IATA AGM: Clark says Emirates looking at closer ties with Qantas

Emirates president Tim Clark has revealed that the Dubai airlines is studying closer links with Australia's Qantas airline.

Local rivals Etihad announced an equity deal with Qantas rival Virgin Australia earlier this month and Qantas has seen severe drops in its market share and significant losses on its long haul flights.

Speaking to Bloomberg TV at the IATA AGM in Beijing today, Clark said Emirates was examining a “commercial arrangement” with Qantas but would be stopping short of an equity stake.

Industry analyst Saj Ahmad said “Qantas can no longer afford to try and fight the UAE airlines in its backyard so it makes sense that they strike some sort of deal with Emirates. After all, it now faces greater competition from Etihad and Virgin Australia and given their poor earnings forecast and poor performance, Emirates knows it is in the driving seat and they can muster a deal without the need for an equity stake.

“Emirates would love to tap into the domestic market and its unclear what opposition Qantas can put up given their precarious state. They are better off converging with Emirates rather than competing with them head to head.

“Qantas should have struck a deal when it had the chance but now it has less bargaining power. And its equally unlikely that Emirates will do them any major favours, especially when Qantas has near nil presence in the GCC and Emirates will want to protect its regional monopoly.”

In the Bloomberg TV interview Clark said: “The Australian market has been one that is hugely successful for Emirates. We want to grow our business there and it makes a lot of sense to come to a commercial arrangement with the major player in Australia.”

Qantas shares collapsed by almost a third last week upon news that the airline was forecasting its first net loss as a publicly quoted company. Those losses came from restructuring and the 16 international routes that it still operates.

Last month, Bloomberg reported that some analysts believed Emirates could also be looking at investing in Qantas’ domestic airline if it was separated from the international brand. The domestic operations were profitable, Bloomberg said.