Qantas CEO: Partnership with Emirates key to turnaround in international operations

Australia’s national airline Qantas saw 1.5 million passengers fly on its code in the 12 months to June 30, 2015 under the Emirates partnership, four times the number that flew on its previous code-

Australia’s national airline Qantas saw 1.5 million passengers fly on its code in the 12 months to June 30, 2015 under the Emirates partnership, four times the number that flew on its previous code-share with British Airways.

Qantas reported on Thursday a soaring statutory profit after tax of 560 million Australian dollars ($408 million) for the financial year ending June 30, compared to a record A$2.8 billion loss a year ago. Revenue climbed 3 percent to $15.8 billion.

The Australian financial year is from July 1 to June 30.

It is Qantas’ largest profit since the global financial crisis when it made A$1.8 billion.

Qantas’ international division recorded its first full year profit since the global financial crisis with an underlying earnings before interest and tax (EBIT) of A$267 million, a turnaround from last year’s $764 million loss.

The airline has tightened international schedules in the past 12 months; shaving time aircraft are spending on the ground and added the Airbus A380 on the Sydney to Dallas Fort Worth in Texas, United States.

Qantas Chief Executive Alan Joyce said the tie-up with Emirates, which launched in 2013 after Qantas dropped a 17-year partnership with British Airways, is a key driver to the turnaround in international operations.

“The numbers are extremely positive with Emirates. It’s a great partnership,” he said.

Qantas carried 1.5 million passengers on code-share flights with Emirates to Europe over the 12 months to June 30, Joyce said, compared to “carrying around 400,000” in its previous European-bound partnership with British Airways.

Passengers “were traveling on Asian competitors. They now leverage Qantas Frequent Flyer, Qantas presence in this market with the Emirates network … it’s been fantastic for us,” he said.

A spokesperson declined to state the revenue contribution of the tie-up that saw Qantas shift its London-bound hub from Singapore to Dubai but told Gulf News by email the airline is “really happy with how the partnership is going.”

After last year’s loss — its biggest as a publicly listed company — Joyce could not help but take in the moment after steering the massive turnaround and took swipe at his competitors.

“Qantas this year with these results will make more than Virgin [Australia], Air New Zealand, Singapore Airlines and Etihad [Airways] put together,” he said.

Etihad, Air New Zealand and Singapore Airlines own significant stakes in Qantas’ domestic competitor Virgin Australia.

Australia’s iconic airline, commonly known as “the flying kangaroo,” engineered the huge turnaround off the back of cheaper fuel and major cuts in costs.

The airline’s fuel bill was A$597 million less than a year before with global oil prices still well below June 2014’s benchmark Brent crude high of $115 a barrel. The US Energy Information Administration estimated on August 11 Brent will trade at an average of $54.40 a barrel in 2015.

In 2014, Joyce said he would take out A$2 billion of costs within three years and axe 5,000 jobs. Since then, it has cut jobs, frozen salaries, and trimmed its maintenance operations.

Qantas announced on Thursday it will purchase the Boeing 787-9 Dreamliner with eight firm orders to be delivered by the end of financial year 2019. It retains options for 15 and purchase rights 30 more.

Qantas did not announce Dreamliner routes though in June Joyce told Gulf News there is potential to launch services to Dubai with the aircraft.

But for the next 12 months there are “no plans to change the capacity we offer between Dubai and Australia,” the spokesperson said. It currently flies daily from Melbourne and Sydney to Dubai and onwards to London with daily flights going the other way too.

Will Horton, senior analyst at CAPA — Centre for Aviation, told Gulf News by email it is unlikely Qantas would look to Dubai for its first growth opportunity.

“Qantas is clearly back in growth mode but not globally. The Americas are attractive but Europe probably not. Asia remains challenging,” he said.

Qantas’ domestic operations, where it makes the bulk of its money, reported an underlying EBIT of A$480 million, compared with $30 million a year ago. Combined with its low cost subsidiary, Jetstar, domestic operations made A$600 million.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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