Emirates Airline link helps Qantas to profit

Qantas aircraft on the tarmac at Sydney's International Airport. Today, Emirates has more flights on the Australia-Europe route than Qantas. Greg Wood / AFP

Profits at Qantas doubled this year as the Australian carrier's tie-up with Emirates Airline helped it to narrow losses on international routes.

Earnings at Australia's largest airline beat analyst estimates, with pretax profit rising to A$192 million (Dh630.6m) from A$95m a year earlier.

Losses on foreign flights have halved since Qantas cancelled lacklustre long-haul routes to Europe and moved its regional hub to Dubai, the company said.

Qantas shares trading on the Australian exchange rose by nearly 14 per cent yesterday to A$1.40, the biggest gain in more than six years.

"The Qantas-Emirates partnership gives the group a strengthened position on routes to Europe, the Middle East and North Africa, via the global hub of Dubai," said Alan Joyce, the Qantas chief executive. "Bookings have been very positive, running at about twice the level of Qantas's previous code-share arrangements for flights to Europe."

A US$111 million settlement from Boeing for a cancellation of 787 orders helped to lift earnings.

Qantas also retired older planes and increased its domestic flight capacity by 8 per cent to defend its share of the Australian market, where it battles Virgin Australia for dominance.

The emphasis on domestic routes reflects Qantas's focus since partnering with Emirates to share loyalty programmes and flight codes.

Today Emirates has more flights on the Australia-Europe route than Qantas does.

Qantas's international unit, which suffered from losses in 2012, aims to turn a profit again by 2015, Mr Joyce told investors. Losses this year totalled A$246 million.

The planned gains would come from taking advantage of the Emirates tie-up to further streamline services and increase Europe and Middle East routes using Dubai as a hub.

"The ability to contain costs and take some bold steps in the international division is starting to show some positive signs," said Peter Esho, chief market analyst at Invast Securities. "The diversified group has held up relatively well."

The airline spent more on fuel, which it buys in US dollars, because of a fall in the Australian currency. Fuel costs that totalled A$4.2 billion pushed the airline to raise fuel surcharges by up to A$75 on some flights.

* with Bloomberg News