Qantas splits domestic and int’l wings; Jetstar CEO to step down

written by australianaviation.com.au | May 22, 2012
Qantas will split its profitable domestic and struggling international operations into separate businesses(Rob Finlayson)

Qantas’s domestic and international businesses have been going in opposite directions for years, with the international side losing money against stiff competition even as the domestic wing continues to bring in solid profits.

Now, the two are officially parting company, with Qantas announcing today that it will split its domestic and international operations into separate businesses in a move designed to let each side focus on its own issues.

As part of the surprise announcement, which comes a day after Qantas said it would cut another 500-plus jobs, the airline also revealed that  Jetstar CEO Bruce Buchanon will leave the company within six month to pursue other business opportunities in Asia.

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The split of the airline’s operations comes amid a five-year plan to turn around the struggling international business, which lost $216 million last financial year. Separating the international arm from the profitable domestic operation will turn Qantas into a “true portfolio business” allowing executives to “independently run each business according to its specific priorities and market conditions,” Qantas CEO Alan Joyce said.

“Qantas Domestic and Qantas International face very different situations,” Mr Joyce said.

Under the restructure, the international and domestic business will each get their own chief executive and will report their financial results separately.

Simon Hickey, currently chief executive of the airline’s frequent flyer program, will take over as CEO of Qantas International while Lesley Grant, who developed the turn-around strategy for the international business, will replace Mr. Hickey at the frequent flyer program. Lyell Strambi, the airline’s current executive of operations, will serve as CEO of Qantas Domestic.

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Mr Joyce said the reshuffle would not impact the airline’s day-to-day operations. “It will continue to be business as usual for Qantas customers and employees,” he said.

At Jetstar, Jayne Hrdlicka, Qantas’s head of strategy and technology, has been tabbed to take over for Mr. Buchanon as CEO of Jetstar following a six month transition period.

After leaving Jetstar, Mr Buchanon said he would use his nine years of experience guiding Jetstar through its Asian expansion to assist other Australian companies targeting Asian markets. He will also continue to provide consultancy services to Jetstar for 18 months following his departure, the airline said.

Qantas yesterday announced that it would shed more than 500 engineering jobs and shut down its heavy maintenance facility at Melbourne Airport. Coming on top of a previous round of job cuts in February, Qantas has shed more than 1000 jobs this year.

6 Comments

  • ron

    says:

    Spinning off the international arm also allows it to do what VA did & open up the domestic side to foreign capital inputs. They complained when VA did it, but as they say: if you can’t beat them, join them!

  • Alan T.

    says:

    It does seem as though Borghetti’s clever ideas are being noticed and ‘imported’. I bet the VA team are glad JB wasn’t made CEO of QF. He would have destroyed Godfrey and the old VB.

  • PONTIOUS

    says:

    TAA-TAA TO QANTAS DOMESTIC?

  • AirportAddict

    says:

    What happens to Alan Joyce now??

  • Adrian Paddingtom

    says:

    The only reason to split international and domestic is to allow the international part to go broke or to sell it as uneconomic, rather than improve it. Qantas is concentrating on the easy money, lack of competition in the domestic market.

  • John Harrison

    says:

    Not to much to say really, as someone else has said, are we going back many many years when TAA was taken over or pushed into Qantas. Maybe they will sell off the International arm, who knows anymore with Qantas managerment. I give up.

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