Jetstar loses $116m despite strong domestic showing

By John Walton, August 28 2014
Jetstar loses $116m despite strong domestic showing

Qantas' low-cost sibling Jetstar has not escaped its share of the pain, with the Jetstar Group losing $116 million before tax this year.

It's a shift in fortunes for the low-cost carrier, with profits down over a quarter of a billion dollars following last year’s earnings before tax profit of $138 million.

Fuel costs of $86 million, a reduction in revenue of $113 million, and “associate start-up losses” for new Jetstar franchises in Asia have taken the lustre off Jetstar for the Qantas Group.

The Qantas Group as a whole has also deferred orders for 21 A320ceos — the current version of the narrowbody used by Jetstar — by four years. Those orders have been turned into future orders for the more fuel-efficient re-engined A320neo, which was revealed earlier this year. The Qantas Group now holds orders for 99 of the neo version.

Responding to a question from Australian Business Traveller, Qantas CFO Gareth Evans confirmed that all the A320neos are intended for Jetstar.

"We have made some fleet changes to the A320 order, converted ceos to neos and pushed them out to the end of the delivery stream. The plan is that the neos will replace the ceos in the Jetstar Group. As those leases roll off, we will roll in the neos over time. We have a strong order stream to bring in these aircraft over a long period of time within the Jetstar Group."

Indeed, Qantas Group CEO Alan Joyce declared “No new Jetstar ventures will be established while the Group is focused on Transformation, but we know that substantial value exists across the Jetstar airlines and we will realise that value over time.”

A point of orange light in the gloom this financial year was that Jetstar’s domestic Australian business remained profitable, but the financial results are mum about precisely how much: Qantas’ documents refer only to a “strong surplus”. 

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John Walton

Aviation journalist and travel columnist John took his first long-haul flight when he was eight weeks old and hasn't looked back since. Well, except when facing rearwards in business class.

John, welcome back!

25 Sep 2013

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