Qantas sees globalization key to survival, eyes partnerships
Print 
Globalization is crucial for the survival of Qantas Airways , its CEO said, pointing to further partnerships with global airlines and expansion in Asia as part of a planned overhaul of its loss-making international operations.
Chief Executive Alan Joyce also warned of some "tough" changes for the airline as it sought to tackle inefficient maintenance operations and noted Qantas employed more staff in its home country than rivals, suggesting jobs may move offshore.
"Globalization requires change. We can't just change a few parts of our business, we have to make every part of our business efficient and in touch with the new realities," Joyce told an aviation conference on Wednesday.
"Our survival and success is far from guaranteed."
Qantas warned last month it was looking at cuts to its international operations amid reports it is eyeing setting up a new premium carrier based in Singapore. The new strategy will be announced on Aug. 24.
Joyce said the airline should grab new opportunities in Asia which was central to its future, and Qantas was looking at new partnerships and further joint ventures.
He noted branding opportunities in China and the success of the carrier's low-cost subsidiary Jetstar in Asia.
"I'm sure they would love to do something with one of the Chinese airlines if they could but that is obviously quite difficult as Singapore Airlines found out few years back," said Andrew Orchard, a Hong Kong-based analyst for RBS.
"Most airlines would be looking at China if possible, I think that is the most ideal situation, as it is one of the fastest growing air travel markets out there," Orchard said.
Singapore Airlines' efforts to gain a foothold in the Chinese market failed in 2008 when shareholders in China Eastern Airlines rejected a proposed sale of a 24 percent stake in the airline.
"No sacred ground"
Joyce said Qantas's maintenance and repair costs were the "least efficient and most expensive" in the world, comments that are likely to anger unions.
The Irish-born chief executive said only 10 percent of the airline's 35,000 staff were based outside Australia.
Qantas also faces threatened industrial unrest from aircraft engineers and pilots.
"I think all options are on the table, I think he is not ruling out any possibilities, so that is why we are seeing the difficulties they are facing not just with the cockpit crew but also with other union members. He is looking at everything and there's no sacred ground at the moment," said Shukor Yusof, a Singapore-based analyst for Standard & Poor's.
Joyce described the unions as being "out of touch."
"We all know that change is always tough but the competitive challenges we face make major change essential," he said.
Qantas staff have been demanding increased job security amid talk the airline may axe some routes and move some operations overseas as part of a restructuring.
Joyce has previously warned the airline could face extinction unless dramatic changes were made to its operations. The international business is expected to make a A$200 million (US$214 million) loss this year.
He said on Wednesday he remained confident the airline's joint venture in Vietnam would eventually become profitable.
Qantas shares were trading 1.1 percent firmer at A$1.845, compared with a 1.6 percent gain in the broader market. (US$1 = 0.934 Australian Dollars)
