Jetstar is looking at selling three of its Boeing 787-8s as a consequence of ongoing industrial action and the subsequent impact on the budget airline’s bottom line. Strikes by pilots and ground crew, the most recent been yesterday, Thursday 19 December 2019, will cost Jetstar between USD$14 million and $17 million.
Jetstar says possible sale comes from a “review of its fleet”
The airline operates a fleet of 11 Boeing 787-8s, mostly to medium-haul destinations across Asia Pacific. According to a report in CH-Aviation, cash from the sale will be re-invested in other parts of the airline or returned to shareholders.
Jetstar is calling the move a “review of its fleet and network to protect the airline’s ongoing profitability”. In a statement provided to Simple Flying, Jetstar said;
“This review has identified three 787-8 aircraft operated by Jetstar that are serving loss-making and marginal international routes. A business case has been developed to sell these three aircraft, with capital to be reinvested in other parts of the Qantas Group or returned to shareholders. A final decision is expected to be made in the first quarter of calendar 2020.”
Or is it a negotiating tactic?
But it could also be seen as a negotiating tactic by Jetstar and its parent airline, Qantas. The parent airline, under its current CEO, Alan Joyce, has form when it comes to playing hardball with the unions. As a result of the sale, some 50 Jetstar pilots could lose their jobs and another 50 be demoted. Coincidence or not?
Jetstar employs just over 800 pilots, the majority who are members of the Australian Federation of Air Pilots (AFAP). A spokesperson for the AFAP told Simple Flying today that Jetstar had not raised the possibility of any job losses with them but they would expect to be consulted before any decisions were made that may adversely affect their members.
At the very least, the timing of the announcement concerning the 787s is interesting, coming as industrial action against Jetstar ramps up. It could just be a quirk of timing but one former Qantas pilot noted that this was the sort of ‘negotiating’ the wider Qantas group now regularly undertook and that the days of win-win were over.
Jetstar sends its 787-8s to a range of medium-haul destinations, including Hawaii, Thailand, South Korea, Bali, Japan, and Vietnam. The routes thought to be struggling are those to Japan and Hawaii. Jetstar is a leisure airline and the weakness in the leisure market has been a drag on the airline for some time. The route to Hawaii is particularly vulnerable due to the weakness of the Australian dollar (AUD$1 = USD$0.69).
Despite this, Jetstar remains a highly profitable business in the wider Qantas group.
The 787-8s belong to Qantas
But Jetstar cannot “sell” the 787-8s per se. They belong to Qantas. They would likely be transferred back to the parent airline. There is speculation that the aircraft (due soon for some expensive heavy maintenance) have been flagged to go back to Qantas for some time. Being able to blame the move on the industrial action makes for a handy scapegoat.
Qantas doesn’t fly 787-8s, sticking to 787-9s, but repainting them, taking out the Jetstar seats, installing Qantas seats, and slipping them into the Qantas fleet wouldn’t be a big deal. Many airlines fly a combination of both 787s. Most passengers wouldn’t even notice.
Having flagged its intentions, Jetstar plans to make a decision an announcement regarding the “sale” of three 787-8s in the first quarter of 2020.