Qantas Airways (ASX: QAN) announced today its decision to shutter Jetstar Asia, its Singapore-based budget airline subsidiary, by July 31, 2025. The move, attributed to escalating operational costs, intense regional competition, and persistent financial losses, marks the end of a 20-year venture that has struggled to achieve consistent profitability. While the news brings job losses and a one-time financial hit, analysts suggest the strategic realignment could ultimately benefit Qantas by streamlining operations and freeing up capital for more lucrative ventures.
Qantas shares ended the day down 1.32% at A$10.50, as markets digested the news. Over the past year, Qantas shares have rallied as the company has focused on fleet upgrades and operational restructuring. With the latest adjustment, QAN is up 70% compared to the same period last year.
Jetstar Asia has reported profits only six times in its two-decade history, and is projected to post an underlying EBIT loss of A$35 million for the current financial year. The airline has been grappling with rising supplier costs and high airport fees, coupled with increasingly aggressive competition from other low-cost carriers in the Southeast Asian market. Qantas anticipates a one-time financial impact of A$175 million from the shutdown, which includes severance packages for the approximately 500 employees who will be laid off. Affected passengers will be offered full refunds.
Crucially, Qantas has emphasized that the closure of Jetstar Asia will not impact the operations of its other budget carriers, Jetstar Airways (based in Australia) and Jetstar Japan. This distinction is vital, as Jetstar Airways has been a significant contributor to Qantas’ overall performance, carrying a record number of passengers and appealing to cost-conscious consumers with fares often under A$100.
The company is coordinating support for displaced Singapore employees and exploring new domestic and international opportunities for them.
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The closure of Jetstar Asia is expected to unlock up to A$500 million in capital, which Qantas intends to recycle for fleet investment and enhancing capacity and efficiency within its core businesses. This capital redeployment comes at a time when Qantas has already been demonstrating strong financial performance. In February 2025, the airline reported an interim underlying profit of A$1.39 billion for the six months ending December 31, marking a 6% increase from the prior corresponding period.
The closure of Jetstar Asia represents a significant strategic shift for Qantas. While the immediate impact includes financial charges and job losses, the long-term benefits of capital redeployment and a renewed focus on core markets could outweigh the short-term pain. Markets will be closely watching Qantas’ next earnings release for further details on the company’s plans and the impact of the Jetstar Asia closure on its overall financial performance.
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