Qantas pushes on with Asian premium airline

Dec 12 2011 07:54

Sydney - Qantas chief Alan Joyce said on Monday he was pushing ahead with plans for a joint-venture premium airline in Asia, while insisting damage to the brand from grounding the fleet was only "temporary".

Uncertainty over global economic conditions and volatile fuel prices have sparked reports that Qantas was ready to shelve plans for an Asian carrier as part of its strategy to refocus on the fast-growing region.

But Joyce said talks were ongoing, with Kuala Lumpur or Singapore seen as the most likely base.

"We have announced our plans to invest in a premium airline based in Asia," he said at an investor presentation. "Talks continue, and it remains premature to make any announcements at this stage.

"Our aim is to position ourselves within the Southeast Asian marketplace in advance of planned aviation liberalisation."

Within five years, the Australian flag carrier plans to have a hub in Asia feeding traffic into the Qantas and Jetstar networks, he added.

"This is how we will end the disadvantage of being an end-of-the-line carrier."

Nevertheless, he admits it will be a challenge with the global economic prognosis "gloomy".

"Even with the insulation of a strong Australian resource-based economy, we will not be fully immune from the global forces that are at work. So we expect real challenges over the next five years," he said.

Joyce added that one of those challenges would be "further competitive pressure from Middle Eastern and, increasingly, Chinese carriers in international markets".

The announcement in August of plans to establish a premium Asian airline sparked a fierce backlash from unions concerned at the outsourcing of jobs, which culminated in Qantas grounding its entire fleet in October.

The government's industrial relations umpire was forced to step in and, with unions representing pilots, engineers and ground staff unable to resolve their disagreements with the airline, the dispute is now headed to arbitration.

Joyce has already revealed that the shock grounding cost Aus$194m, but he said Monday that despite thousands of customers being impacted the damage to the brand was only "temporary".

"I say temporary because all the signs are that the damage is neither extensive nor permanent," he said.

"To the contrary, we've had overwhelming support from our most valued frequent flyers and the business community."

Domestic operations continue to perform strongly and generate plenty of cash, with bookings now back to normal after the grounding chaos. International forward bookings through to January remain slow but beyond that they pick up, Joyce said.

He added that with the threat of strikes now diminished, coupled with his planned transformation of the airline's loss-making international arm, he expected far better shareholder value in the years ahead.

"We will continue to drive down our cost base and improve productivity," he said.

"In five years' time, and always, the Qantas Group will call Australia home, but increasingly we will be an efficient, multi-brand enterprise that is a flagship for Australian expertise and quality around the world."

qantas  |  airlines



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