Amid domestic problems with its engineers, Qantas Airways Ltd. is looking at its Asian neighbors to boost its opportunities.

According to the newspaper Nikkei, Qantas is in talks with Japan Airlines for a low cost carrier. The joint venture would have a capitalization of 10 billion yen ($115 million) to 20 billion yen, and would have each airline having a 30 per cent stake.

Qantas in a statement said that no agreement has been reached with any parties but acknowledged that it "is looking at a range of opportunities across the Asia region."

Nikkei also reported that among investors invited to the joint venture are Mitsubishi and Toyota Tsusho. Busy Japanese cities Tokyo, Nagoya and Osaka were also considered as hubs.

Japan Airlines collapsed to bankruptcy in January last year due to cash woes. It exited court-backed rehabilitation in March this year, after obtaining 255 billion yen in new loans from lenders that included the Development Bank of Japan to pay off JPY255 billion in new loans from 11 creditors, including the Development Bank of Japan. JAL exited from rehabilitation after the former flag carrier underwent painful restructuring efforts, including reductions in its workforce, routes and flights. JAL though has turned around its fortunes as it has achieved a consolidated operating profit of JPY174.9 billion in the period between April 2010 and February this year.

It was reported earlier this year that JAL is looking to establish a low-cost air carrier for domestic flights with Qantas' Australian budget airline Jetstar Airways Pty Ltd. JAL is hoping to challenge All Nippon Airways Co., which plans to launch a low-fare airline based at Kansai International Airport in the second half of 2011.

An international low-cost carrier would not only boost JAL but would also help Qantas improve its international operations.

Qantas said in June that it expects to report underlying profit before tax of $500 million to $550 million for the 12 months ending June 30, 2011. However, while its two domestic flying brands, Qantas and Jetstar, have made the business profitable, Qantas International is the airline's weakest link.

"Qantas International is the Group's weakest business -- it ahs achieved returns only three times in the past 15 years. Clearly the situation is not sustainable. However, we are developing a long-term strategy aimed at restoring competitiveness and profitability," Qantas said in a June 22 statement.

"We have a proud history and unmatched experience in international flying and will take the hard steps necessary to turn this airline around. Our review of Qantas International is progressing in line with expectations and we will announce plans for its strategic renewal this year."

While Qantas' plan to boost its international operations is certainly in the pipeline, it shouldn't look very far as it has still problems to solve at home: its engineers union has again notified that it will go on strike during the lucrative school holidays.

The Australian Licenced Aircraft Engineers Association announced that they will take industrial action as part of an ongoing dispute over pay and conditions. The union has announced rolling two-hour work stoppages by Qantas licensed aircraft line maintenance engineers in Melbourne on Monday, July 4, and a ban on overtime for all Qantas licensed engineers.