Emirates deal will help Qantas return to profit

02 September 2013

Full commercial benefits of tie-up to be realised by 2015

Australian airline Qantas says that moving its hub for European flights to Dubai had a short-term negative impact on its full year earnings.

Despite the cost of the relocation, the airline’s international arm still managed to almost halve its losses recorded in the previous year. It recorded an underlying Earnings Before Interest and Tax (EBIT) loss of $246m.

Qantas Group also posted an improved underlying profit before tax of $192m, compared to a profit of $95m recorded in the last financial year.

The airline’s partnership with the Dubai-based airline Emirates was highlighted by Qantas’ chief executive officer, Alan Joyce as “the most important element” in its plans to return the airline to profitability by 2015.

The tie-up between Qantas and Emirates came into operation as 1 April and according to the Australian carrier, there was a “surge” in bookings following the launch, with bookings still remaining strong.  

“So far, almost half a million Qantas customers have travelled through Dubai,” says Joyce.

Codeshare bookings by Qantas customers on Emirates’ network are running at about twice the level of the airline’s previous network to Europe.

The partnership is also driving increased bookings by Emirates customers on Qantas domestic network.

Joyce added that there is “still a lot of work to do bedding down the partnership in full year 2014. But by full year 2015, we expect to see the full commercial benefits flow.”

As well as the cost of relocating to Dubai, Qantas’ full year earnings were negatively affected by the set-up costs of its low-cost carrier Jetstar’s Asia operations.

Positive developments, which include compensation from US airplane manufacturer Boeing for the delays to the delivery of the Dreamliner aircraft, ensured that the group’s overall profits increased.

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