Qantas and Japan Airlines have agreed to put an additional 11 billion yen (A$114 million) into loss-making Jetstar Japan.
The recapitalisation would support Jetstar Japan’s growth ahead of international flights beginning in 2015 and an expansion of its domestic flying, Qantas said in a statement on Friday.
The funds will be paid over two tranches, starting with Qantas and Japan Airlines each forking over A$37 million on Friday for non-voting shares.
“This investment will support Jetstar Japan’s growth including the launch of international operations in early calendar 2015, enabling the airline to capitalise on the significant potential of the low cost carrier market in the world’s third largest economy,” Qantas said in a statement posted to the Australian Securities Exchange on Friday.
It was the second time Qantas and Japan Airlines have provided Jetstar Japan with a capital injection, following the 11 billion yen recapitalisation of the low-cost carrier in November 2013.
Jetstar Japan, which began flying in July 2012 and now has 19 Airbus A320 aircraft flying to 11 domestic destinations, posted an 11.1 billion Japanese yen loss for the 12 months to June 30 2014.
Despite the losses since start-up, Jetstar group chief executive Jayne Hrdlicka said in August Jetstar Japan had a big future.
“In time we believe that the Jetstar Japan business will be as big or bigger than our business in Australia, given the size and scale of the Japanese market,” Hrdlicka told an aviation conference on August 8.
“Commercially it is delivering well ahead of our expectations and the fundamentals in Japan for it age and stage are better than the fundamentals were in Australia at the same point.”
The capital injection did not change the voting rights held by joint-venture partners Qantas (33.3 per cent), Japan Airlines (33.3 per cent), Mitsubishi Corporation (16.7 per cent) and Century Tokyo Leasing (16.7 per cent).
However, Qantas and Japan Airlines will increase their economic interest in Jetstar Japan to 46.7 per cent, from 45.7 per cent. Meanwhile Mitsubishi and Century will have their economic interest fall to 2.94 per cent, from 4.35 per cent.
Meanwhile, Qantas said it will place its QF airline code on Jetstar Japan-operated flights from Tokyo Narita to nine new domestic Japanese destinations – Sapporo, Fukuoka, Oita, Okinawa, Osaka, Takamatsu, Matsuyama, Kumamoto and Kagoshima.
