SYDNEY (March 9): Qantas Airways has called off talks with Malaysian Airlines to establish an Asian premium carrier because terms could not be agreed, a big setback to the Australian carrier's plans to turn around its ailing international operations.
Qantas had said it was in talks with Malaysian Airlines, budget carrier Air Asia and Singapore to set up the airline, but recent reports indicated talks had run into rough weather over capital investment and size of the stake.
Qantas chief Executive Alan Joyce, who has staked almost everything on the Asian move to turn around the international operations of Australia's top airline, reiterated in a statement the plan remained a priority.
Qantas said it "continued to explore opportunities in the region, including joint ventures and alliances.
"However, mindful of global economic uncertainty, and consistent with Qantas' focus on disciplined financial management, the group will allocate minimal capital to such ventures."
The plan for an Asian premium carrier was part of a five-year strategy to revive Qantas' international operations, which lose A$200 million ($212 million) annually. Unions have opposed the plan.
The turnaround strategy also includes restructuring the international network and raising the focus on Asia.
Last month, the airline said it would axe 500 jobs and cut capital spending by A$700 million over two years to protect profitability.
Last year, Qantas grounded its entire fleet for almost two days, seeking to bring long-running industrial action with a number of unions to a head through the intervention of the industrial labour umpire. Qantas has since settled with unions.
Qantas, one of the two global airlines still to boast an investment-grade rating, saw Moody's cut its credit rating dropped by a notch in late January, citing pressure from high fuel prices and difficult operating environment.
At 2348 GMT, Qantas shares were down 2.0 percent to A$1.69 in a broader market that was up 0.5 percent. – Reuters
Qantas had said it was in talks with Malaysian Airlines, budget carrier Air Asia and Singapore to set up the airline, but recent reports indicated talks had run into rough weather over capital investment and size of the stake.
Qantas chief Executive Alan Joyce, who has staked almost everything on the Asian move to turn around the international operations of Australia's top airline, reiterated in a statement the plan remained a priority.
Qantas said it "continued to explore opportunities in the region, including joint ventures and alliances.
"However, mindful of global economic uncertainty, and consistent with Qantas' focus on disciplined financial management, the group will allocate minimal capital to such ventures."
The plan for an Asian premium carrier was part of a five-year strategy to revive Qantas' international operations, which lose A$200 million ($212 million) annually. Unions have opposed the plan.
The turnaround strategy also includes restructuring the international network and raising the focus on Asia.
Last month, the airline said it would axe 500 jobs and cut capital spending by A$700 million over two years to protect profitability.
Last year, Qantas grounded its entire fleet for almost two days, seeking to bring long-running industrial action with a number of unions to a head through the intervention of the industrial labour umpire. Qantas has since settled with unions.
Qantas, one of the two global airlines still to boast an investment-grade rating, saw Moody's cut its credit rating dropped by a notch in late January, citing pressure from high fuel prices and difficult operating environment.
At 2348 GMT, Qantas shares were down 2.0 percent to A$1.69 in a broader market that was up 0.5 percent. – Reuters
