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Qantas sells lease to Sydney Airport's Terminal 3
[SYDNEY] Qantas Airways Ltd said on Tuesday it had reached a deal to sell its lease on Sydney Airport's Terminal 3 to Sydney Airport Holdings Ltd for A$535 million (S$555 million), adding to the airline's cost-saving drive.
Under the deal, Qantas will retain exclusive use of the terminal and will continue to manage most of its operations until June 2019. It will then have priority use of the terminal through to June 2025.
Qantas has been aggressively cutting costs as part of a three-and-half-year turnaround programme, which has included freezing capacity and slashing 5,000 jobs.
As the so-called Flying Kangaroo nears the halfway mark, the strategy appears to be paying off. Qantas is expected to report a record full-year profit of at least A$900 million on Thursday, a far cry from the A$2.8 billion statutory loss it posted last year.
Qantas had held a 30-year lease on the terminal, which was due to expire on June 30, 2019. The airline said the deal will have a neutral impact on earnings before interest and tax (EBIT) through 2019.
"This deal secures Qantas' long-term position in our largest hub, ensuring priority usage as the primary airline customer of Sydney's Terminal 3," Chief Executive Alan Joyce said in a statement. "We now have certainty about our future operations in Terminal 3 post-2019."