Sydney: The Australian airline, Qantas Airways, has entered into negotiations with one of the leading airlines in the world, Emirates Airline, for making a potential deal of partnership in order to pull out the Australian airline from financial crisis.
The loss-making Australian carrier, Qantas Airways, has confirmed that it is in talks with the Emirates Airline which could lead to a potential alliance.
The likely deal between the two airlines would bring change in Qantas routing as it would be routing European flights through Dubai instead of Singapore.
The Chief Executive at Emirates Airline, Tim Clark, had said last month that he was not interested in buying an equity stake in Qantas and would rather consider other forms of commercial arrangements, such as code sharing.
Qantas Airways said in a statement to the Australian Securities Exchange, “At one time, Qantas may be in contact with a wide range of companies about potential commercial cooperation.”
“These airlines include Emirates, among others,” it added.
Clark confirmed that Emirates Airline is in talks with Qantas Airways.
Typically, a code-sharing arrangement allows an airline to sell tickets on a partner's flight and split the revenue.
However, Clark said that the current discussions do not include revenue sharing.
Last month, Qantas worried investors after it said it expected losses for its international routes in the year that ended last month to more than double to AUD450 million.
Moody's Investors Service, a ratings agency, said that a profitable international business is a key to maintaining the airline's investment grade.
Moody’s said, “A scenario involving a major tie-up with a Middle East or South East Asian-based hub carrier could alleviate some of the strategic disadvantages that Qantas faces as an end-of-line carrier.”
The partnership deal between the two airlines would reduce costs for Qantas by allowing it to place passengers en route to Europe on Emirates aircraft rather than its own.
On the other hand, the partnership would extend Emirates services around Australia and offer its customers far-reaching access on Qantas' domestic routes.
The recent partnership between Abu Dhabi's Etihad Airways and Virgin Australia Holdings has increased competition for Qantas. Together, Etihad and Virgin Australia now operate 24 flights per week between Australia and Abu Dhabi, offering travellers a combined network of more than 285 global destinations.
Qantas could potentially add more than 40 one-stop destinations through an Emirates deal, based on route maps on the airlines' websites.
The Managing Director of Webber Quantitative Consulting and a former Qantas Chief Economist, Tony Webber, stated, “If this is a reality, it's brilliant for Qantas.”
“There's lots of Aussies who want to go to other parts of Europe than the ones that are served by Qantas and people from all over Europe want to come to Australia,” he added.
An analyst at Macquarie Groupin Sydney, Russell Shaw, commented, “The airline can save as much as AUD600 million of capital spending over the next five to six years by dropping its Frankfurt route and tying up with Emirates.”
“The main saving would be avoiding the need to replace three Boeing 747 aircraft,” he said.