Qantas shares climb on Emirates tie-up

6 Sep 2012, 5:11 pm   -   Source: AAP
Qantas flights to Europe will now stop over in Dubai under a 10-year partnership with Emirates. (AAP)

Qantas flights to Europe will now stop over in Dubai under a 10-year partnership with Emirates. (AAP)

Qantas has signed a 10-year partnership with Emirates that will see the Australian airline's hub for European flights move to Dubai.

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Qantas Airways chief executive Alan Joyce says a tie-up with Emirates will go a long way to returning the Australian airline's struggling international operations to profitability.

Mr Joyce and Emirates president Tim Clark announced a 10-year partnership on Thursday that will feature a broad codesharing arrangement and reciprocal frequent flyer benefits.

Qantas' international operations lost $450 million in 2011/12 due to intense competition from rival carriers, high fuel prices, the economic downturn in its key European and US markets and restructuring costs.

The Qantas boss said the new global aviation partnership was a key plank in turning around the performance of Qantas international.

"It is a major step in us getting to our target of breakeven by the 2015 financial year and a major step in us growing that business again," Mr Joyce told reporters on Thursday.

"In terms of jobs, the headline here is: this is great for jobs for Qantas, great for jobs in Australia."

The market welcomed the news, with Qantas shares closing up 6.7 per cent, or 7.5 cents, at $1.20.

Giving Qantas access to Emirates' extensive network via a codeshare arrangement will combat the drift of Qantas customers to other carriers that serve more destinations in Europe.

Government figures showed Emirates and Qantas had a combined 26.3 per cent of all international passengers into and out of Australia in the 12 months to June 2012.

Qantas will also drop the loss-making daily service to Frankfurt.

Mr Joyce said Qantas's new route to Europe - it would fly to London via Dubai instead of Singapore - would also allow Qantas to reschedule and add more frequency to Hong Kong and Singapore.

This would offer passengers better connections to the rest of Asia.

The Centre for Aviation described the deal as "an improvement but no silver bullet to Qantas' ails".

"The Emirates partnership will further reduce long-haul losses and, combined with Qantas' already announced initiatives, give the international network a fighting chance of being profitable," it said in a research note.

Mr Joyce said the alliance with Emirates offered the potential for growth in the years ahead once the airline took delivery of Boeing 787-9 Dreamliners.

"We think this is a springboard for us to actually start growing more services back into Europe," Mr Joyce said.

"We don't see this as ending in Dubai, we see this ending in a lot more destinations in Europe."

Mr Clark said the arrangement with Qantas was the largest partnership the carrier had yet done with another airline, and offered Emirates access to more Australian and New Zealand destinations.

"This isn't just about Emirates growing its business into Australia, it's about in the future Qantas growing its metal over Dubai into points in Europe and re-entering those cities that it served many many years ago," he said.

The tie up, which mirrors a similar arrangement Virgin Australia has with Abu Dhabi-based Etihad Airways, requires Australian Competition and Consumer Commission approval.

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