Qantas sets break-even hopes on alliance with Emirates

PUBLISHED : Monday, 10 September, 2012, 12:00am
UPDATED : Monday, 10 September, 2012, 3:32am


Embattled Qantas Airways said yesterday its lagging international business was expected to break even again from 2014 after a tie-up with Emirates it hoped would help it refocus on Asia.

The Australian carrier has described the 10-year partnership with Emirates, unveiled last week and subject to regulatory approval, as "momentous" for the industry and an important step in reversing its haemorrhaging international arm.

The alliance, operational in April next year, will see Qantas' hub for European flights shift to Dubai from Singapore, ending a lengthy partnership with British Airways on the so-called kangaroo route to London.

It will extend beyond code sharing and joint services to include coordinated pricing, sales and scheduling and a benefit-sharing model. Neither airline will take equity in the other.

Qantas chief Alan Joyce said it was the biggest deal in the airline's history and "the biggest deal I think we're ever going to do".

"We were missing continental Europe as a strong partnership … it also fixes the gap we had in North Africa and the Middle East and frees us up to fix the issues that we have in Asia," Joyce told ABC television.

Although Qantas' domestic business is a strong performer, its international arm is struggling with fuel costs and competition, accounting for much of the airline's A$244 million (HK$1.95 billion) loss in 2011-12.

Because Emirates would help plug its holes to Europe, Joyce said Qantas flights that once flew through Singapore or Hong Kong as a stopover to London would now terminate in those cities.

"[That] makes us more competitive against Singapore [Airlines] and [Hong Kong-based] Cathay," Joyce said.