Shares of beleaguered Australian carrier Qantas Airways surged on Thursday after the flying kangaroo announced on the same day it has entered into a 10-year arrangement with Dubai's Emirates that will enable the Australian airline fly to London via Dubai.

Although still subject to regulatory approval by the Australian Competition and Consumer Commission (ACCC), the 10-year tie-up, which goes beyond codesharing such as coordinated pricing, sales and scheduling and a benefit-sharing model, is expected to start in April 2013.

"This agreement represents a step-change for the aviation industry,'' Alan Joyce, Qantas chief executive, said. "It is far bigger than a codeshare. Or even a joint services agreement. This is the biggest arrangement Qantas has ever entered into with another airline."

As of 2 p.m., shares zoomed up 6.2 per cent to $1.19 following the announcement.

The arrangement forms part of Qantas's efforts to turn around its fortunes after reporting its first annual loss in August since getting privatised in 1995. It will see Qantas moving its hub to Dubai from Singapore for European flights, including the 'Kangaroo Route', wherein Qantas will operate daily Airbus A380 flights from Sydney and Melbourne to London via Dubai.

Neither airline will take an equity in the other.

Helping Emirates compete against state-backed Abu Dhabi rivals Etihad Airways and Qatar Airways, the arrangement aids Qantas to cut loss-making international routes and focus on its profitable domestic and budget operations.

Qantas will already terminate the Frankfurt route under the arrangement, but more routes will be opened up to Australian travellers in Europe, Middle Eastern and North Africa under the agreement.

Both airlines' frequent flyer program members likewise have the opportunity to earn rewards, recognition and gain lounge access.

"As the world's largest international airline, with a network that perfectly complements our own, Emirates will help us give our customers across Australia a dramatically expanded range of travel options," Mr Joyce said.

"Together with Emirates, Qantas will provide a unique one-stop hub service, as well as deeply integrated frequent flyer and customer benefits."