Buoyed by the recent turnaround of its financial situation (see here), Qantas Airways has committed a further A$55 million (US$39.7 million) into its joint venture Jetstar Japan.
The injection of cash has boosted the Flying Kangaroo’s total investment in the low-cost carrier (LCC) to A$215 million (US$155.2 million). Meanwhile, joint venture partner Japan Airlines, which owns a 47.1 per cent stake in Jetstar Japan, has agreed to match the funds by Qantas.
Jetstar Japan has thus far been a loss-making business for the Australian carrier, having recorded a JPY11.1 billion (US$91.7 million) loss last year.
Speaking to The Australian Financial Review, Qantas Group chief executive Alan Joyce attributed Jetstar Japan’s financial woes to the ongoing devaluation of the yen and competition from the now-bankrupt Japanese LCC Skymark; in the months leading to its bankruptcy, Skymark ran its business for cash, which led to lower-than-usual airfares. Since then, the struggling LCC has announced it will join the ANA Group, which should see fares return to their normal rates.
"We expect stability to be re-established [in the Japanese LCC market]," said Joyce.
The Qantas chief also believes that with the cash injection and the group’s overall healthy financial situation, Jetstar Japan is in a good position to achieve profitability in the 2016-2017 financial year.
"We have seen profitability dramatically improve in the last year and we are expecting it to improve again this year. We are seeing yields up and we are seeing costs down and all of the indicators are pretty positive."
For more information, visit qantas.com.au and jetstar.com/jp/en
Clement Huang
