competitive by international standards.

“We have 12 A380s in service across our long-haul network and the reconfiguration of nine Boeing 747-400s will be complete by late 2012. Boeing 737-800s will continue to enter the Qantas Domestic fleet as part of the Group’s existing fleet plan, while Airbus A330s will transfer from Jetstar as Boeing 787s are delivered. And Jetstar’s domestic and pan-Asian fleet requirements will be met over the long-term by our existing A320 order book and the arrival of Boeing 787-8s.

“Fifty Boeing 787-9s will remain available to the Group from 2016, in line with the timeframe of the Qantas International turnaround plan.”

On the financial side the group issued this report (all amounts in Australian dollars):

Qantas Group today (August 23) announced Underlying Profit Before Tax of $95 million for the year ended 30 June 2012.

The Group’s portfolio of businesses faced a challenging year – however, it is well-positioned for a strong,sustainable future.

The result was materially impacted by record high fuel costs ($4.3 billion, up $645 million) and industrial action culminating in the grounding of the Qantas fleet ($194 million). Operating conditions for the global aviation industry deteriorated significantly during the year, affecting most major airline businesses.

There were also one-off costs of $398 million, which are not included in Underlying PBT, as the Group initiated a turnaround plan for Qantas’ international network and addressed its legacy cost base.

As a result, the Group reported a Statutory Loss After Tax of $244 million for the year.

All parts of the Group were profitable with the exception of Qantas’ international network. Jetstar and Qantas Frequent Flyer achieved record results² and Qantas’ domestic operations outperformed the prior year. The Group holds a leading position in the Australian domestic market while Jetstar continues to expand in Asia, including through the successful launch of Jetstar Japan.

In line with previous market guidance, Qantas’ international network made an Underlying EBIT loss of approximately $450 million and Qantas and Jetstar’s domestic networks together delivered Underlying EBIT of approximately $600 million.

Qantas Group CEO Alan Joyce said the Group had launched the biggest transformation program since
privatisation in extremely challenging circumstances.

“Qantas has been through an exceptional period in its history over the past 12 months,” Mr Joyce said.

“Over the course of the year we made significant progress in advancing the Group’s strategy – building on our strong domestic business and frequent flyer program and growing Jetstar across Asia. Qantas’ international turnaround plan is on track and set for improvement in 2012/13.

“We are now coming off a period of high capital expenditure that has given us the youngest fleet since Qantas became a public company in 1995 – an average age of 8.3 years for passenger aircraft⁴. Our Boeing 747 reconfiguration program is nearly complete, with the aircraft receiving outstanding customer feedback, and from this October we will also upgrade our domestic Boeing 767 fleet.

“We will continue to invest capital efficiently as we target greater competitiveness and customer satisfaction to deliver a stronger Qantas Group.”

The Group improved cash flow during the year, achieving a free cash flow positive position of $206 million in the second half of 2011/12. Cash held at 30 June 2012 was $3.4 billion with access to a $300 million undrawn standby facility, and the Group retained an investment-grade credit rating. Ten narrow-body aircraft were purchased with cash, meaning the Group has added 18 new unencumbered aircraft over the past two years.

During the year the Group took steps to reduce planned 2012/2013 capital expenditure to $1.9 billion, and expenditure will remain at that level through 2013/2014.

Fleet renewal is substantially complete after the delivery of 114 new aircraft over the past four years and the Group will now shift its focus to debt reduction. The Group’s future fleet delivery profile has been restructured with a reduction in potential commitments for the Boeing 787-9 from 85 to 50 (announced separately today), available from 2016.

Segment performance

Qantas reported an Underlying EBIT loss of $21 million, down $249 million compared with 2010/11, reflecting the poor performance of the international network. The Qantas segment result was also severely impacted by record fuel costs and industrial action.

Customer satisfaction in the domestic market is at its highest level in over three years and the Group continues to invest in Qantas’ domestic network, product and service. It remains the airline of choice for corporate travellers with strong double-digit corporate revenue growth and an estimated 84 per cent share of the domestic corporate travel market.

