Qantas’ plans for a new premium airline in Asia have bitten the dust as talks with prospective partner Malaysia Airlines broke down.
Chief executive Alan Joyce revealed that discussions between the two airlines had foundered with the parties “unable to reach mutually agreeable terms.”
The new premium airline is now off the agenda as Joyce confirmed the group would explore joint ventures and alliances in Asia instead. But he stressed that Qantas would “allocate minimal capital to such ventures,” attributing the U-turn to global economic uncertainty and the airline’s recent financial clampdown.
“The transformation of Qantas’ international business remains vital, with plans to return the international business to profitability in the short term on track,” he said.
“In the medium term, the Qantas flying businesses, both domestic and international combined will exceed the cost of capital on a sustainable basis.”
The withdrawal has been welcomed by the unions, with the proposed Asian airline a major aggravator of industrial action at the end of last year. The pilots union called it a “fantastic opportunity” for the airline to rebuild its brand.
The premium airline had been expected to operate initially with 11 A320s with flights into Australia and intra-Asia, helping the airline to win back its declining market share into Asia.
Its premature end will leave Qantas back at square one, trying to devise a way to tackle its losses as Asian airlines continue to eat into its business.
