HANOI -- Australian flag carrier Qantas Airways said Monday that it is leaving its joint venture with Vietnam Airlines amid growing headwinds from the coronavirus outbreak.
Qantas currently owns 30% of Vietnamese budget carrier Jetstar Pacific Airlines. Sources familiar with the matter say the Australian carrier is in talks to sell the entire stake to Vietnam Airlines, which owns roughly 69% of the venture.
Jetstar Pacific, Vietnam's second-largest budget carrier with a 15% share in domestic flights, is to be renamed Pacific Airlines.
Qantas entered the Vietnamese market in 2007, when it jointly invested with Vietnam Airlines in Jetstar Pacific's state-run predecessor. It has since been increasing its stake in the low-cost carrier, but demand for domestic flights plunged here amid the coronavirus pandemic.
Vietnam lifted lockdown measures on April 23, with the economy showing signs of returning to normal.
Domestic flights have returned to pre-pandemic levels. Vietnam Airlines fully resumed domestic service by the end of May, and top budget carrier Vietjet Air is operating all of its 45 routes within the country. Overall traffic in Vietnam, including cargo, has rebounded to more than 350 flights a day, roughly the same level as a year earlier.
But major carriers including Vietnam Airlines are expected to sustain deep losses for the year, taking a hit from the extended restrictions on the public's movement during the lockdown.
Meanwhile, international service is likely to take more time to restart. Facing challenges in turning around its earnings as a smaller carrier, Jetstar Pacific aims to strengthen its partnership with Vietnam Airlines in order to chart a way forward from the pandemic.