Jetstar snatches market share in NZ domestic routes

Thursday 16th February 2012

Jetstar, the discount brand of Australian airline Qantas Airways, boosted its share of New Zealand’s domestic market, even as its parent reported an 82 percent slump in first-half earnings.

Jetstar raised its share of New Zealand’s domestic routes to 19.9 percent as at Dec. 31 from 14.9 percent a year earlier. That captures the changing dynamic in the market, after Virgin Airline’s Pacific Blue quit New Zealand’s domestic routes in October 2010.

National carrier Air New Zealand controls about 80 percent of the market.

The improving fortunes for Jetstar come at the same time its parent Qantas’s profit sank to A$42 million, or 1.9 Australian cents per share, in the six months ended Dec. 31, from A$239 million, or 10.6 cents per share, a year earlier. Revenue rose 6 percent to A$8.05 billion in the half.

The airline blamed a protracted industrial dispute that grounded its fleet and a 26 percent increase in its fuel bill for the decline in earnings. It will cut about 500 jobs after reviewing its maintenance and catering businesses, retiring some aircraft early, and quitting two international routes, including Auckland to Los Angeles.

Jetstar was the biggest contributor to underlying pre-tax earnings with A$147 million in the period, some 53 percent of the A$277 million.

No dividend was declared. Qantas hasn’t paid a return to shareholders since the first half of the 2008/09 financial year.

The shares rose 2.6 percent to A$1.60 on the ASX, and have gained 5.5 percent this year.

BusinessDesk.co.nz

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