Stephen Thompson, Qantas’ executive manager global sales (pictured left), speaking at the recent Australian Tourism Exchange in Perth, added there was no truth to rumours of a takeover of Qantas by certain parties.
“The airline remains in strong financial position and we have A$3 billion in cash. There are no plans to raise capital in the short term to compromise on our longterm plans.”
Admitting Qantas’ international operations is “undergoing pains and have underperformed”, Thompson said the airline’s restructuring was among a slew of measures to try and stem losses and cut costs.
The division has been hurt by slowing demand in its key markets, as well as higher operational costs, strikes and strong competition from Middle East airlines like Qatar and Emirates. The strikes also saw the airline’s Group CEO Alan Joyce ground the entire fleet for 48 hours last October.
From July 1, the airline’s international and domestic arms will be spilt into separate businesses. Each of the two entities, currently operating as Qantas Airways, will have its own chief executive and will report its financial results separately.
The restructuring will also enable the airline to focus on turning around its international business and enhance its strong domestic operations.
Each business arm will have its own CEO and its own operational and commercial functions. Simon Hickey, currently CEO, Qantas Frequent Flyer, will be CEO of Qantas International, while Lyell Strambi, currently group executive, Qantas Airlines Operations, will be the new CEO, Qantas Domestic.
Group chief Alan Joyce, who remains in overall charge, said the transformation would strengthen the airline and help it deliver its strategic goals.
Thompson said the airline would continue with expanding its international operations, which currently cover 800 destinations, through expanding its partnership with global airline partners such as LAN Airlines and British Airways, its “cornerstone” partner.
The airline will increase the frequency of its services between Sydney and Dallas/Fort Worth (DFW) to daily services from July 1.
Thompson said that as Dallas is home to Qantas’ oneworld partner, American Airlines, the two carriers have established a joint partnership agreement to deliver lower fares and better connections flying between the US and Australia/New Zealand.
“This is part of the Qantas’ international strategy to serve key global hubs and develop stronger relationships with our airline partners.”
Qantas will also delay, delivery of the two new A380s from early 2013 to June 2017. Currently it has 12 A380s in service and will get its other six on-order superjumbos by the end of June 2019, it said.
The airline is cutting annual operating costs for international services by more than A$300 million. The savings include about A$120 million by cutting flights on unprofitable routes and A$100 million from streamlining heavy maintenance and engineering.
On what the airline is doing to protect its domestic market, described as the “pulse and heart of Qantas”, and fend off competition from an aggressive Virgin Australia, Thompson replied, “Competition will always be there and competition is good. We’ll leverage on our strength to ensure our 65% of the domestic market is not compromised.”
One way is upgrading the aircraft type on its domestic routes, from the Boeing B767 aircraft to the Airbus A330. The aircraft is internationally configured to offer Skybed seats in business class and on-demand seat back inflight entertainment in both the business and economy cabins.
The airline will increase the A330 services on the Perth-Melbourne route from October 15, from 44 services per week to 68, replacing flights currently operated with the B767.
“This move is in direct response to the growing demand for premium travel to Perth from both business and leisure passengers,” said Thompson.
