This was published 15 years ago
Subleases to sister help struggling Jetstar Asia post $4.5m profit
By Scott Rochfort
THE Qantas-backed Singaporean budget airline Jetstar Asia has belatedly posted a modest full-year profit, the first since it began services in late 2004.
But far from crowing about its $S4.5 million ($4.5 million) full-year profit, the airline's holding company, Orangestar Investments, was even tardier in releasing its full-year accounts than its Singapore Airlines-backed rival, Tiger Airways, which filed its accounts three months late.
The 45 per cent Qantas-owned holding company sneaked out its accounts to the Singaporean corporate regulator shortly after the new year - more than one month later than Tiger.
Despite the profit for the 12 months to March 31, 2008, Jetstar Asia seems to have little to celebrate.
Jetstar Asia failed to respond to the Herald over the weekend on speculation that several of its senior managers, including its chief financial officer, had resigned. Nor would the airline's Singapore management comment on suspicions its maiden profit had been propped up through its relationship with its Australian sister airline, Jetstar, to which it subleases three of its 10 Airbus A320s.
The accounts show Jetstar Asia earned $S21.8 million in "sublease" revenue in the 12 months, against $S12.5 million the previous year. It has four jets leased out altogether.
Jetstar Asia did not explain why its subleasing revenue rose the same year it transferred the three jets it had leased to the Turkish airline AtlasJet to the Australian Jetstar. Jetstar took delivery of the aircraft in December 2007.
A spokesman for Jetstar Australia, Simon Westaway, said the jets were leased at a "commercial" rate.
The figures suggest the Singaporean airline is possibly being subsidised by the subleasing of its three A320s to the Australian franchise at a higher rate. Jetstar Asia paid $S45 million for the lease of all of its aircraft during the year. This includes the aircraft operated by Jetstar Asia under the Valuair name. Qantas also acknowledges in its annual report that it "has seconded employees and provided various support services" to the airline.
It is also likely Jetstar Asia's meagre profit could have been wiped out by the surge in oil prices last year and now the slump in demand fuelled by the economic slowdown in Singapore.
The figures also show that four years on, the low-cost airline boom in Asia has failed to live up to its hype. When the Jetstar Asia name was unveiled in Singapore in September 2004, the former Qantas chief, Geoff Dixon, argued: "This is going to be a very, very substantial airline."
Jetstar merged with the loss-making Valuair in 2005, mainly in an attempt to gain landing rights in Indonesia. Valuair has racked up $S87 million in losses since its founding and Jetstar Asia $S81 million. Qantas's other shareholders in the venture include the Singaporean Government's investment arm, Temasek, which aside from being a shareholder in Singapore Airlines has a stake in Tiger Airways.
Tiger, too, has failed to live up to its hype, with its Australian operations incurring heavy losses and its overall operations making only a modest profit last year. The former darling of the Asian low-cost segment, Malaysia's AirAsia, recently reported its first loss since its listing in 2004.