Analysts: Deal with Emirates, Win-Lose for Qantas
The fresh Qantas-Emirates code-sharing deal could spell the end of the national carrier's international career, analysts said, in return for strong semblance of profitability on the domestic front.
Qantas chief executive Alan Joyce forged a 10-year partnership with Emirates that over the long haul could leave the airline out of profitable international routes, with aviation analysts pointing to the company's dwindling global destinations.
What Qantas has acquired was temporary relief with long-term repercussions on its international operations - the eventual loss of what's left to the airline's struggling routes out of Australia, an unnamed analyst told Fairfax.
The day could soon come that Qantas will end up merely delivering its European destinations to Emirates, which has made its intention to become one of the dominant global airlines, the sooner the better.
Its goal is amply backed by deep pockets - weapons that Qantas had earlier admitted were not at its disposal at the moment.
And the weaker player that it is right now, the firm being led by Mr Joyce was forced to swallow the bitter pill of ceding more grounds to Emirates in order to stay fit following the heavy losses it incurred - some $245 million at the last count.
Never mind that Qantas could be eclipsed in the process, which in the end could compel the firm to give up on its global interests and focus instead on where the revenues were more promising - regional and domestic routes, Fairfax said.
Mr Joyce is obviously under pressure to paint an image of solid turnaround for Qantas investors to buoy their confidence and that exactly what he had accomplished in sealing his firm's deal with Emirates.
Considerable loads were of his shoulder plus he gets more time to prove that the company he steers can fly its way back to profitability.
And the market has been kind on that end: Qantas shares surged close to seven per cent at the last trading, according to reports by News Ltd.
Some analysts too responded positively to the latest Qantas tack, with Macquarie analyst Russell Shaw telling The Herald Sun on Friday that Mr Joyce was taxiing his plane just at the right pace, heading into the perfect hangar.
Despite the lingering macroeconomic concerns, what was finalised between Qantas and Emirates would "definitely help return (the former) to profitability," Mr Shaw said.
The company, in fact, reached for a solution that counts the most at moment - protecting its local routes from the determined efforts by its fiercest rival, Virgin Australia, to chip away as much market shares as possible, and again the sooner the better, according to Strategic Airlines Solutions analyst Neil Hansford.
At least, Qantas would be at the receiving end as soon as Emirates passengers deplane in Australia and jump into domestic destination, creating a scenario that only assures higher local revenues for the national carrier, Mr Hansford told The Herald Sun.
His only complain: Mr Joyce should have thought about the arrangement a bit earlier.
"It's the right decision," nonetheless, he added.