One of the key pillars of Qantas’s strategy to revive its international business came toppling over today as the airline said it had broken off talks with Malaysia Airlines to establish a new premium carrier.
Qantas offered few details, saying only that the talks “would not continue due to parties being unable to reach mutually agreeable commercial terms.”
In a statement, CEO Alan Joyce said Asia remains a priority for Qantas and the airline would continue to look for opportunities to expand, either through joint ventures or alliances. However, he said the uncertain global economy meant the airline would “allocate minimal capital to such ventures.”
“The transformation of Qantas’s international business remains vital, with plans to return the international business to profitability in the short term on track,” Joyce said. “In the medium term, the Qantas flying businesses, both domestic and international combined, will exceed the cost of capital on a sustainable basis.”
The collapse of the talks with MAS come as little real surprise. Reports from as far back as November indicated that Qantas had abandoned plans to launch a new premium carrier, though the airline insisted it remained in talks. Last week, Malaysia Airlines said it was “in crisis” after a fourth straight quarterly loss.
Still, the news seemingly marks the end of the road for what was once a highly touted plan to revive Qantas’s increasingly unprofitable international operations. The new premium carrier — Qantas had trademarked such names as RedQ — was to have been a more nimble Asia-based spin off that could take advantage of the world’s fastest growing market without the high costs of being based in Australia.