[SINGAPORE] Australian flag carrier Qantas will wind down operations of its Singapore-based unit Jetstar Asia and shut it down on Jul 31, as the low-cost airline has been facing challenges that threaten the sustainability of its business, said Jetstar Asia in a Wednesday (Jun 11) statement.
The Singapore-based airline will continue operating flights for the next seven weeks and progressively reduce its schedule across its short-haul international network outside of the Republic before its last day of operations, it added.
More than 500 employees will receive support during the closure, in the form of retrenchment packages, employment and employability support as well as opportunities within the Qantas Group, where possible, and other airlines and aviation partners in Singapore.
Customers whose bookings have been impacted by the closure will be contacted directly, and will be offered the option of a full cash refund or an alternative flight, where possible.
The closure will affect 16 intra-Asia routes and will not have an impact on Jetstar Group’s Australian and New Zealand unit, Jetstar Airways, or its Japan-based unit, Jetstar Japan. The two airlines will continue to operate their current schedule, including Jetstar Airways’ flights between Australia and Singapore.
The intra-Asia flights operated by Jetstar include:
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The move comes as Jetstar Asia deals with escalating supplier costs, airport fees and aviation charges alongside growing regional capacity and competition. Latest media reports said the carrier is expected to post an underlying earnings before interest and taxes loss of A$35 million (S$29.3 million) in the current financial year.
“These rising costs are projected to continue into the foreseeable future, putting unsustainable pressure on the airline’s ability to offer low fares, which is fundamental to its business model,” said Jetstar Asia.
The closure will free up A$500 million of capital for Qantas to reinvest in its fleet-renewal plans.
Once the airline’s operations have ceased, its 13 Airbus A320 aircraft will be redeployed across the Qantas Group to support fleet renewal and growth in its Australia and New Zealand businesses, in line with underlying demand, Jetstar Asia said.
Qantas Group will provide support for Jetstar Asia to continue to meet its obligations as operations wind down towards closure.
The Singapore Manual & Mercantile Workers’ Union said it was notified of the job cuts and has negotiated with Jetstar Asia to “ensure that affected members and workers are treated with care and receive fair compensation”.
“The company has committed to providing a comprehensive retrenchment package in line with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment,” it added in a statement.
