Qantas poised to inject millions into Jetstar Japan
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Qantas poised to inject millions into Jetstar Japan
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Qantas poised to inject millions into Jetstar Japan
Another Aaaamazing business.
Qantas poised to inject millions into Jetstar Japan
October 29, 2013 - 12:23PM
Qantas is said to be on the cusp of pouring more money into Jetstar Japan as it seeks to secure its position in the domestic Japanese market against other newcomers.
Japanese newspaper Nikkei has reported that Jetstar Japan will raise 11 billion yen ($118 million) next month from Qantas and Japan Airlines, which each have stakes of 33.3 per cent.
It is not known whether Jetstar Japan's other shareholders, Mitsubishi and Century Tokyo Leasing Corporation, will participate in the private placement. They both have takes of 16.7 per cent in the budget airline.
Comment was being sought from Qantas this morning on the expected cash injection.
Since it began flying in July last year, Jetstar Japan has become the largest budget airline in Japan with a fleet of 17 A320 aircraft. Low-cost airlines are a new phenomena in the Asian nation.
But the cost of entering the Japanese market has weighed on the financial performance of Melbourne-based Jetstar, which booked $50 million in start-up losses from Jetstar Japan and Jetstar Hong Kong in the year to June.
The airline did not split out the losses when its parent, Qantas, reported its full-year results in August.
Japan Airlines has conceded that Jetstar Japan has experienced growing pains since launching domestic flights.
JAL chairman Masaru Onishi said in June that turning Jetstar Japan into a profitable business would depend to a large extent on the timing of a start to short-haul flying to destinations in China, Korea and Taiwan.
He expected Jetstar Japan to begin international flying within the next two years.
Macquarie Equities has estimated that Jetstar Japan is losing about $50 million a year as it competes against Peach and AirAsia Japan, which will be rebranded Vanilla Air next month.
Malaysian budget airline AirAsia decided several months ago to pull out of the airline joint venture in Japan.
After initially relying on selling tickets via the internet, the budget airlines are looking to boost ways of encouraging consumers to fly with them in a market where people tend to book through travel agents.
October 29, 2013 - 12:23PM
Qantas is said to be on the cusp of pouring more money into Jetstar Japan as it seeks to secure its position in the domestic Japanese market against other newcomers.
Japanese newspaper Nikkei has reported that Jetstar Japan will raise 11 billion yen ($118 million) next month from Qantas and Japan Airlines, which each have stakes of 33.3 per cent.
It is not known whether Jetstar Japan's other shareholders, Mitsubishi and Century Tokyo Leasing Corporation, will participate in the private placement. They both have takes of 16.7 per cent in the budget airline.
Comment was being sought from Qantas this morning on the expected cash injection.
Since it began flying in July last year, Jetstar Japan has become the largest budget airline in Japan with a fleet of 17 A320 aircraft. Low-cost airlines are a new phenomena in the Asian nation.
But the cost of entering the Japanese market has weighed on the financial performance of Melbourne-based Jetstar, which booked $50 million in start-up losses from Jetstar Japan and Jetstar Hong Kong in the year to June.
The airline did not split out the losses when its parent, Qantas, reported its full-year results in August.
Japan Airlines has conceded that Jetstar Japan has experienced growing pains since launching domestic flights.
JAL chairman Masaru Onishi said in June that turning Jetstar Japan into a profitable business would depend to a large extent on the timing of a start to short-haul flying to destinations in China, Korea and Taiwan.
He expected Jetstar Japan to begin international flying within the next two years.
Macquarie Equities has estimated that Jetstar Japan is losing about $50 million a year as it competes against Peach and AirAsia Japan, which will be rebranded Vanilla Air next month.
Malaysian budget airline AirAsia decided several months ago to pull out of the airline joint venture in Japan.
After initially relying on selling tickets via the internet, the budget airlines are looking to boost ways of encouraging consumers to fly with them in a market where people tend to book through travel agents.
Another Aaaamazing business.
Qantas spin is that Skymark is not a LCC yet Jetstar Japan will flounder in my view for one basic reason. They hub out of Narita not Haneda and that will always be to their disadvantage unlike Skymark. The time it takes to get from Tokyo to Narita airport is a significant impost in both time and money. Flying from Haneda or Shinkansen from Tokyo is far more convenient. Wrong hub for most Japanese I should think.
How many shares will they buy back tomorrow? Short or long?
How many shares will they buy back tomorrow? Short or long?
