Bloomberg News

Qantas Says Asia Demand Rising as Talks Continue for New Carrier

December 07, 2011

Dec. 7 (Bloomberg) -- Qantas Airways Ltd., Australia’s biggest carrier, said travel demand in Asia is rising as the company continues talks to establish a new airline based in Singapore or Malaysia.

The growth is helping to limit the impact of stalling travel to traditional international destinations such as Europe, Chief Executive Officer Alan Joyce told a conference in Sydney today.

Qantas wants to start the new airline next year with a base in either Kuala Lumpur or Singapore offering flights from southeast Asia that reach China and Australia. The company may also increase cooperation with Malaysian Airline System Bhd as it tries to drive new passenger growth and turn around A$200 million ($205 million) in annual losses from international operations.

“We’re seeing the rapid rise of emerging markets in Asia,” Joyce said today. “A cornerstone of our international strategy is to tap into the forecast growth in the intra Asia travel sector at the premium end of the market.”

Joyce grounded most of his fleet on Oct. 29, ahead of a planned lockout of long-haul pilots, engineers and baggage handlers, who are campaigning for job-security measures in their contracts.

The grounding triggered intervention by the government, which sought an end to the dispute and resumption of negotiations. The nation’s labor regulator is now holding arbitration between Qantas and the three unions after those talks failed.

The company last week forecast first-half profit that beat analyst estimates, saying bookings had rebounded from strikes that forced the Sydney-based company to cancel flights, stranding 80,000 passengers in October. Qantas predicted earnings before tax and items of as much as A$190 million for the six months ending Dec. 31, with the labor dispute costing A$194 million.

--With assistance from Robert Fenner in Melbourne. Editors: Edward Johnson, Iain Wilson

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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