Jetstar Asia Closure Risks Qantas’ Asian Market Footprint Amid Rising Costs

Strategic Shift Amid Rising Costs

Qantas Group has announced a significant strategic restructure with the closure of its Singapore-based low-cost airline, Jetstar Asia. The decision comes after years of mounting challenges including soaring supplier costs; some up to 200% higher; and intense competition in the intra-Asia market. Despite Jetstar Asia’s strong operational reliability and customer service, these pressures have eroded its profitability, culminating in an expected $35 million underlying EBIT loss this financial year.

Jetstar Asia will cease operations on 31 July 2025, winding down over the next seven weeks. The closure affects only the intra-Asia routes operated from Singapore, leaving Jetstar Airways’ domestic and international services, as well as Jetstar Japan, untouched. This ensures continuity for popular Asian destinations served directly from Australia and New Zealand.

Capital Recycling to Fuel Core Markets

Central to this restructure is the recycling of up to $500 million in capital, which will be redirected to Qantas’ historic fleet renewal program. Thirteen mid-life Airbus A320 aircraft from Jetstar Asia will be progressively redeployed to Australia and New Zealand. This redeployment is expected to create over 100 local jobs and enhance low-fare offerings, particularly by replacing leased aircraft in Jetstar Airways’ domestic operations to reduce costs. Some aircraft will also support fleet renewal in Qantas’ regional operations servicing Western Australia’s critical resources sector.

Qantas CEO Vanessa Hudson highlighted the ambitious fleet renewal underway, including the imminent arrival of the Airbus A321XLR and the Project Sunrise A350-1000ULR. The closure of Jetstar Asia is a disciplined capital allocation move, prioritizing stronger performing segments and strategic growth initiatives.

Financial and Operational Implications

The closure will incur one-off redundancy and restructuring costs, along with non-cash foreign currency translation losses and asset write-downs, estimated at approximately $175 million. Around a third of these costs will hit FY25, with the remainder spread into FY26, largely outside underlying earnings. The direct pre-tax cash impact is forecast at about $160 million, mostly in FY26, but will be partially offset by working capital benefits from growth in Jetstar Airways and tax adjustments.

Despite the closure, Qantas Group maintains a positive outlook with strong demand across domestic and international markets. Capacity growth guidance remains largely intact, though slightly tempered by external factors such as Cyclone Alfred and industrial action affecting wet lease operations.

Looking Ahead

Singapore remains a critical hub for Qantas, supported by nearly 20 codeshare and interline partners, ensuring continued connectivity across Asia. The Group is committed to supporting affected Jetstar Asia employees with redundancy benefits and employment assistance, including efforts to find roles within the wider Qantas Group and regional airlines.

This strategic pivot underscores Qantas’ focus on strengthening its core markets while navigating the complexities of the Asian aviation landscape. The redeployment of aircraft and capital recycling signal a renewed emphasis on operational efficiency and growth in Australia and New Zealand.