Significant progress was made in Qantas’ international turnaround plan launched in August 2011. Qantas increased capacity to its Dallas/Fort Worth and Santiago hubs, reconfigured seven out of a planned nine Boeing 747 aircraft with award-winning A380 interiors, strengthened alliance relationships and withdrew from major loss-making routes. Major business transformation initiatives, including heavy maintenance consolidation, were commenced during the year.

The benefits from these initiatives have started to flow and will deliver annual savings of approximately $300 million when all measures announced to date have been implemented.

Jetstar reported record Underlying EBIT of $203 million, up $34 million or 20 per cent on the prior year. Ancillary revenues grew by 27 per cent and unit costs were reduced to record lows. Domestically, Jetstar continues to hold a clear leadership position in the price-sensitive market.

Despite challenging operating conditions, Jetstar achieved capacity and passenger growth in all markets. Jetstar Japan was established during the year and commenced operations in July 2012, five months ahead of schedule, complementing airlines based in Singapore (Jetstar Asia) and Vietnam (Jetstar Pacific) – with Jetstar Hong Kong to be added in 2013, subject to regulatory approval. Each of these investments draws on Jetstar’s well-established brand, world-class ancillary revenue model and strong local partners.

Qantas Frequent Flyer achieved a record result, with Normalised Underlying EBIT of $231 million, up 14 per cent compared with 2010/11. The continued expansion and enhancement of the program saw billings increase by 14 per cent to $1.2 billion. Membership now stands at 8.6 million members, with over 500 program partners.

The acquisition of Wishlist Holdings Ltd, establishment of a new membership tier (Platinum One) and addition of major new partners such as Optus all contributed to Qantas Frequent Flyer’s strong performance.

Qantas Freight’s Underlying EBIT was $45 million, down $17 million compared with the prior year. The result reflects a broader downturn in global air freight markets, plus adverse fuel price and foreign exchange impacts that were only partially offset by yield improvements.

Outlook

The Group’s operating environment and economic outlook for the first half of 2012/2013 remains challenging, volatile and dependent on a number of uncontrollable external factors.

Group capacity is expected to increase by 3-4 per cent in the first half of 2012/2013 compared to the first half of 2011/2012, while maintaining flexibility.

The Group aims to maintain a profit-maximising 65 per cent domestic market share. Given current market conditions, Group domestic capacity is expected to increase by 9-11 per cent in the first half of 2012/2013 compared to the first half of 2011/2012. However, the Group has significant flexibility to adjust domestic capacity should current market conditions change.

Underlying fuel costs (excluding carbon tax) for the Group are expected to be approximately $2.3 billion⁵ in the first half of 2012/2013 compared to $2.2 billion in the first half of 2011/2012, due to higher forward market jet fuel prices and increased flying.

No Group profit guidance is provided at this time due to the high degree of volatility and uncertainty in global economic conditions, fuel prices, exchange rates, as well as the major transformational change agenda underway.

¹ Underlying Profit Before Tax (Underlying PBT) is a non-statutory measure and is the primary measure used by the Group’s chief operating decision making bodies for the purposes of assessing the financial performance of the Group. All line items in the Media Release are reported on an Underlying basis. A detailed reconciliation of Statutory and Underlying PBT is included in the Review of Operations.

² Jetstar result based on Underlying EBIT. Qantas Frequent Flyer result based on Normalised EBIT, which is Underlying EBIT normalised for prior period changes in accounting estimates. Refer to the Review of Operations for a reconciliation of Normalised EBIT to Underlying EBIT.

³ Free cash flow – Operating cash flows less investing cash flows. Free cash flow is a measure of the amount of operating cash flows that are available (i.e. after investing activities) to fund reductions in net debt or payments to shareholders.

⁴ Average fleet age of the Group’s scheduled passenger fleet based on manufacturing dates.

⁵ As at 15 August 2012.

Copyright Photo: John Adlard. The Boeing 767-300 ERs are now likely to be operated longer under this revised plan. Boeing 767-338 ER VH-OGD (msn 24407) arrives at Sydney.

