Qantas Airlines, Australia's biggest carrier, and Singapore businessman Choo Teck Wong (popularly known as Dennis Choo) are together buying out two low-cost Singapore airlines, Jetstar Asia and Valuair. Quantas already has a large shareholding in both airlines, but plans to increase its stake.
Choo will own 51 per cent of Jetstar Asia Airways Pte and Valuair Ltd through his private company Westbrook, with Qantas holding the rest, the Sydney-based carrier said on Thursday in a stock exchange statement.
The new ownership structure will help Qantas lower costs by better aligning Jetstar Asia with its operations in Australia, the carrier said. Last month, Qantas chief executive officer Alan Joyce said. Qantas has cut 90 executive jobs and frozen salaries in the last couple of months.
Singapore nationals will hold the majority of Jetstar Asia's board seats and the carrier will retain its traffic rights in the nation. Chong Phit Lian will continue as Jetstar Asia's chief executive officer. Choo, who has worked with Qantas for more than two decades, will become chairman of Newstar Investment Holdings Pte, the new parent for Jetstar Asia and Valuair.
Jetstar Asia was previously owned by Orangestar Investment Holdings Pte, whose shareholders included Qantas with 45 per cent, while Temasek Holdings, the private investment arm of the Singapore government, held 33.5 per cent. The rest was held by private investors. Westbrook has largely bought out Temasek and the other stakeholders.
Qantas chief executive Alan Joyce said the new structure would provide a stronger platform for the group's pan-Asian growth strategy, but there would be no immediate impact on the two airlines workforce, networks, or customers.
"A unified and simpler shareholder structure and vision for Jetstar Asia and Valuair provides certainty for these airlines and greater commercial and operational alignment, achieving new synergies across the airlines," he said.
"The airlines will continue to operate the same network, with no impact on existing employees, customers, flight bookings or supplier relationships," Joyce added.
For Qantas, the deal means that for an initial outlay of $S25 million, it will create 'back-office synergies' of about $S20 million a year. Besides savings on booking systems, branding, maintenance and training, it will also result in better co-ordination of routes.
Jetstar Asia and Valuair are relatively minor players, operating seven A320s and servicing 16 South-East Asian destinations. The main target of the new combinations seems to be Tiger Airways, which operates services 28 destinations from its Singapore hub.