Qantas Forecasts Break Even for International Operations by 2015
Qantas Chief Executive Alan Joyce said on Sunday that he is expecting the Australian air carrier would break even on its international operations by 2015 with help from the agreement it signed last week with Middle East carrier Emirates.
"This is a big step in the right direction for Qantas international . . . We see a path through to this business breaking even by financial year 2015. We do want to make sure Qantas international goes back to profits," ABC quoted Mr Joyce.
On Thursday, Qantas announced it entered into a revenue and cost-sharing agreement with Emirates to help reverse the financial losses of the Sydney-based airline which reported $467 million loss for its international routes in the year to June 30.
Of that amount, $100 million was due to the prolonged industrial row with unions which led to the unilateral grounding by Mr Joyce of the entire Qantas fleet for two days in the later part of 2011.
The loss is mainly due to stiffer competition from Etihad, Emirates and Qatar Airways which have wider range of one-stop flight to Europe and Virgin's international expansion through a deal with Etihad.
With the agreement, Qantas will end its revenue-sharing agreement with British Airways and instead coordinate pricing, sales and scheduling with its new partner. The deal, however, needs approval from the Australian Competition and Consumer Commission.
Mr Joyce said he is confident that he can convince competition regulators that Australian travelers would not suffer because of the deal with Emirates, the world's largest airlines in terms of passengers.
Part of the 10-year deal is the launch soon of a daily non-stop service between Perth and Auckland and complimentary chauffeur service for international business and first class passengers beginning April 2013.
In turn, Qantas would drop Singapore in favour of Dubai as its hub for all European trips where it would connect with Emirates's network to 33 destinations across Europe. Qantas would also exit from the Frankfurt service which Mr Joyce described as a big loss maker.
"We look at our Qantas businesses as a group and we do want to make sure that Qantas International goes back to profits, but it and domestic together recover its cost to capital. And once we get there, those businesses will be producing equal or better results than Emirates because we have a very strong franchise in the domestic market," Mr Joyce told ABC.
