THE move by Qantas to spend $23.7 million to increase its stake in two Asian airlines, and replace the Singapore Government's Temasek Holdings with a new shareholder, is part of a grand plan to beef up its presence in Asia and take on its main competitor, Singapore Airlines.
The new ownership structure also puts Qantas in a better position to forge a relationship with one of Asia's biggest low-cost carriers, AirAsia, which was recently forced to cancel a plan to privatise after failing to get finance.
The speculation is Jetstar will unite with AirAsia and use the low-cost model to expand in Asia.
There are no formal merger talks with any parties but speculation is rife that when the time is right, Qantas will pounce.
Qantas injected $S25 million ($23.7 million) in net capital to increase its stake in low-cost carriers Jetstar Asia and Valuair from 45 per cent to 49 per cent, and buy control of the brand. The removal of Temasek as a 33 per cent shareholder will enable Jetstar Asia and Valuair to better compete with the Singapore Government's low-cost carrier Tiger Airways.
Qantas chief executive Alan Joyce said yesterday the change in the shareholder structure would see the two airlines more closely align with Jetstar's Australian operations and provide a platform for the Jetstar brand to develop in the region.
Mr Joyce said the move was in anticipation of more open skies across Asia.
The board has been looking at Singapore since 2000, when it first debated the merits of a business plan called Project Calypso. It eventually announced it would set up a low-cost carrier in Singapore in 2004.
In its original business plan the goal was 20 aircraft within three years. Five years on, after merging with Valuair, it has seven aircraft, 280 staff, and flies to 16 destinations.
One analyst said the latest ownership restructure could be viewed as the new management team taking a multi-generational view of Qantas's position in Asia.
"It is possible this set of management will deliver on a strategy in Asia that the previous management were never able to achieve," the analyst said.
He also said it threw into question what Qantas had in store for its other Asian carrier, Pacific Airlines, which was based in Vietnam. "They could end up with a Singapore and Vietnamese hub, which makes a lot of sense for expanding their Asian presence," he said.
A spokesman for Qantas said yesterday the new ownership structure would result in cost savings of $S20 million a year. "It cleans up the structure and creates back-office synergies," he said.
As part of the changes, Qantas and the Singapore company Westbrook Investments have bought all the shares in the previous ownership holding company, Orangestar Investment Holdings, via a new holding company, Newstar Investment Holdings.
Westbrook, which is owned by Choo Teck Wong, will have a 51per cent stake in Newstar, and will chair the company, and Qantas, a 49 per cent stake. Qantas previously had a 45 per cent interest in Orangestar.
Jetstar chief executive Bruce Buchanan and Orangestar director Paul Edwards will also serve on the board of Newstar, with Chong Phit-Lian to remain as chief executive of both Jetstar Asia and Valuair
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