Mon, Sep 10, 2012 - Page 15 News List

Struggling Qantas pins hopes on Emirates deal

AFP, SYDNEY

Embattled Australian carrier Qantas said yesterday its lagging international business was expected to break even again from 2014, after a tie-up with Emirates it hopes will help it refocus on Asia.

Qantas 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 hemorrhaging international arm.

The alliance, expected to be operational in April next year, will see Qantas’ hub for European flights shift to Dubai from Singapore, ending a lengthy partnership with British Airways.

It will extend beyond code-sharing and joint services to include coordinated pricing, sales and scheduling and a benefit-sharing model, although 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 TV.

Though Qantas’ domestic business is a strong performer, its international arm is struggling with high fuel costs and steep competition, accounting for much of the airline’s A$244 million (US$253 million) loss last year and this year.

The half-billion-dollar reverse in its fortunes in just 12 months saw Standard and Poor’s downgrade the Australian carrier’s credit rating despite the Emirates deal.

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