Leak reveals risky moves in Jetstar bid

The three new A320s were now parked indefinitely in France. Qantas Airways

The mounting cost of long delays to Jetstar's offshoot in Hong Kong gaining approval to fly have been revealed in leaked internal documents that show it considered getting Qantas to store planes in Australia.

It raises questions about the risk of Qantas' investments in budget airlines in Asia at the same time as the national carrier is pleading for financial assistance from the federal government.

A letter from Qantas, obtained by BusinessDay, shows it proposed taking three A320 aircraft from Jetstar Hong Kong as recently as three weeks ago, and storing at least two of them in Australia.

Under an aircraft procurement agreement, Qantas Airways was to have taken title over the planes.

But the airline said on Thursday that Jetstar Hong Kong had since decided not to sign off on the agreement, and the three new A320s were now parked indefinitely in France.

It would not disclose the cost of storing them there, saying it was up to Jetstar Hong Kong's board to decide what to do with them.

In a leaked email to Jetstar Hong Kong chief executive Edward Lau and other executives on November 15, its chief financial officer, Howard Cheung, detailed arrangements for sending one of the planes to Qantas.

He called a management meeting to discuss a range of scenarios, which included considering the "cost of aircraft storage in Toulouse vs Australia". The French city of Toulouse is the base for the plane's maker, Airbus.

The other items to be considered were "technical concerns of aircraft storage in Australia and subsequent delivery" to Hong Kong.

The need to store the planes in France highlights the risk Jetstar Hong Kong undertook in ordering new aircraft before it gained approval from the city's authorities to operate services there.

Qantas had earmarked the middle of this year for Jetstar Hong Kong to fly, but is now not likely to hear until next year whether authorities will give it approval to fly. Cathay Pacific has mounted an aggressive campaign against the new airline, in which Qantas has a 33 per cent stake.

However, the storage of the planes in France indicates that Jetstar Hong Kong does not expect to be able to fly any time soon. It was initially due to begin with three A320 planes, before growing to 18 by 2015.

"We confirm that Jetstar Hong Kong has advised us that it does not anticipate that it will receive the relevant authorisations prior to the expected delivery date for each of the relevant aircraft," Qantas said in the leaked letter to Jetstar Hong Kong on November 15 in reference to the three planes.

Qantas has repeatedly said it has adopted a "capital light" strategy in Asia via its budget offshoot Jetstar.

Federal Transport Minister Warren Truss has made it clear he does not want the government to be pressed into a situation where it is bankrolling Qantas' desire to open new airlines in other parts of the world.

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