31-Mar-2011 11:07 AM

Qantas CEO defends Jetstar profitability

Qantas CEO Alan Joyce said that domestic operations at Jetstar are “still profitable” despite the Australian leisure market being hurt by high fuel costs and recent natural disasters (The Australian Financial Review, 31-Mar-2011). Mr Joyce’s announcement follows news the airline is cutting management staff, accelerating the retirement of ageing aircraft and reducing capacity growth in light of tough trading conditions. Following Virgin Blue’s forecast of a full-year loss of between AUD30-80 million last week, it was thought the domestic operations of rival airlines, such as Jetstar and Qantas, must also be under significant pressure. On the issue of oil prices, Mr Joyce said sustained high prices (of around USD100 a barrel) could risk some key aviation markets moving backwards just as it appeared they were returning to growth. “Everyone is worried about that,” the CEO said. Jetstar has 23% of Australia’s leisure market, behind parent Qantas and Virgin Blue, which both control 36% of the market. LCC Tiger Airways has the remaining 5%.

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