Welcome to this week’s edition of top stock market highlights.
In a surprise shake-up of the budget airline industry, Singapore-based low-cost airline Jetstar Asia announced that it will cease operations on 31 July.
This closure is part of a “strategic restructure” by its parent company, Qantas (ASX: QAN).
More than 500 employees will lose their jobs because of this closure, but Jetstar Asia will provide support, which includes retrenchment benefits and employment opportunities either within the Qantas group or elsewhere.
The low-cost carrier will continue to operate flights in the next seven weeks out of Singapore while slowly scaling down its operations till 31 July.
The closure was blamed on escalating supplier costs, airport fees, and aviation charges.
The airline also cited growing capacity and intense competition in the region as factors that influenced its decision.
Jetstar Asia was expected to post a loss of A$35 million before interest and taxes are factored in for this financial year (ending 30 June 2025).
Records from the Accounting and Corporate Regulatory Authority (ACRA) show that the airline has been bleeding for several years.
Of the four fiscal years stretching from 30 June 2021 to 30 June 2024, the airline was profitable for just one fiscal year, turning in a profit of S$12.5 million in 2023.
With costs expected to continue increasing, the airline said that it would put pressure on its ability to offer low fares, thus forcing it to shut down.
Retrenched employees will receive a payment of four weeks per year of service, a bonus for this fiscal year, a special “thank you” payment, and other benefits.
Singapore Airlines (SGX: C6L) has stepped in to explore potential employment opportunities for affected staff and is working closely with Jetstar Asia.
16 routes are affected by Jetstar Asia’s closure, but 12 of these are served by other airlines.
Changi Airport Group (CAG) will work to restore connectivity for the remaining four locations.
Ground handler SATS Ltd (SGX: S58) is also working with Jetstar Asia to ensure a smooth and orderly transition.
Link REIT is looking at listing a REIT in Singapore that includes properties from outside of China and Hong Kong.
Early discussions are being held with advisers on the potential initial public offer (IPO), but the company has not decided to proceed.
This IPO news is coming at a time when Link REIT is looking to diversify its operations away from property management.
If the IPO goes ahead, it will be good news for the Singapore market as it struggles to reverse a trend of delistings.
Read More: Jetstar Asia, Link REIT and Centurion Corporation
