By Mathew Murphy
THE Qantas group is preparing to accelerate its Asian expansion and challenge Tiger Airways after announcing a new ownership structure for its Asian-based airlines.
A new holding company, Newstar Investment Holdings, has been created for Jetstar Asia, which began operations in December 2004, and Valuair, which merged with the airline a year later.
At that time, the two carriers were under a company called Orangestar Investment Holdings, in which Qantas had a 45.04 per cent stake and Temasek Holdings, the investment arm of the Singapore Government, had 33.5 per cent. A group of minority shareholders made up the difference.
But with Temasek subsequently taking an 11 per cent stake in rival Tiger Airways, Qantas wanted to break away from that relationship.
Mr Choo Teck Wong, otherwise known as Dennis Choo, has stepped in to fill the void.
Mr Choo's Westbrook Investments has agreed to take a 51 per cent share in Newstar despite challenging financial times.
What that means for the Qantas group is that for an initial outlay of $S25 million ($A23.5 million) it will create "back-office" synergies of about $S20 million a year.
Besides savings on booking systems, branding, maintenance and training, it will also result in better co-ordination of routes.
While the aviation industry is in the doldrums, the new structure gives the Qantas group the opportunity to strike once the market shows signs of improving.
Jetstar Asia and Valuair are relatively minor players, operating seven A320s and servicing 16 South-East Asian destinations. But Qantas is keen to expand that network.
The main target is Tiger, which services 28 cities from its Singapore hub.
Qantas shares rose on news of the new structure and outperformed the general market, soaring 10.5¢, or 6.5 per cent, to $1.81.
Qantas chief executive Alan Joyce said the changes would give Jetstar a platform to expand, in anticipation of more open skies across Asia.
"The airlines will continue to operate the same network, with no impact on existing employees, customers, flight bookings or supplier relationships," Mr Joyce said.
"This is the right path forward for the airlines, their employees and, most importantly, our customers, who will have access to an award-winning product offering across every market."
Qantas said it did not expect the changes to result in a larger percentage of its maintenance work being done overseas.
Ms Chong Phit-Lian will remain chief executive of both Jetstar Asia and Valuair.
Jetstar chief executive Bruce Buchanan, who has been largely involved in driving the new structure, and Orangestar director Paul Edwards will also serve on the board of Newstar. Mr Choo will become chairman of the company.