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Qantas and Emirates Airlines are in advanced talks about a partnership that could help the Australian flag carrier to reduce the losses at its international operations.
Some analysts said that an agreement between Emirates and Qantas could have negative repercussions for British Airways, which has a 16 year-old joint business with the Australian carrier on routes between the UK and Australia.
Emirates is in talks with Qantas about a code-share agreement, under which the Australian carrier could rely on the fast-growing Gulf airline to fly passengers from Australia to its Dubai hub, and then on to European destinations.
Australia is Emirates’ third most important market by revenue, and it is facing increasing competition there because Etihad, the Abu Dhabi-based carrier, is forging deeper links with Virgin Australia.
Etihad this month received permission from the Australian government to increase its stake in Virgin Australia from 5 per cent to 10 per cent, having established a code-share agreement between the two airlines in 2010.
Tim Clark, president of Emirates, said that the talks with Qantas were confined to a code-share agreement under which the Australian carrier might rely on the Gulf airline to fly passengers to Dubai or beyond. Emirates could also tap into Virgin Australia’s domestic passenger traffic for its long haul network, he added.
“The idea is each carrier offers the other the benefits of its network,” said Mr Clark, adding that no decisions had been reached between the two airlines.
Emirates is also considering code-share agreements with airlines in north and south America and with China.
The Gulf carrier has deliberately avoided joining one of the three large global airline alliances, on the grounds that it could compromise its expansion strategy.
Analysts said that a partnership with Emirates might provide a significant opportunity to cut the losses at Qantas’s international operations, which are expected to reach A$450m in the year to June 2012.
Alan Joyce, Qantas’s chief executive, has been searching for ways to stem the international losses, following a profit warning by the airline in June that pushed its share price to a record low.
Qantas issued a statement confirming talks with Emirates and other airlines about “potential alliances” after shares in the Australian airline spiked, closing up 9.6 per cent at A$1.09.
One analyst, who declined to be named, said that British Airways had “a lot to lose” from a code-share agreement between Emirates and Qantas.
He said that such a partnership could deprive British Airways of Qantas feeder traffic at Heathrow airport for the UK airline’s short-haul network.
International Airlines Group, the parent of British Airways, declined to comment.