Qantas will close its low-cost carrier Jetstar Asia by the end of July, saying rising costs, increased competition and high airport fees eroded the regional airlineโs profits.
The Singapore-based airlineโs performance had deteriorated since the start of the year to a point where it is expected to weigh down Qantasโ result with a $25 million underlying loss this financial year, Qantas said in a statement to the ASX on Wednesday morning.
It said the closure would eliminate 500 jobs in the region.
Qantas is shutting down its Jetstar Asia operations.
Its troubles compound a disappointing outcome from Qantasโ core domestic and international operations in the June half. In a trading update, the airline warned capacity growth in its domestic network was lower than expected, largely due to Cyclone Alfred, which affected flights over large parts of Queensland and wiped out $30 million in earnings. International flight capacity growth will also fall short of previous forecast, due to a strike at Qantasโ partner airline Finnair, the statement said.
Demand across its domestic and international operations remained strong, however, Qantas said.
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Jetstar Asia will run its flights across Asia for the next seven weeks on a progressively reduced schedule before its final grounding on July 31. Its thirteen A320 planes will be redeployed to Australia and New Zealand to support Qantasโ fleet renewal and replace leased planes on Jetstarโs domestic routes.
โThis is a very tough day,โ said Qantas boss Vanessa Hudson in the statement.
โDespite their best efforts, we have seen some of Jetstar Asiaโs supplier costs increase by up to 200 per cent, which has materially changed its cost base.โ
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