Business & Finance

Qantas and Impulse Enter Commercial Relationship

May 1st, 2001

Impulse Airlines announced today that it would withdraw from operating scheduled air services in Australia under its own brand.

At the same time, Impulse Executive Chairman Gerry McGowan and Qantas Airways Chief Executive Officer Geoff Dixon jointly announced the two airlines had entered into a long term commercial relationship that will involve:

• Impulse contracting to Qantas its eight Boeing 717 and 13 Beechcraft 1900D aircraft, complete with pilots and cabin crew;
• Impulse operating Boeing 717 services for Qantas, under the Qantas brand and livery, to primarily leisure destinations, including Gold Coast, Maroochydore and Hamilton Island and also between Melbourne and Hobart;
• Continuing the Impulse Beechcraft services to Canberra and Newcastle;
• Impulse operating new services for Qantas to regional ports where Qantas does not currently operate;
• Qantas loaning funds to allow Impulse to buy back its institutional shareholders' shares and provide working capital.

Mr Dixon and Mr McGowan said the commercial relationship between Qantas and Impulse was a direct result of the increasingly competitive conditions in both the Australian and world aviation markets.

Impulse and a number of its institutional shareholders had decided the major trunk route market was too difficult for Impulse to continue operating on its own. As a result, Impulse would cease to operate services on the major trunk routes of Sydney-Melbourne and Sydney-Brisbane from 14 May. Qantas will honour all Impulse tickets from 14 May.

"This agreement will strengthen Impulse financially and protect its future," Mr McGowan said. "Impulse will continue to be a major employer of skilled aviation personnel and will continue to maintain its own aircraft. Today's announcement is all about two Australian owned airlines working strategically together to deliver highly competitive air services to more Australian destinations."

Mr McGowan said Impulse intended to honour all agreements it had established with Governments, including the positioning of its National Reservation Centre in Newcastle under a Commonwealth grant and support packages obtained with the Tasmanian and ACT Governments.

Under the agreement, which is subject to approval from the Australian Competition and Consumer Commission and due diligence, Impulse will be owned by its founders, Gerry and Sue McGowan.

Mr Dixon said the commercial relationship between Qantas and Impulse would be similar in nature to the one that exists between Qantas and National Jet Systems, under which National Jet Systems leases aircraft to Airlink.

"This agreement will secure over 1,000 jobs at Impulse. While the new arrangements could involve some transfers for a small number of Qantas staff, these staff will be offered ongoing employment with Qantas," Mr Dixon said.

"The Australian aviation market is as tough as it has ever been and it remains very competitive. Our relationship with Impulse will result in increased regional and leisure services in Australia and Qantas will continue to offer a wide range of discount fares."

Mr Dixon said Qantas had kept the Australian Competition and Consumer Commission fully informed of the developments.

"We do expect further discussions with the ACCC on a number of issues arising from today's announcement, including slots at Sydney Airport," Mr Dixon said.

Impulse services will continue to operate as usual until 14 May. Bookings to fly with Impulse can be made through its website, via its National Reservations Centre on 13 13 81 or through travel agents.