Qantas shares higher on Jetstar Japan sale

Qantas Airways Ltd (ASX: QAN) shares are pushing higher on Tuesday afternoon.

At the time of writing, the airline operator’s shares are up almost 1% to $10.25.

Why are Qantas shares rising today?

Today’s gain could have been supported by the release of an update on the Jetstar Japan business.

This afternoon, Qantas and Japan Airlines revealed that they have signed a non-binding memorandum of understanding (MoU) to facilitate the Narita-based low-cost carrier’s (LCC) transition to a new Japanese-based ownership structure. This is expected to set the airline up for its next phase of growth, sustainable development, and success.

Subject to further negotiation and regulatory approvals, Qantas intends to divest its full shareholding in Jetstar Japan, with Development Bank of Japan (DBJ) planning to enter as a shareholder.

It notes that DBJ has extensive aviation market knowledge and a proven track record in the aviation industry.

Jetstar Japan will maintain its independent LCC operations while creating new synergies with its shareholders to address rising inbound demand, promote regional travel, and enhance customer value and service quality.

Following the divestment, Qantas will concentrate its resources on its core Australian operations, Qantas and Jetstar Airways, to further accelerate the largest fleet renewal program in the company’s history.

Once the deal completes, Jetstar Japan will refresh its brand from Jetstar to a new brand, with the aim of further establishing itself as a leading Japanese LCC under this new brand and identity.

Commenting on the news, Qantas’ CEO, Vanessa Hudson, said:

We’re incredibly proud of the pioneering role Jetstar Japan has played in the low-cost aviation sector in Japan and sincerely thank our Jetstar team members for their unwavering commitment to maintaining excellent safety, operational and service standards for millions of customers.

We’re confident the new ownership structure will deliver greater value to customers, benefitting from the Development Bank of Japan’s domestic and international aviation knowledge and industry expertise as well as their strong, long-standing relationships with national and regional tourism bodies. We thank Japan Airlines for their strong partnership and look forward to continuing to work together during the transition and in oneworld.

Japan Airlines’ president and CEO, Mitsuko Tottori, added:

We are delighted to announce this new beginning for Jetstar Japan alongside DBJ and Tokyo Century. We also extend our deepest gratitude to Qantas for their 14-year partnership in establishing and developing the LCC market in Japan. By moving to this new structure, we will respond flexibly to market changes and maximize synergies with the JAL Group to achieve sustainable growth for JJP as a key LCC at the expanding Narita Airport.

The post Qantas shares higher on Jetstar Japan sale appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.