$50 million loss ........ Something about good money after bad
Their biggest problem is their based out of Narita ...... Not great for a domestic LLC, and lame for international, especially when Peach operate out of Hanada
Good luck
Their biggest problem is their based out of Narita ...... Not great for a domestic LLC, and lame for international, especially when Peach operate out of Hanada
Good luck
What I find amazing is that no one in the press or any of the financial gurus ever question how much money collectively has been sunk into all the Jetstar franchises, what their collective loses are and that in my opinion they will never return a reasonable rate on that money.
What I find amazing is that no one in the press or any of the financial gurus ever question how much money collectively has been sunk into all the Jetstar franchises, what their collective loses are and that in my opinion they will never return a reasonable rate on that money.
Even the Business TV shows are just a few friendly questions. Rarely is some ever under the pump.
The only person I've ever seen asked hard questions and have them concerned is the guy from the Australian Shareholder's Association.
The airline did not split out the losses when its parent, Qantas, reported its full-year results in August.
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which booked $50 million in start-up losses from Jetstar Japan
The Joyce strategy — not investing in Qantas long haul until it becomes sustainably profitable in two to four years time
I am somewhat confused.
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Reading between the lines here.
Air Asia Japan, a JV between Air Asia and ANA has just stopped flying and is returning all planes to Air Asia.
ANA is instead starting up another LCC in November - Vanilla Air, which it will solely own, and operate alongside Peach (33% ANA).
With this capacity (5 A320s) dropping out of the market all of a sudden, I suspect Jetstar Japan is looking to expand more quickly...
That said at 17 jets it is a worry that they are not turning the corner on profitability.
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As for the comment on independence, well if a partly owned subsidiary needs more capital they make a call on each shareholder. Up to that shareholder to decide if they want to invest or not.
Air Asia Japan, a JV between Air Asia and ANA has just stopped flying and is returning all planes to Air Asia.
ANA is instead starting up another LCC in November - Vanilla Air, which it will solely own, and operate alongside Peach (33% ANA).
With this capacity (5 A320s) dropping out of the market all of a sudden, I suspect Jetstar Japan is looking to expand more quickly...
That said at 17 jets it is a worry that they are not turning the corner on profitability.
---
As for the comment on independence, well if a partly owned subsidiary needs more capital they make a call on each shareholder. Up to that shareholder to decide if they want to invest or not.
Last edited by moa999; 30th Oct 2013 at 01:13.
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they may have 17 aircraft but they don't seem to be flying much. Every time we taxi out of Narita, at different times of the day, we see 4 or 5 (sometimes more) JQJ a/c parked at the hangar. Maybe not enough pilots??
Last edited by almostok; 30th Oct 2013 at 02:06.
More good money after bad. And for what?? So that the group has the largest share of all the low hanging fruit.
I've given up asking when they will be called to account.
I've given up asking when they will be called to account.
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Air Asia, being one of the most successful LCC's to date, dipped their toe in the water in Vietnam, and pulled it out really quickly. They have now done similar in Japan....
GB, there were other factors at play in both of those investments - AirAsia was blocked by the Vietnamese government from using their name (in part due to lobbying by Jetstar) so they chose not to go ahead. In Japan they couldn't agree with ANA on how to run the airline, and ANA in the end had a gutful so they pulled the pin.
Jetstar Japan (and AirAsia for that matter) have run foul of the local regulators before, so I think that has slowed down their progress in the short term.
Jetstar Japan (and AirAsia for that matter) have run foul of the local regulators before, so I think that has slowed down their progress in the short term.
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Jetstar Japan (and AirAsia for that matter) have run foul of the local regulators before, so I think that has slowed down ther progress in the short
Last edited by Collando; 30th Oct 2013 at 10:13.
Only two possible reasons anyone would do something so stupid.
1) Ego. I can't be wrong, so I must double up - ergo, gambling.
2) Theft / Fraud.
There are no other possible scenarios. It is seriously like watching the Hindenburg video. Over and over again.
'Oh the humanity!'
1) Ego. I can't be wrong, so I must double up - ergo, gambling.
2) Theft / Fraud.
There are no other possible scenarios. It is seriously like watching the Hindenburg video. Over and over again.
'Oh the humanity!'
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Singapore Airlines have put close to $122 million into Virgin Australia in return for 19.9%.... and they're yet to return a profit after 12 years of operation.
Perhaps diversity in the business is good foresight.
Perhaps diversity in the business is good foresight.