(Reuters) -Australian flag carrier Qantas said on Wednesday it will close Jetstar Asia, the group's Singapore-based low-cost unit, in a bid to recycle up to A$500 million ($326.40 million)as part of its fleet renewal plans.

Qantas said that 13 Jetstar Asia Airbus A320 aircraft will be progressively redeployed to Australia and New Zealand.

Jetstar Asia continues to be negatively affected by rising supplier costs, high fees at airports and rising competition in the region.

"This has fundamentally challenged the low-cost airline's ability to deliver returns comparable to the stronger performing core markets in the group," Qantas said.

Jetstar Asia is currently expected to post an underlying EBIT loss of A$35 million in the current financial year.

The airline will cease operating on July 31 and will continue flights for the next seven weeks.

($1 = 1.5319 Australian dollars)