Jetstar reports strong growth across all markets

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Low-cost carrier Jetstar posted 20% growth in its FY2011/12 earnings even as its parent Qantas Airways suffered its first full-year loss since 1995.

Jetstar posted record earnings before interest and tax (EBIT) of A$203 million ($214 million), an increase of A$34 million from a year ago.

Qantas, however, reported an overall loss of A$244 million in the year ended 30 June, mainly because of continuing challenges at the full-service carrier's international business.

The carrier's overall capacity grew by 14% - a result of a 7% increase in domestic capacity, 12% rise in international capacity and Jetstar Asia's growth of 38%. Its load factor, meanwhile, rose by 1.4 percentage points to 79.2%.

During this period, ancillary revenue rose by 27% while its unit costs were at a record low.

The carrier was able to improve fuel efficiency for the year after it retrofitted 32 Airbus A320s with new lightweight seats, which allowed three additional seats per aircraft, Qantas said in its financial results statement.

It added that Jetstar "continues to hold a clear leadership position in the price-sensitive market" within Australia. Having two brands in the domestic market allows the Group to keep its 65% market share, the carrier said.

"Jetstar's strong domestic results highlight the benefits of the Qantas Group's two complementary flying brands and Jetstar's strong competitive position in the Australian market," said Qantas.

"The successful execution of the strategy is evidenced by Qantas and Jetstar continuing to be the two most profitable Australian domestic networks, maintaining the Group's profit-maximising 65% market share."

Giving an update on its Jetstar-branded franchises within Asia, Qantas said that Jetstar Japan's load factor is at 86%. The carrier was launched five months ahead of schedule in July and operates four A320s to five destinations in Japan.

Jetstar Japan's fleet is expected to grow to 13 aircraft by June 2013. Pending regulatory approvals, the carrier will launch international services in the first half of next year.

The airline has applied for an air operator's certificate for Jetstar Hong Kong. This is a 50/50 joint venture with China Eastern Airlines that it hopes will begin operations late next year.

Singapore-based Jetstar Asia, which Qantas says is the most profitable LCC in the island, grew its capacity by 38% as it expanded both its short-haul and long-haul network over the last year.

Growth is also expected at Vietnamese affiliate Jetstar Pacific in the coming months, following the airline's partnership with major flag carrier Vietnam Airlines.

"Each of these investments draws on Jetstar's well-established brand, world-class ancillary revenue model and strong local partners," said Qantas.

"Jetstar's international network will leverage the growth of these Jetstar branded airlines to provide traffic flow between Australia and Asia and reinforce the group's strong competitive position in the leisure travel markets across Asia-Pacific."

While parent Qantas cancelled its firm order for 35 Boeing 787-9s to reduce capital expenditure, deliveries of 15 Boeing 787-8s to Jetstar will continue as planned.

"We are now progressively embedding the Jetstar brand and the two-airline model in Asia. Jetstar is already the largest low-cost carrier in Asia-Pacific measured by revenue," says Qantas's chief executive Alan Joyce.