The Qantas Airways Ltd (ASX: QAN) share price is down more than 1% after the airline announced it’s closing Jetstar Asia.
Qantas closes Jetstar Asia
The airline has announced a strategic restructuring to support its historic fleet renewal program and strengthen its core businesses in Australia and New Zealand.
Qantas said it’s closing its Singapore-based intra-Asia airline, Jetstar Asia, enabling Qantas Group to recycle up to $500 million in capital supporting its fleet renewal program.
Jetstar Asia has been impacted by rising supplier costs, high airport fees and intensified competition in the region. This has challenged Jetstar Asia’s ability to deliver returns compared to stronger performing core markets.
The business said that 13 Jetstar Asia Airbus A320 aircraft to be progressively redeployed to Australia and New Zealand bringing more low fares and more local jobs, according to Qantas.
The airline said that only 16 intra-Asia routes will be impacted by the closure of Jetstar Asia with no changes to Jetstar Airways and Jetstar Japan services into Asia. All of Jetstar Airways International services in and out of Australia remain unchanged.
Jetstar Asia will continue to operate flights for the next seven weeks on a progressively reduced schedule before its final day of operation on 31 July 2025.
Qantas said the airline is expected to deliver a $35 million underlying EBIT loss this financial year, and $25 million in the second half, before the closure decision. That’s not helpful for the Qantas share price, though the recycling on capital is.
Capital to be recycled
Qantas said the closure will unlock up to $500 million in fleet capital to be recycled into its core businesses and improve long-term returns.
The 13 A320 aircraft will be progressively redeployed to the core markets in Australia and New Zealand to support fleet renewal and growth, including replacing leased aircraft in Jetstar Airways’ domestic operation to reduce its cost base.
The airline also announced that some of the aircraft will also help accelerate fleet renewal in Qantas’ regional operations that service the resources sector in Western Australia.
Financial impact
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.
The combined impact is currently estimated to be approximately $175 million, with approximately a third in FY25 and the rest in FY26, which will be “taken outside of underlying earnings”.
Final thoughts on the Qantas share price
The Qantas share price has soared around 70% in the past year. I’m not sure if it’s still a great opportunity today after rising so much. There are better opportunities around, in my opinion.
