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Qantas hopes for turnaround with Emirates alliance

Qantas hopes for turnaround with Emirates alliance
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Australia’s struggling Qantas Airways has agreed to a 10-year alliance with Dubai’s Emirates, a key step in efforts to turn around its loss-making international business.

Dubai will become the hub for Qantas’ European flights from March 2013, replacing Singapore, and the two airlines will coordinate pricing, sales and schedules

Qantas will end its existing relationship with British Airways.

“A key objective is to make Qantas International strong and viable, and bring it back to profitability,” Qantas Chief Executive Officer Alan Joyce told reporters. “This partnership will help us do that.”

Joyce said the airline remained committed to reaching break-even in its international business in the 2015 financial year.

He declined to comment on analysts’ estimates that the alliance would save Qantas A$90-100 million (73-81 million euros) before taxes annually, or provide the airline’s own forecasts for cost savings.

The long-anticipated deal was received warmly by investors, with Qantas’ share price surging almost 6.7 percent.

The arrangement will enable Qantas to cut loss-making international routes and focus on its profitable domestic and budget operations, while helping Emirates compete against its main state-backed rivals Etihad Airways and Qatar Airways.

The alliance is deeper than a straightforward code-share arrangement – where airlines combine some flights – but stops short of a global revenue-sharing deal or injection of shares or cash from either side.

For passengers, benefits include the pair sharing airport lounges and frequent flyer programmes.