22 May 2012 Myriam Robin
Change is coming thick and fast at Qantas Airways.
A mere day after announcing 500 job cuts, the airline is in the news again with an even bigger announcement.
The company is splitting its domestic and international operations into two separate businesses from July 1. Each of the businesses will get their own CEO, and will report their financial results separately.
“This change will enable a greater focus on the priorities of turning around the Qantas International business and enhancing the strong Qantas Domestic business,” the airline said in a statement.
Lyell Strambi, formerly group executive of Qantas Airlines Operations, will become the new CEO Domestic, while Simon Hickey, formerly CEO of the frequent flyer program, will have the unenviable job of managing Qantas’ profit-haemorrhaging international business.
Qantas isn’t the only airline to split up its business. Competitor Virgin Australia is proposing a complete split, with its domestic and international businesses having a different shareholder base, in order to allow an investment from Etihad Airways.
Qantas isn’t going so far. The changes don’t go as far as listing a new entity on the ASX, with the company saying it will be business as usual for shareholders and employees.
So why is the airline doing this? Here’s what the experts say.
1. To better focus on the two very different businesses
This is Qantas’ stated reason for the split: “Qantas Domestic and Qantas International face very different situations,” the company said.
“Qantas Domestic is strong and profitable. We are seeing the most sustained levels of high customer satisfaction on domestic services since 2004, and we are the airline of choice for corporate Australia.”
The airline’s assessment of the international division was vastly different.
“Qantas International… is loss-making and does not deliver sustainable...