Qantas chief resets plan to make airline profitable as losses build

Qantas Airways chief executive Alan Joyce promised last year that an alliance with Emirates would prove a "turning point" for the 93-year-old carrier. It is not working out.

Losses in Qantas's international unit hit A$262 million (HK$1.82 billion) in the six months to December 31, the carrier said on Thursday, wider than those over the preceding 12 months.

Joyce abandoned a goal to turn the division profitable by next year, meaning the earliest the company is estimated to post a profit is in 2016.

Irish-born Joyce, 47, is cutting 5,000 jobs, cancelling or deferring 50 plane deliveries, freezing pay and ending some overseas routes as he struggles to turn Qantas around.

Success with this strategy is key for him to win the support he has sought from Prime Minister Tony Abbott's government as three foreign airlines help boost finances at Virgin Australia Holdings.

"The overall strategy of retreating from the international market is not a viable long-term strategy," said Oliver Lamb, director of Pacific Aviation Consulting. "If Qantas retreats from markets such that their passengers no longer have a choice, customers are going to vote with their feet."

Virgin Australia yesterday posted a first-half net loss of A$84 million, compared with the A$235 million loss reported on Thursday by Qantas for the same period.