Qantas Plans to Buy Airline Stake in Asia, CFO Says
By Chan Sue Ling, Bloomberg News | Jan. 23, 2007
Qantas Airways Ltd., Australia's largest airline, plans to buy a stake in an Asian carrier as part of plans to expand its network in the region.
Qantas, which plans to have 50 planes operating in Asia, wants traffic in the region to account for 15 percent to 20 percent of its total in the next decade, Chief Financial Officer Peter Gregg said on January 23.
We have "plans to make a substantial investment in Asia," Gregg said at an airline conference in Singapore, declining to give details or identify the airline. We are "doing due diligence and plan to take an equity stake in an airline."
Cooperation with another carrier will allow the Sydney-based airline to broaden its reach in Asia, where passenger traffic is predicted to grow 6.5 percent a year until 2009. Qantas has been seeking partners to boost its presence in Southeast Asia, a market with a combined population of 558 million and total trade exceeding $1 trillion.
Asia has 270 metropolitan areas with more than 500,000 residents each and accounts for about 60 percent of the world's population, Singapore's Minister of State for Finance and Transport Lim Hwee Hua said. That exceeds the 230 metropolitan areas in Europe and the U.S. combined, she said.
Qantas has no plans to restart talks with PT Adam Skyconnection Airlines for an investment or alliance with the Indonesian carrier, Gregg said in an interview on January 23.
Jetstar
The investment in the Asian carrier may involve Jetstar, the low-cost airline owned by Qantas, Jetstar Chief Executive Alan Joyce said on January 23.
Jetstar, which is as much as 50 percent cheaper to run than Qantas, was created to recover domestic market share lost to Virgin Blue Holdings Ltd., Australia's second-largest carrier.
The airline said it will start flights between Sydney and the Malaysian capital of Kuala Lumpur in September. The carrier plans to pick a hub in Asia for its new Boeing Co. 787- 900 planes in 2010, Joyce said. It's considering Kuala Lumpur, Singapore, Bangkok and Ho Chi Minh City as hubs.
Jetstar has no plans to restart stalled talks with Malaysia's AirAsia Bhd., Joyce said in an interview on January 23. AirAsia Chief Executive Officer Tony Fernandes said on January 12 the carrier had been in talks about cooperating with Jetstar.
"We have had some talks with Tony about Jetstar's long-haul operation in to KL and a cooperation agreement with Jetstar," Joyce said. "Those talks have paused. AirAsia is very focused on their own growth and their own operations. No further dialogue is planned."