Qantas losses halve following Dubai deal

Qantas losses halve following Dubai deal
Qantas said the deal with Emirates helped to reduce losses.
Published: 2 September 2013 - 6:54 a.m.
By: Ruchi Shroff

Emirates’ Australian partner Qantas has credited the airline’s new hub in Dubai for helping to halve its international business losses during the 12 months to June 30, Arabian Business has reported.

The struggling international arm of the flag carrier was now expected to make a profit by mid-2015, Qantas CEO Alan Joyce said.

Qantas International reported an underlying earnings before tax (EBIT) loss of $246 million in the year to June 2013. Costs improved 5%, or $148 million, after the airline withdrew from loss-making routes, retired ageing aircraft and completed the reconfiguration of nine Boeing 747s and 12 A380s.

Qantas relocated its European hub from Singapore to Dubai as part of its historic alliance with Emirates that launched on March 31. The company said ticket sales for European services had doubled under the partnership.

However, figures released to the Australian Stock Exchange in June showed international passenger numbers fell significantly in the first month of the tie-up with Emirates.

Qantas International carried 463,000 passengers during April, down 7.2% on the same period last year. Its load factor, a key indicator of the airline’s profitability, also fell from 82.1% to 77.8%.

Joyce said the full benefits of the partnership were yet to be realised. “The Qantas-Emirates partnership gives [Qantas] a strengthened position on routes to Europe, the Middle East and North Africa, via the global hub of Dubai,” Joyce said. “Bookings have been very positive, running at about twice the level of Qantas’ previous codeshare arrangements for flights to Europe. However, while the early signs are very promising, much of the partnership will be bedded down during FY14 – and we expect full benefits to flow from FY15.”

Overall, Qantas, which also operates domestic services and low cost carrier Jetstar, reported a $6 million profit.

The company said its Emirates partnership also had helped to strengthen its network in Asia and in the Tasman.

“We have reworked our schedule on services between Australia and Asia to provide better connections to the region’s major hubs and expanded our alliance with China Eastern – part of a long-term strategy for the world’s biggest aviation market,” Joyce said. "Our services to North and South America continue to perform well, and we see good prospects for our partnerships with American Airlines and LATAM in those markets.”

Joyce said the international business’ improvement had been achieved despite an increasingly competitive environment and higher oil prices.

“The international market remains intensely competitive, as the response to the Emirates partnership has shown, with market capacity growth of 5% in FY13,” he said.

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