Qantas splits into separate international and domestic operations

Qantas splits into separate international and domestic operations

Qantas splits into separate international and domestic operations

QANTAS has followed up yesterday’s engineering job announcement with a major management shake-up in which its prosperous domestic and troubled international services will be split into separate business divisions.

Chief executive Alan Joyce will head a revamped team, which will see the head of its successful Frequent Flyer program, Simon Hickey, drafted to guide International to break even within three years, while the airline’s operations chief Lyell Strambi will head the Domestic division.

And in a major surprise the head of Jetstar international, Bruce Buchanan, will leave the company and be replaced by the group’s strategy and technology chief Jane Hrdlicka.

Mr Buchanan will stay at Jetstar for the next six months to handle the transition, after which he will pursue opportunities developing other Australian firms in Asia, while still consulting for the group over 18 months.

Lesley Grant, who developed Qantas International’s recovery strategy, will effectively swap places with Mr Hickey to become head of the Frequent Flyer business.

Mr Joyce said the aim of the changes were to help the airline implement its five-year transformation plan launched last year, which has seen some international routes cut, industrial changes to work practices which helped lead to last year’s grounding and the consolidation of heavy maintenance announce yesterday.

That saw 500 jobs lost at Tullamarine and Avalon as the airline moves its heavy maintenance focus to Brisbane. The airline last year embarked on redundancies of 1000 employees.

It is believed the changes will allow Qantas to concentrate on growing new areas of profit, particularly around domestic services, without the distraction of the problems of international dominating the attention of management.

Mr Joyce said said the changes recognised that Qantas was “a true portfolio business”.

“Qantas Domestic and Qantas International face very different situations. Qantas Domestic is strong and profitable,” he said.

“Formally separating the management of Qantas International and Qantas Domestic will ensure that we can independently run each business according to its specific priorities and market conditions.”

Qantas has a strategy to return Qantas International, which lost $214 million last year, to profitability over five years based on deeper alliances with other airlines, investment in product and disciplined capital management.

Its underlying profit before tax of $552 million was made on the back of its domestic and Frequent Flyer businesses.

“Simon Hickey has achieved record profits at Qantas Frequent Flyer, which now has 8.5 million members and is now a powerful brand in its own right,” Mr Joyce said.

He said it would be business as usual for Qantas customers and employees.

Mr Buchanan said after expanding Jetstar into Asia with the Qantas Group over the past nine years, he wished to use that knowledge to assist other Australian companies.

“If we can export airlines – a business where we have no natural advantages – there are no limits to where we can leverage our Australian ingenuity,” he said.

Qantas shares were trading at $1.44 this morning, up 0.7 per cent after the announcement.