Qantas splits domestic and international businesses

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Australia's Qantas Group is splitting its airline business into two separate units in a major restructuring of its operations.

The Qantas Airlines division will be split into Qantas International and Qantas Domestic from 1 July. Each unit will have its own chief executive and separate operational and commercial functions, and their financial results will be reported separately within the group, says the company.

"This change will enable a greater focus on the priorities of turning around the Qantas International business and enhancing the strong Qantas Domestic business, as part of the overall group strategy," it added in a statement.

Simon Hickey, currently chief executive of Qantas Frequent Flyer, will head up Qantas International. Lyell Strambi, now group executive of Qantas Airlines Operations, will be chief executive of Qantas Domestic.

Qantas Group chief executive Alan Joyce says that the domestic and international businesses face different challenges, and the restructuring of the business and 21 May announcement of a consolidation of the company's heavy maintenance bases, will help to restore the international business to profitability.

"Qantas Domestic is strong and profitable. We are seeing the most sustained levels of high customer satisfaction on domestic services since 2004, and we are the airline of choice for corporate Australia. But we cannot be complacent - we must continue to offer customers the best network, frequency and flying experience in the domestic market, and find new ways to earn and reward their loyalty," says Joyce.

"Qantas International, a great airline with a rich history, is loss-making and does not deliver sustainable returns. However, we are committed to turning it around through the five-year strategy we announced last year, based on flying to global gateways, deeper alliances, smart investment in product and disciplined capital management."

He adds that formally separating the management into the international and domestic businesses will help the company to run them according to their "specific priorities and market conditions".

Qantas has also announced that Jetstar Group chief executive Bruce Buchanan will leave his position after six months, although he will help the airline as a "consultant" for 18 months after that. He will be replaced by Jayne Hrdlicka, who heads up the Strategy and Technology division. This division will now come under Qantas chief financial officer Gareth Evans. Rob Gurney, who heads up the Qantas commercial and freight divisions, will leave the company as a result of the restructuring.