What’s The Buzz Around Qantas Airways Shutting Down Its Innovation Unit?

It has been heard that Qantas Innovation unit has come to a halt. Airways company, Qantas Airways Ltd (ASX: QAN) has shut down its business of “Qantas Innovation” and released its employees from work on Wednesday. The unit was led by Robert Marcolina, a Group Executive of Strategy, Innovation & Technology at Qantas. But it has been understood that even after the closure of Qantas Innovation segment, Mr. Marcolina will continue with Qantas. Meanwhile, the operations of Qantas Innovation unit are believed to be carried forward by other segments of Qantas.

Qantas Innovation was formed ahead of the company’s innovation agenda under which the start-up, scale-up and digital distributors were invited to pitch in their ideas to streamline the travel experience and develop next generation of global businesses. It was done through the AVRO Accelerator program that was launched by Qantas almost one year back.  [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

Moreover, Qantas’s venture capital unit, Qantas Ventures, and part of its loyalty arm Qantas Loyalty are said to be unaffected by the shut-down.

Let’s take a recap of Qantas financial performance in Fiscal 2019: The national carrier company Qantas has achieved a record level revenue of $4.41 billion in the first quarter of Fiscal 2019. This reflects a growth of 6.3% from previous corresponding period, confronting the headwinds from rising fuel costs. During Q1 FY19, Qantas’ group domestic operations has shown significant improvement of 6.8% underpinned by strong travel demand in leisure and business market. Whereas on international front there has been decent growth of 4% in unit revenue. It was driven by major contribution from ‘Qantas International’ on the back of revenue growth in Perth-London route and codeshare deals renewals.

Despite facing weaker Australian dollar and surging fuel cost, Qantas has managed to flag record level of revenue. It is mainly because Qantas has substantially attracted the new customers who have boosted the group’s revenue from new passengers. As a result, total passengers carried during first quarter shot straight up from 13,842,000 in 1Q FY18 to 14,103,000 in 1Q FY19. However, its total capacity declined by 0.3% ahead of challenging international and domestic market.

The headwinds from higher fuel prices are expected to continue in remaining Fiscal 2019. Qantas has estimated its full year fuel cost to reach $4.09 billion, higher than previous year’s cost of $2.23 billion.

On new developments front, the company has unleashed its first investment in a new first lounge at Singapore airport. Ahead of this multi-million-dollar investment, the company also proposes to expand its business lounge at Singapore Changi Airport.

So far Qantas is trading in green today. The stock price of Qantas Airways Limited (ASX: QAN) has gone up by 1.828% to trade at $5.570 on 1 November 2018 (3:00 PM AEST). Currently, the stock is trading at PE of 9.770 x with market capitalization of $9.05 billion. Looking at its past performance we can see Qantas’ share price has fallen by 11.06% over the past one year.


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