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Qantas splits domestic & international wings

By David Flynn     Filed under: qantas, alan joyce

Qantas will carve its domestic and international operations into two distinct businesses from July 1st in a dramatic restructure which Qantas CEO Alan Joyce describes as an "essential program of change."

The result will in effect be two airlines – Qantas Domestic and Qantas International – each with its own CEO and reporting financial results independently.

Simon Hickey, currently chief executive of Qantas Frequent Flyer, will head Qantas International while Lyell Strambi, currently Qantas' executive of operations, will take charge of Qantas Domestic.

The move comes as Qantas seeks to protect its domestic market share from an increasingly competitive Virgin Australia, while also stemming the flow of red ink from its international arm.

Qantas' domestic arm reported a profit before tax of $552m in the 2010-11 financial year, compared to a loss of $126m by its international sibling.

“Formally separating the management of Qantas International and Qantas Domestic will ensure that we can independently run each business according to its specific priorities and market conditions," Joyce said in a statement.

“Qantas Domestic and Qantas International face very different situations. Qantas Domestic is strong and profitable. We are seeing the most sustained levels of high customer satisfaction on domestic services since 2004, and we are the airline of choice for corporate Australia."

“But we cannot be complacent – we must continue to offer customers the best network, frequency and flying experience in the domestic market, and find new ways to earn and reward their loyalty."

Joyce trumpeted Qantas International as "a great airline with a rich history", albeit one which is "is loss-making and does not deliver sustainable returns".

"However, we are committed to turning it around through the five-year strategy we announced last year, based on flying to global gateways, deeper alliances, smart investment in product and disciplined capital management."

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About David Flynn

David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

 

Have something to say? Post a comment now!

1 on 22/5/12 by dc

Oh Alan, you have a lot of work to do! DOMESTICALLY, get your planes on time. Improve your customer service (this doesnt cost anything) just ask your staff to smile, that would be a great start. Update your hostess uniforms. Give Australias 6th largest city, the Gold Coast a decent airline; we are forced to fly Virgin. INTERNATIONALLY, let us use our Frequent flyer points in a reasonable time. As it stands you need to book 18 months in advanced????? If Virgin can do it, why can't Qantas?  Oh and Jetstar, really, do you think any frequent traveller would put up with this garbage?  I hope this helps DC

2 on 22/5/12 by Platinum1FF

Could not agree more, I am Platinum-1 and frankly it is not worth the plastic it is printed on, the last international flight I took one of the QF staff informed me that they were told by senior staff NOT to apologise for the lack of service and to add to insult this poor lady was the ONLY one serving in Business class,,,,,if it were not for the Domestic leg of QF of which I us the FF points for travel I would never fly them and now they are splitting I would image they will change the FF program,, perhaps this will force my hand to move carriers, Virgin may very well scoop their premium travellers, I know one thing I will be in that line up

3 on 22/5/12 by driley28

This is a cosmetic move by Qantas.  There needs to be improved and a more consistent level of service, greater FF opportunities, more code share arrangements eg. LAN, Malaysia, Emirates to provide customers with a greater level of destinations. 

4 on 23/5/12 by julius-grafton

Maths. Jetstar FY earnings 250 mill. Sell it for 8 x EDITDA so that's 2 Bill. What is market cap on the whole Qantas group? Not much more. Then flog off QFF, then Q Domestic and just wind up QF International.

Shareholder return: 3 x market cap.

 

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