QANTAS Airways:

Jetstar Airways:

QANTAS to spilt its company into domestic and international operations

QANTAS Airways (Sydney) has announced it will split up its international and domestic operations into two separate businesses in July 2012 according to the Sydney Morning Herald. The logic behind the move is to insure each division can operate efficiently and profitably. The company is committed to turning its international operations which is losing money.

Read the full report: CLICK HERE

In other news, QANTAS Airways and subsidiary Jetstar Airways (Melbourne) will increase capacity on the east coast routes by up to 25,800 seats per week during 2012/13.

QANTAS will add:

– 11 return services per week between Sydney and Melbourne from July 9, 2012
– 11 return services per week between Sydney and Brisbane from August 23, 2012

Jetstar will add:

– 21 return services per week between Sydney and Melbourne from August 16, 2012
– Seven return services per week between Sydney and Adelaide from November 15, 2012
– Seven return services per week between Sydney and Ballina-Byron from April 18, 2013
– Seven return services per week between Sydney and the Gold Coast from April 18, 2013
– Three return services per week between Adelaide and the Gold Coast from April 18, 2013
– Four return services per week between Newcastle and the Gold Coast from April 18, 2013

Top Copyright Photo: John Adlard.

QANTAS Airways:

Jetstar Airways:

Bottom Copyright Photo: John Adlard.

QANTAS operates a biofuel flight today

QANTAS Airways’ (Sydney) today operated its first biofuel flight. Flight QF 1121 departed Sydney at 10:20 am (1020) this morning and arrived in Adelaide at 12:05 pm (1205). The return flight, QF 1120, departed Adelaide at 1:35 pm (1335), arriving in Sydney at 4:00 pm (1600).

On April 19, Jetstar flights JQ 705 and JQ 706 from Melbourne to Hobart and back will also be powered by the same fuel type used in today’s QF flights, underlining the QANTAS Group’s commitment to sustainable aviation fuel.

Supplied by SkyNRG, the fuel type is a 50:50 blend of biofuel and conventional jet fuel certified for use in commercial aviation. Its “life cycle” carbon footprint is around 60 percent smaller than that of conventional jet fuel.

The company also announced today that it will conduct a feasibility study into the potential for an Australian sustainable aviation fuel industry, backed by funding from the Australian Government.

The Honorable Martin Ferguson MP, Minister for Resources, Energy and Tourism, announced the Australian government’s support for the study this morning. Government funding for the study will be allocated under the Emerging Renewables Program, while Shell will provide technical support. The study will commence in May.

QANTAS Slide Show: CLICK HERE

Jetstar Airways to extend the Darwin-Manila route to Tokyo

Jetstar Airways (Jetstar.com) (Australia) Airbus A320-232 VH-VGZ (msn 3917) (Quiksilver) SYD (John Adlard) (right side), originally uploaded by Airliners Gallery.

Jetstar Airways (Australia) (Melbourne) will extend the Darwin-Manila route to Toyko (Narita) on March 26 per Airline Route. The route will be operated four days a week with Airbus A320s.

Jetstar Slide Show: CLICK HERE

QANTAS and Airbus finalize Australia’s largest aircraft order

QANTAS Airways (Sydney) and Airbus have finalized a contract for 110 A320 Family aircraft, to help with the airline’s fleet renewal and expansion plans in the coming years. The firm order for 78 A320neo and 32 A320s is the largest single order in Australian aviation history by aircraft units and follows a commitment signed in August.

The new aircraft will be deployed mainly by Jetstar Airways.

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QANTAS announces new lounges, Boeing 747 upgrades, orders more A320s and launches Jetstar Japan

QANTAS Airways Boeing 747-438 ER VH-OEJ (msn 32914) (Wunala Dreaming 2nd) SYD (John Adlard), originally uploaded by Airliners Gallery.

QANTAS Airways (Sydney) has announced it will invest almost A$400 million in new international lounges, new inflight entertainment and aircraft refurbishment to improve the customer experience. The investment is part of the QANTAS Group’s five-year plan to build a truly modern, customer-focused and competitive global airline business.

