Qantas Group To Close Jetstar Asia

• The Qantas Group is undertaking a strategic restructure, including the closure of its intra-Asia airline, Jetstar Asia, to support its historic fleet renewal program and bolster core operations in Australia and New Zealand.
• This closure is expected to recycle up to $500 million in capital, which will be reinvested into the Group's core businesses.
• Thirteen Jetstar Asia Airbus A320 aircraft will be progressively redeployed to Australia and New Zealand, aiming to offer more low fares and create over 100 local jobs.
• Jetstar Asia was projected to incur a $35 million underlying EBIT loss for the current financial year prior to the closure decision, with a $25 million loss specifically in the second half.
• Only 16 intra-Asia routes will be impacted, with Jetstar Asia ceasing operations on 31 July 2025, following a progressively reduced schedule over the next seven weeks.
• The closure does not affect Jetstar Airways' domestic and international services in Australia and New Zealand, or Jetstar Japan's operations.
• The total combined impact of one-off redundancy, restructuring costs, and non-cash foreign exchange translation reserve losses is estimated at approximately $175 million, with about one-third in FY25 and the remainder in FY26, taken outside of underlying earnings.
• The direct pre-tax cash impact is approximately $160 million, predominantly in FY26, which will be mitigated by working capital benefits from Jetstar Airways' growth and consequential tax adjustments.
• Group International capacity for the second half of FY25 is expected to grow by 9 percent, which is 3 percent lower than previously guided due to industrial action.

Score: 7

Explanation: The sentiment is largely positive from an investment perspective, as the document outlines a disciplined strategic move to divest from an underperforming asset, recycle capital, and strengthen core businesses, despite the immediate financial costs and job losses associated with the closure.

• The closure of Jetstar Asia enables the Qantas Group to recycle up to $500 million in capital, supporting its historic fleet renewal program.
• Thirteen Jetstar Asia Airbus A320 aircraft will be progressively redeployed to Australia and New Zealand, bringing more low fares and creating more than 100 local jobs.
• The redeployment of aircraft will help reduce Jetstar Airways' domestic cost base by replacing leased aircraft.
• Some redeployed aircraft will accelerate fleet renewal in Qantas regional operations, particularly those servicing the critical resources sector in Western Australia.
• Singapore remains a critical hub for the Qantas Group, serving as its third largest international airport with nearly 20 codeshare and interline partners.
• The strategic decisions align with the Qantas Group's disciplined allocation of capital, prioritizing stronger performing segments and strategic growth initiatives like Project Sunrise.

• Jetstar Asia is expected to post a $35 million underlying EBIT loss this financial year prior to the closure decision, with a $25 million loss in the second half.
• Jetstar Asia's supplier costs increased by up to 200 percent, significantly impacting its cost base.
• The closure of Jetstar Asia will result in one-off redundancy and restructuring costs, as well as non-cash foreign exchange translation reserve losses, estimated at approximately $175 million.
• The direct pre-tax cash impact of the closure is approximately $160 million, predominantly in FY26.
• The closure impacts 16 intra-Asia routes operated by Jetstar Asia.
• All affected Jetstar Asia employees will face redundancy, although they will be provided with benefits and employment support services.

• The document highlights that Jetstar Asia's supplier costs increased by up to 200 percent, indicating a risk of significant cost volatility in the aviation industry.
• Industrial action impacted Qantas Finnair wet lease, leading to a 3 percent reduction in Group International capacity growth guidance for 2H25, which poses a risk to operational targets.
• Foreign exchange movements could alter the estimated non-cash foreign exchange translation reserve losses, which were approximately $65 million at the end of May 2025.
• The successful redeployment of aircraft and mitigation of cash impacts rely on future working capital benefits and tax adjustments, which carry inherent execution risks.

The Qantas Group anticipates continued strong demand across its Domestic and International segments, with unit revenue and capital expenditure expected to remain in line with previous guidance. The strategic closure of Jetstar Asia and redeployment of aircraft are intended to improve long-term returns and support ongoing fleet renewal, including the upcoming delivery of Airbus A321XLR and A350-1000ULR aircraft.

• Qantas Group CEO Vanessa Hudson stated that Jetstar Asia has been a pioneering force in the Asian aviation market for over 20 years, making air travel accessible to millions.
• Ms. Hudson expressed pride in the Jetstar Asia team for their efforts in delivering low fares, strong operational performance, and exceptional customer service, acknowledging that it is a very tough day for them.
• She noted that despite the team's best efforts, Jetstar Asia's supplier costs increased by up to 200 percent, materially changing its cost base.
• Ms. Hudson sincerely thanked and acknowledged the Jetstar Asia team, emphasizing their significant impact on aviation in the region over the past two decades.
• She also commented that the Group is making disciplined decisions to recycle capital across the business and prioritize it towards stronger performing segments and strategic growth initiatives like Project Sunrise.

This announcement reflects a broader trend in the aviation industry where airlines are strategically optimizing their portfolios and fleet utilization in response to evolving market conditions, including rising operational costs and the need for capital efficiency. By divesting from a less profitable intra-Asia venture, Qantas is consolidating its focus on core, higher-performing markets in Australia and New Zealand, aligning with global airline strategies to strengthen domestic and key international routes. The redeployment of mid-life aircraft also highlights a pragmatic approach to fleet management, extending the utility of existing assets while integrating new, more efficient aircraft like the A321XLR and A350-1000ULR, a common strategy among major carriers to enhance competitiveness and sustainability.

• Shareholders are expected to benefit from improved long-term returns and disciplined capital allocation, as up to $500 million in capital is recycled into stronger performing segments.
• Jetstar Asia employees will be significantly impacted by redundancies, though they will receive benefits and employment support services, with Qantas actively seeking new job opportunities for them.
• Customers with existing bookings on cancelled Jetstar Asia flights will be offered full refunds and reaccommodation onto other airlines where possible.
• Suppliers to Jetstar Asia will have their financial obligations met by the Qantas Group.
• Customers in Australia and New Zealand are expected to benefit from more low fares due to the redeployment of aircraft.
• Employees in Australia and New Zealand will see the creation of more than 100 local jobs due to the redeployment of aircraft.

• Jetstar Asia will continue to operate flights on a progressively reduced schedule for the next seven weeks.
• Jetstar Asia's final day of operation will be 31 July 2025.
• Thirteen Jetstar Asia Airbus A320 aircraft will be progressively redeployed to Australia and New Zealand.
• Qantas expects to receive its first Airbus A321XLR later this month.
• Qantas expects to receive the first Project Sunrise A350-1000ULR in calendar year 2026.

• 2025-06-11: Date of the announcement regarding the strategic restructure and closure of Jetstar Asia.
• 2025-06: Expected receipt of Qantas's first Airbus A321XLR aircraft.
• 2025-07-31: Final day of operation for Jetstar Asia flights.
• 2026: Expected receipt of the first Project Sunrise A350-1000ULR aircraft.