Qantas yet to decide base for new Asian airline

CANBERRA, Australia (AP) — Qantas CEO Alan Joyce said Wednesday he is negotiating with multiple Asian governments to find a base for a new premium airline that the Australian carrier hopes will turnaround its loss-making international business.

Singapore and Kuala Lumpur have been mentioned in media reports as preferred options but Joyce said a decision had yet to be made. The base for the new airline will avoid the high costs and geographic isolation of Australia, he said.

Under the five-year plan announced Tuesday to improve the poor performance of its international business, Qantas Airways Ltd. will establish an Asia-based airline that will have its own name and branding.

“We are still taking to multiple locations about where that premium airline will be based,” Joyce told reporters.

“We have been talking to the government in each of those countries about the application process and the dialogue will continue,” he said.

Qantas will also launch a budget airline in Japan to be called Jetstar Japan in partnership with Japan Airlines Co. and Mitsubishi Corp. and slash up to 1,000 jobs from its work force of 35,000 which is mostly in Australia.

Unions attacked the plan to cut Australian jobs and some lawmakers are lobbying the federal government to block the changes.

The government has responded by calling for the 1,000 job losses to come from voluntary redundancies.

Joyce said he hoped the redundancies will be voluntary.

Under the turnaround plan, Qantas will buy between 106 and 110 Airbus A320 aircraft, and retire older planes.

It will also defer the delivery of six Airbus A380 superjumbo planes for up to six years. The A380s were earmarked for long-haul routes to destinations such as London on which Qantas has faced increased competition.

Qantas International has forecast a loss of Australian dollars 200 million ($210 million) for the 2011 financial year due to stiff competition and costs that the airline says are 20 percent higher than its key competitors such as Emirates.

Even with these losses, Joyce said overall profit at Qantas for the year would be around AU$500 million ($525 million).

But he said that was small compared with the AU$2.5 billion the airline spent each year on new aircraft.

Qantas and its Japanese venture partners said Jetstar Japan plans to start operations by the end of 2012 and will serve domestic routes at first through likely bases at Tokyo’s Narita International Airport and Kansai International Airport in Osaka. It ultimately aims to expand to short-haul international routes in Asia.

The announcement of the new budget airline comes less than a month after JAL rival All Nippon Airways Co. and Malaysian budget carrier AirAsia announced a partnership to create a low-cost airline in Japan serving local and international destinations.

Qantas, JAL and Mitsubishi will each own one-third of the new venture, with capitalization of 12 billion yen ($156 million) and an initial fleet of three new Airbus A320 planes. The fleet will expand to 24 aircraft within a few years, the companies said.

Japan Airlines has been restructuring since filing for bankruptcy protection last year.

Qantas shares were up 2.4 percent at AU$1.56 on the Australian stock market.

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Associated Press writers Tomoko A. Hosaka in Tokyo and Kristen Gelineau in Sydney contributed to this report.

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