Qantas Airways has split its struggling international flights operation into a separate business unit, as part of a wider restructure that includes the departure of long-standing Jetstar chief Bruce Buchanan, reported Dow Jones Newswires.

It comes as Qantas acts to stem losses at its international arm caused largely by soaring jet fuel costs and intense competition from state-backed Middle Eastern carriers. Qantas is among a few profitable airlines in the world, but its success is being underpinned by a domestic flights unit exposed to Australia's booming resource-rich economy.

Chief executive Alan Joyce has cut poorly performing international routes and slashed jobs as he attempts to make the business break even by 2014 and maintain the company's coveted investment-grade credit rating.

In the biggest leadership shakeup at Australia's flag carrier since Joyce took the helm in 2008, frequent flyer chief Simon Hickey has been promoted to head the newly created long-haul flights business.

Operations head Lyell Strambi will steer the Qantas-branded domestic flights unit, while strategy head Jayne Hrdlicka will replace Buchanan as CEO of low-cost offshoot Jetstar.

"Qantas Domestic and Qantas International face very different situations," Joyce said in a statement to the Australian Securities Exchange.

On Monday, Qantas said 500 engineering jobs would be lost as it consolidates its Australian maintenance bases. That brings total announced layoffs to 2,000 since August.

Anthony Moulder, an aviation analyst at Credit Suisse, said the management changes are a slight negative for the company.

"Overall, the loss of Bruce Buchanan is disappointing given the importance of Jetstar's growth to the group," Moulder said.
Buchanan has led the establishment of separate Jetstar joint ventures in Japan, Singapore and Vietnam and is in the process of setting up another in Hong Kong to service the fast-growing Chinese market.

The split of the businesses, however, will allow greater transparency to the turnaround of Qantas International, potentially boosting Qantas shares as it makes it easier to value different parts of the company, Moulder said.

Buchanan will remain at Jetstar for the next six months to assist Ms. Hrdlicka's transition into the role before providing consultancy services to Qantas for an additional 18 months.

Qantas said Buchanan left to pursue other opportunities, including helping other Australian companies to expand in Asia. He had long been considered a possible candidate for chief executive should Joyce step down.