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.
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.
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.