Qantas’ sweeping alliance with Emirates will help return the Flying Kangaroo’s international operations to profit by 2015, CEO Alan Joyce has predicted.
“This is a big step in the right direction for Qantas International,” Mr Joyce told the ABC’s Inside Business this weekend. “We see a path through to this business breaking even by financial year 2015. We do want to make sure Qantas International goes back to profits.”
But while the 10-year tie up with Emirates has received generally positive reviews, it has not served to turn around Qantas’s business overnight. A day after the deal was announced, ratings agency Standard & Poor’s downgraded Qantas’s debt rating from BBB to BBB-minus, the lowest grade above junk status.
S&P attributed the downgrade to Qantas’s eroding market share and “structural pressures” affecting its international operations. The downgrade did not appear to be a reflection of the Emirates deal.
Even with the downgrade, Qantas remains one of only two airlines in the world to hold investment-grade status from two ratings agencies, with Moody’s also giving Qantas its lowest investment grade rating.