Qantas to Go for Jetstar Recapitalisation

Submitted by Jim Thesiger on 9 October, 2009 - 04:18

Domestic and international air transport service provider Qantas (QAN) is about to go for recapitalising Vietnam based Jetstar Pacific so that it can cope up with the significant growth in traffic. The recapitalisation is expected to assist Jetstar with future expansion as well. It is believed that the capital injection is going to be less than $10 million and designed to assist the carrier to capitalise on a 30 percent growth in the Vietnamese traffic over the past year with lower fares allowing more people to go for air travel. Bruce Buchanan, the chief executive of Jetstar stated on Wednesday that the partnership between Qantas and Vietnamese Government is doing a good job with the business model being established along with the brand. The Vietnamese Airline posted its first monthly profit in July.

27 percent of the airline is owned by Qantas which is planning to boost up its share to 30 percent. Qantas started with 18 percent stake in the Airline in 2007 when it was called as Pacific Airlines. In 2008, the airline was rebranded as Jetstar Pacific and the fleet was expanded to an Airbus A320 and five Boeing 737-400s. Mr. Buchanan stated that the progress made by the airline was quite satisfactory with the market growing 30 percent in the last year and capacity increased by 50 percent. The Airline saw its market share increasing to 23 percent from 14 percent and the cost dropped by 29 percent. Considerable operational improvement was achieved by the Airline as well with on-time performance growing from the 50th percentile to more than 80 percent, seat factors moved to 85 percent and use went up to 12 hours from 8.6 hours a day. The level of dissatisfaction among the staff was also reduced to less than 5 percent while it was 25 percent during the time when Jetstar moved in.

Qantas is seeking approval for Jetstar which will allow the Airline to add two 177-seat A320s between Darwin and Ho Chi Minh City to boost up the its capability during the peak demand and also for unlimited capacity over the next decade involving Vietnam and Australian points other than the four large airports.