Qantas stumps up $60m to help Jetstar Japan fly higher
Following speculation this week about the need for further funding, Qantas said it and Japan Airlines would inject ¥11 billion ($120 million) between them into Jetstar Japan. It will result in both airlines increasing their stakes from 41.7 to 45.7 per cent. Their voting rights remain unchanged.
The two smaller shareholders - Mitsubishi and Century Tokyo Leasing - will have their stakes in the budget airline drop from 8.3 to 4.3 per cent as they are not participating in the placement.
Qantas said the equity injection would support growth in Jetstar Japan's fleet and infrastructure, helping it to take advantage of the "significant potential" for budget airlines in Japan.
The latest injection takes Qantas' investments in Jetstar offshoots in Asia - including those in Vietnam and Singapore - to about $277 million, according to Macquarie Equities.
The Macquarie analysts said the funding for Jetstar Japan suggested its start-up losses were higher than the original business case for the airline had allowed. They have estimated Jetstar Japan is losing about $50 million a year.
Jetstar was one of three budget airlines that started domestic services in Japan within six months of each other last year.
Jetstar Japan has also been hit with a higher fuel bill due to the yen depreciating against the US dollar. Airlines buy jet fuel in US dollars.
The airline's plans to establish a base at Kansai International Airport near Osaka have also been delayed by months, casting doubt over its plans to expand its network as quickly as it had wanted.
Since it began flying in July last year, Jetstar Japan has become the largest budget airline in Japan, with a fleet of 18 A320s flying to nine domestic destinations.
It intends to boost its fleet to 24 planes and aims to break even within the next two years.
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Qantas is investing $60 million into Jetstar Japan to support its growth, particularly in expanding its fleet and infrastructure. This investment is also aimed at helping Jetstar Japan take advantage of the significant potential for budget airlines in Japan.
Qantas is investing $60 million into Jetstar Japan to support its growth in fleet and infrastructure, helping the airline take advantage of the significant potential for budget airlines in Japan. This investment is also in response to the challenges posed by a weaker yen, which has increased Jetstar Japan's fuel costs.
The new investment will increase both Qantas and Japan Airlines' stakes in Jetstar Japan from 41.7% to 45.7%. However, their voting rights will remain unchanged.
The new investment will increase both Qantas and Japan Airlines' stakes in Jetstar Japan from 41.7% to 45.7%. However, their voting rights will remain unchanged.
The weaker yen has increased Jetstar Japan's fuel bill because airlines purchase jet fuel in US dollars. This has contributed to the need for additional funding.
The weaker yen has increased Jetstar Japan's fuel bill because airlines purchase jet fuel in US dollars. This has added financial pressure on the budget airline, prompting the need for additional investment.
Jetstar Japan is facing challenges such as higher fuel costs due to the depreciating yen and delays in establishing a second base at Kansai International Airport, which has affected its expansion plans.
Jetstar Japan plans to expand its fleet from 18 A320s to 24 planes. This expansion is part of its strategy to grow its operations and eventually break even within the next two years.
Qantas has invested approximately $277 million in Jetstar offshoots across Asia, including those in Vietnam and Singapore.
Mitsubishi and Century Tokyo Leasing are not participating in the new funding round, which will result in their stakes in Jetstar Japan dropping from 8.3% to 4.3%.
Jetstar Japan is estimated to be losing about $50 million a year, which is higher than the original business case had anticipated.
Since its launch, Jetstar Japan has faced challenges such as higher fuel costs due to the depreciating yen and delays in establishing a second base at Kansai International Airport. These factors have impacted its expansion plans and financial performance.
Jetstar Japan plans to increase its fleet from 18 to 24 A320 aircraft and aims to break even within the next two years.
Jetstar Japan has become the largest budget airline in Japan since it began operations in July last year. It currently operates a fleet of 18 A320s, serving nine domestic destinations.
Since its launch in July last year, Jetstar Japan has become the largest budget airline in Japan, operating a fleet of 18 A320s and serving nine domestic destinations.
The latest investment brings Qantas' total investments in Jetstar offshoots in Asia, including those in Vietnam and Singapore, to approximately $277 million. This reflects Qantas' commitment to expanding its presence in the Asian budget airline market.
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