Airline News
Qantas to inject fresh funds into Jetstar Japan
July 6th 2015
Qantas Airways is set to pump another two billion yen ($21 million) into its Jetstar Japan joint venture, according to Japanese media. Read More » Qantas and partner, Japan Airlines (JAL), agreed in November 2014 on an 11 billion yen cash injection, in two tranches, for the expansion of Jetstar Japan's domestic and international operations, with the first tranche accounting for 7 billion yen.
Despite industry rumours which suggest JAL was less willing than Qantas to keep funding the loss-making budget carrier if it needed cash beyond the next injection, a JAL spokesman told The Sydney Morning Herald it would continue to provide "necessary support" for the budget airline to ensure stable operations. "Regarding the low-cost carrier business model, we consider it will take several years to take root in Japan," the JAL spokesman said.
Qantas and JAL will each hold a 47.1% stake in Jetstar Japan once the second tranche is released, up from 46.7% at present. Each airline has contributed $160 million to the airline, at current exchange rates, since the Tokyo-based carrier was formed four years ago. Stakes held by Mitsubishi Corp and Century Tokyo Leasing have decreased over time as Qantas and JAL injected more funds. However, Qantas has only a one-third voting stake in the venture as a result of Japanese restrictions on foreign ownership of airlines.
With a fleet of 20 A320s and a 60% share of the budget market, Jetstar Japan lost 11.1 billion yen in the last financial year, however Qantas said it reported an unknown but lesser loss in the first half of the current year, despite a weaker Japanese yen and aggressive competitor pricing. In April, it appointed long-serving Jetstar executive, Gerry Turner, as new chief executive after former chief, Miyuki Suzuki, left for Cisco Japan.
Qantas' investments in Asia have proved challenging to date. Jetstar's Singapore and Vietnam ventures have returned to profitability in recent months after years of financial turmoil, while Jetstar Hong Kong was rejected last week by regulators three years after it applied for its air operator’s license, prompting Qantas chief, Alan Joyce, to say the rejection “served the vested interests of those already flying, leaving the travelling public worse off”.