QF will construct a new First Lounge and Business Lounge in Los Angeles, three times the size of the current space, as well as new First Lounges in Singapore and Hong Kong.

Over the past five years QF has opened new First Lounges in Sydney and Melbourne, a new business lounge in Hong Kong and upgraded its business lounges in Sydney, Melbourne, Canberra and Perth. QF has also upgraded its shared First and Business lounge in Bangkok and Narita.

In February 2010, QANTAS announced a $250 million upgrade for nine Boeing 747-400s to meet the changing demands of the airline’s international customers. The first reconfigured Boeing 747-400 will commence services between Brisbane and Los Angeles in October 2011, operating three return services per week.

The remaining eight Boeing 747-400s with new product will be introduced over the next 12 months across the international network, offering customers Business (including the fully flat Skybed), Premium Economy and Economy cabins, and on-demand Panasonic IFE with over 1000 entertainment options in every seat.
Each of the aircraft will be fitted with 364 seats: 58 Business, 36 Premium Economy and 270 Economy. The seats in all three cabins have won awards for their design and comfort, including the 2009 Australian International Design Award for the Economy seat. All these aircraft offer the latest in comfort and design, with Panasonic on-demand inflight entertainment in every seat.

Seven new Boeing 737-800s are now operating on trans-Tasman routes with an eighth to arrive this week.

For the domestic network, QF has a total of 24 Boeing 737-800s, offering customers the latest in comfort and design and Panasonic on-demand inflight entertainment in every seat. Eighteen of these new aircraft will feature the new Boeing Sky Interior, the first of which is set to arrive in October this year. Four new A330s with the best in premium product are also currently operating domestically.

QANTAS Group also announced it would acquire up to 110 Airbus A320 aircraft, plus 194 purchase rights and options, to support its fleet renewal and growth for the next 10 to 15 years.

The Group has committed to order up to 110 A320s (106 confirmed from Airbus and four additional aircraft, either purchased or leased, subject to availability). These aircraft will facilitate capacity growth across Jetstar’s domestic and international operations, the launch of Jetstar Japan and the establishment of QANTAS’ new premium Asia-focused airline – while the purchase rights and options provide the Group with significant flexibility to pursue further growth opportunities on favourable commercial terms.

The Group will become a major customer for the new more fuel-efficient A320neo. The commitment for 110 A320s includes 78 A320neos with 194 rights and options on further purchases.

In addition, as a result of the new strategy and network changes for QANTAS international, QANTAS will defer the delivery of its final six Airbus A380s by up to six years, driving substantial capital cost savings. QF’s A380 fleet will reach 12 aircraft by the end of 2011 and 14 aircraft by mid-2013. The remaining six A380s will be delivered to coincide with the retirement of QF’s last six Boeing 747-400 ER aircraft.

In summary, changes to the QANTAS Group fleet plan are as follows:

– The purchase of between 28 and 32 current-generation A320 aircraft.
– The purchase of 78 new A320neo aircraft with 194 rights and options for further purchases.
– The rescheduling of six A380 deliveries by up to six years.

The QANTAS Group, Japan Airlines Company, Ltd (JAL) and Mitsubishi Corporation announced today the launch of Jetstar Japan – a new domestic airline that will bring more low airfares to customers in Japan.

The QANTAS Group, JAL and Mitsubishi Corporation will each hold 1/3 share in the new company (voting-rights-basis).

Jetstar Japan will commence domestic operations by the end of 2012 and expects to fly from Tokyo (Narita) and Osaka (Kansai International), with other destinations under consideration including Sapporo, Fukuoka, and Okinawa. Jetstar Japan also plans to ultimately offer short haul international services to key Asian cities making travel more accessible and appealing to millions more people.

The airline will launch with an initial fleet of three new Airbus A320 aircraft, configured for 180 customers in a single class, growing to 24 aircraft within its first few years. Total capitalization commitment for the new airline is up to ¥12 billion.

QANTAS Slide Show: CLICK HERE

Copyright Photo: John Adlard. The Boeing 747 is gradually being phased out by QF. Read about this very special logojet by clicking on the photo.